ADventures in Law

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As a reformed patent attorney, I’m always excited to explore issues that bridge patent law and advertising law. Patent issues occasionally arise in the ad tech space, especially around innovations in programmatic advertising, privacy enhancements and content generation. And with the rise of AI-driven advertising and increased regulatory focus on privacy, I expect patent activity in that space, including patent acquisitions and litigation, to grow. But another area where patent and advertising law can intersect is advertising claims – specifically, claims relating to the patented, proprietary and/or exclusive nature of products and services. The words “patented,” “proprietary,” “exclusive” and similar terms used in marketing and advertising can carry significant weight with consumers. They may signal innovation, uniqueness, exclusivity and credibility. But when used inaccurately, they can expose companies to legal risk.

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There are several ways such claims can lead to liability. For example, the Federal Circuit recently found that inaccurate claims about the patent status of materials used in a product were actionable under the Lanham Act. Although this issue may ultimately be decided by the Supreme Court, for now organizations should assume the Lanham Act may extend to such claims. In addition, such claims can trigger liability under the patent statute’s false patent marking provision as well as various consumer protection statutes prohibiting unfair or deceptive acts and practices. Increasingly, courts and regulators are scrutinizing how such language may mislead consumers or injure competitors, so now may be a good time for organizations to confirm they can defend these product claims.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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The false marking provision of the Patent Act prohibits use of the words “patent,”&nbsp;“patent applied for,” “patent pending” or similar words indicating a product is patented or an application has been filed when the product is not patented and no application for patent has been made. In 2011, the America Invents Act (AIA) significantly changed the false marking provision in several ways. Prior to the AIA, the false marking provision specified a $500 fine “for every such offense,” a phrase the Federal Circuit held to mean $500 for each instance (i.e., per article) of a falsely marked product. And it permitted any person to bring an action and collect a portion of that fine pursuant to a qui tam provision in the statute allowing a person to act on behalf of the public to collect statutory damages for products that were falsely marked. You can do the math and predict the results. This led to a flood of false marking claims by opportunistic plaintiffs who in many cases brought claims related to products with recently expired patent numbers – attempting to profit from companies’ failure to carefully track and remove outdated patent makings from their products and marketing materials. The AIA addressed this by (1) removing the qui tam provision and limiting damages for private plaintiffs to “competitive injury” they suffered because of the false marking and (2) adding language stating that marking with a patent that covered the product at one time but has now expired is not a violation. This greatly reduced the number of false marking claims, but it’s important to note the statute still allows competitors to make a claim based on false marking where they can demonstrate a competitive injury resulting from the violation that entitles them to compensatory damages.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

The Lanham Act is another source of potential liability in connection with claims related to the patented, proprietary or exclusive nature of products and services. When patent references appear in advertising – think “patented technology,” “exclusive innovation” or “protected by patent” – they may be interpreted as advertising claims subject to scrutiny under the Lanham Act. Claimants would argue that such references in ads aren’t just technical disclosures; they’re marketing tools. And like any advertising claim, they must be truthful and substantiated. The Lanham Act prohibits any statement in advertising or promotion that “misrepresents the nature, characteristics, qualities, or geographic origin of … goods, services, or commercial activities.” There is some debate over whether this language extends to claims related to a product’s patent status, and that is a question that may ultimately be decided by the Supreme Court; but for now, organizations should understand that such product claims could trigger Lanham Act suits. In addition, there are some features of the Lanham Act making it a more attractive vehicle for a potential plaintiff to bring a claim rather than make a false marking claim under the Patent Act. Specifically, a false advertising claim under the Lanham Act does not require proof of intent, while a false patent marking claim under the Patent Act requires a showing that the false patent marking was done “for the purpose of deceiving the public.” The Lanham Act also provides for more expansive remedies than are available under the Patent Act’s false marking provision. Lastly, although the Patent Act was amended to specifically carve out markings related to patents that were applicable but have now expired, the Lanham Act contains no such carve-out. In sum, it’s important for organizations to understand that such language could lead to Lanham Act suits or self-regulatory challenges by competitors.&nbsp;

What About Consumer Protection Laws?     

Another potential area for liability is, of course, the various state and federal consumer protection laws. The Federal Trade Commission (FTC) and state attorneys general – and consumers, where a private right of action is provided – may bring actions claiming that use of such language in advertising and marketing materials, where untrue or inaccurate, constitutes an unfair or deceptive act or practice. While the FTC has not historically focused heavily on claims related to a product’s patent status or similar language, its broad mandate to police deceptive marketing, and recent enforcement actions around AI-related exaggerations, suggests that innovation claims may soon face similar scrutiny.

Practical Tips for Advertisers and Legal Teams

Here are some things you can do now to avoid these pitfalls:

Treat patent references and language relating to the innovative, proprietary or exclusive nature of products and services as advertising claims requiring the same rigorous substantiation as other advertising claims.

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Confirm any patent referenced in your materials or which you are relying on to make advertising claims is valid, enforceable and relevant to the product and marketing claims you are making. This can be trickier than it seems. Understanding what a patent covers is not as simple as reading the patent title or abstract. The “claims” of a patent (not to be confused with advertising claims) are what determine the features and characteristics that are legally protected by the patent. And these claims can morph and change substantially through the patenting process; it’s not uncommon, coming out of that process, to have something very different from what you started with. As a result, there may be a disconnect between what business and marketing teams believe patents cover and their actual scope and limitations. So, in reviewing any patents, it may be helpful to coordinate with patent counsel.

Implement an audit program to routinely monitor and update patent markings.     

Avoid overstatement: Resist the urge to use patent language as a proxy for innovation unless it’s factually accurate.

Patent Law Meets Ad Law: Legal Risks of Using ‘Patented,’ ‘Proprietary’ or ‘Exclusive’ in Marketing Claims