Raymond E. Stauffer was shopping at a New Jersey mall when he noticed something peculiar about the bow ties on display at Brooks Brothers: They were labeled with old patent numbers.
Mr. Stauffer, who calls himself a "sharp-dressed man," also happens to be a patent lawyer. He sued Brooks Brothers Inc. in federal court, claiming it broke the law by marking its adjustable bow ties with patents that expired in the 1950s.
Matthew Craig/The Wall Street Journal
A Brooks Brothers bow tie
.He figured the retailer would have to pay a nominal amount for violating a law that bars companies from marking products with erroneous patent numbers.
A federal appellate court ruling on Tuesday breathed new life into his case by upholding his right to sue—and could pave the way for hundreds of similar suits against major companies to move forward. A separate ruling in December raised the stakes in such cases, potentially exposing product makers to huge liabilities.
Already, lawsuits claiming false patent markings have been brought against companies that make turkey pop-up timers, toilet plungers, fabric softener, flashlights, staplers, Frisbees, kites, telecommunications equipment, bubble gum and a toy called The Original Wooly Willy.
Defendants include companies such as Procter & Gamble, Bayer Healthcare LLC, Cisco Systems, Scientific-Atlanta, Merck & Co., Pfizer Inc., 3M Co., DirecTV, Medtronic Inc. Merck said no one was available to comment. The other companies didn't respond to requests for comment.
Marking a tube of toothpaste or paper cup with a patent that is out of date or doesn't exist has been against the law for years. It is considered anticompetitive. Until late last year, the most a violator had to worry about was paying a $500 penalty for misleading the public.
But in December, the Court of Appeals for the Federal Circuit in Washington ruled that defendants could be held responsible for up to $500 per offense.
.Lawyers for product manufacturers now fear clients are liable for up to $500 for every tube of mascara or box of garbage bags marked with an expired patent—an error that turns out to be quite common.
In recent months, would-be plaintiffs have been fanning out across retail stores and the Internet searching for expired patent numbers on everything from toothpaste to toilet plungers.
"It absolutely is a startling development in the interpretation of that provision," says Michael C. Smith, a defense lawyer from Marshall, Texas, who is representing Wal-Mart Stores Inc. and mouse-trap maker Kness Mfg. Co. in suits claiming false patent marking. "A lot of these products always have patent numbers on them, and it never occurred to anyone to take them off."
Mr. Smith, who declined to discuss the lawsuits he is handling, says he generally advises clients: "Now is a good time for you to have somebody run down your products" and check their patent numbers.
Patents have a life span of 17 or 20 years. To keep them valid, companies must pay maintenance fees every four years. Once they expire, the holder is expected to remove the numbers from products.
According to Chicago-based merchant bank Ocean Tomo, which tracks patent suits, nearly 350 federal lawsuits have been filed since the December appellate court ruling.
Would-be plaintiffs have been searching retail stores and the Internet for expired patents, then filing lawsuits against product makers. Suits have been filed over allegedly erroneous patent numbers on such products as Etch A Sketch toys, Crest toothpaste, Depend underwear and L'Oréal mascara.
Matthew Craig/The Wall Street Journal
..Some of the suits have been dismissed. Many had been stayed, pending the outcome of Mr. Stauffer's case against Brooks Brothers.
On Tuesday, the Federal Circuit Court of Appeals reversed a lower court ruling that had dismissed Mr. Stauffer's case saying he didn't have standing to bring it.
"Every plaintiff who brings one of these cases is a private attorney general who is doing a service to the United States, and I'm doing the same," says Mr. Stauffer, a lawyer in Roseland, N.J.
Brooks Brothers and a lawyer who represents it in the case didn't respond to requests for comment.
The way Mr. Stauffer calculates it, the liability could be huge. Brooks Brothers had erroneously marked 120 different styles of ties, which sell for about $45 to $100 a piece, according to Mr. Stauffer. He says he doesn't know how many individual ties were falsely marked.
"I would have settled this case for $25,000 back in December of 2008," Mr. Stauffer says. "Brooks Brothers, however, seemed eager to want to litigate the case, and I was delighted to give them the opportunity."
So far, none of the suits have reaped the gigantic awards that plaintiffs say could be possible.
But corporations are spooked, according to numerous attorneys who represent manufacturers of consumer products. They are checking the status of patents and scrambling to review the product lines on shelves to be sure labeling is up-to-date. And they are contacting suppliers to make sure their patents are valid.
"These cases have forced companies to spend time, money and resources investigating claims where there really isn't any injury to anybody," says Chicago lawyer Jason C. White, who is defending more than a dozen companies from such suits. "Companies are spending a lot of time investigating this, even ones who haven't been sued. It has captured the attention of a large cross section of corporate America."
Some of the cases have settled because companies fear a bad outcome or don't want to incur large legal fees fighting them.
"You're paying the hostage fee," says Mark Willard, a lawyer who represented hand-tool manufacturer Ames True Temper Co. in a suit involving a shrub rake. "It was manufactured in China using an old mold that still had the expired patent number on it," says Mr. Willard, adding that the company has long had in place a policy of monitoring patents. "This one fell through the cracks."
The company settled the case for an undisclosed amount. Mr. Willard says the suit has cost the company in other ways. Ames had to thoroughly review its inventory to be sure more outdated patents weren't on the market. "They have a very large product line," he says.
One defendant, Solo Cup Co., was accused in a lawsuit of erroneously marking 21 billion items, including lids for Starbucks coffee cups. The company had more than 3,000 molds for its products that were stamped with the erroneous patents, and they had a plan in place to phase out the molds, according to filings in the case. Solo declined to comment.
The suits are affecting how companies tend their intellectual property. Robert Koch, an intellectual-property lawyer in Washington, says he advises his clients to stop marking patents on their products. That would limit companies' ability to seek damages from infringers. But it eliminates having to closely monitor every package and brochure to avoid a lawsuit.
The law on false patent markings is similar to whistle-blower laws. Anyone can file a claim on behalf of the government, and plaintiffs must split any fine award evenly with it. The Justice Department has argued on the side of plaintiffs in some of the claims.
"We do think that these suits have directed industry attention to the need to adopt procedures to assure that patent markings are accurate and to remove the numbers of expired patents from products," says Charles Miller, a Justice Department spokesman. "This should result in more accurate information on products and their packaging, which would be beneficial to consumers."
The people behind the suits say they see themselves as consumer advocates, helping to protect legitimate inventors from giant corporations who are pretending to have patents to keep competitors from stepping on their turf.
"It chills competition, it misleads the public and takes away from the credit patent holders deserve," says Daniel Ravicher, founder and executive director of New York nonprofit Public Patent Foundation, which has filed numerous suits.
Mr. Ravicher says he found one defendant, Johnson & Johnson's McNeil-PPC unit, by perusing his local drugstore shelves, where he found a bottle of Tylenol he says had an expired patent. Johnson & Johnson declined to comment.
L'Oréal USA Inc. has been hit with at least two suits over its Double Extend Mascara. One of the tubes with an expired patent was still on the shelves of a Midtown Manhattan pharmacy last week. L'Oréal declined to comment.
The lawsuits have been filed by relatively few people or entities, many of whom have close ties to plaintiffs' lawyers who work on patent suits. Some are filed in the name of organizations owned by patent attorneys.
One plaintiff, Sarah Tompkins, who has sued more than a dozen companies, is the wife of Allen, Texas, patent lawyer George Tompkins.
Mr. Tompkins says he heard about the December federal-court ruling from lawyer friends. He and his wife then spent hours poring over Internet advertising to check for outdated patents on products, a process that can be relatively simple because patents are numbered chronologically. Patents that start with the number 4, for example, have expired in recent years.
The couple trekked to retail stores to find falsely marked products on shelves. Their lawsuit against multiple companies also contains false advertising claims.
"We decided what companies were doing was wrong, so we filed a lawsuit," Mr. Tompkins says.
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