Why “Patented” Is Not a Word to Use Casually in Retail Marketing

Many Florida retailers use puffery in their advertising to highlight the unique qualities of their products. Much of this is perfectly legal and harmless, but retailers must always stay aware of legal restrictions on certain words, phrases, and terms. One such word is “patented.” While your business may sell a distinct or one-of-a-kind product, you cannot advertise it as “patented” unless you actually apply for (and receive) a patent from the U.S. Patent and Trademark Office. It is, in fact, a federal crime—punishable by a fine of $500 per incident—to misuse the terms “patent” or “patented”

The Strange Case of “Brooklyn” Bagels

One Florida-based retail franchise managed to run afoul of this seemingly simple federal law. The company in question franchised bagel shops. Invoking a widely believed legend that bagels produced in Brooklyn are superior due to the chemical composition of the local water supply, the company’s advertising promoted its “patented 14-stage water treatment process” that replicated both the New York City borough’s water and bagels.

In fact, while the company maintained a proprietary water system, it did not hold any patents for them. Nevertheless, in 2010 the company attempted to sue a number of competitors who also claimed the ability to produce Brooklyn-style water. One of these competitors responded with a lawsuit of their own, claiming the company’s misuse of “patented” in their marketing violated federal law.

Prior to 2011, any individual could sue a company for misuse of the word “patented.” Congress authorized what are known as qui tam or “whistleblower” lawsuits. This allowed any person to, in effect, act as the federal government for purposes of pursuing a false patent marking claim. Congress abolished qui tam jurisdiction for patent cases in 2011, however, meaning only the U.S. Department of Justice may now pursue such claims. In any event, the “whistleblower” in this case obtained a settlement against the bagel franchiser barring any future misuse of the word “patented.” The company also paid the qui tam plaintiff and the federal government $5,000 each.

But that did not end the company’s litigation related to its so-called “patented” water system. In 2012, one of the company’s franchisees sued, arguing it had been misled by the false “patent” claims into signing a franchise agreement that did not prove as lucrative as promised. Although the franchisee’s claims fell under Florida state law, a federal judge in Miami put a stop to the case, holding the qui tam plaintiff’s settlement barred any further litigation arising from the “patent” issue. On September 30 of this year, a divided panel of the U.S. Eleventh Circuit Court of Appeals affirmed the trial judge’s decision.

Avoiding False Advertising Charges

There is nothing wrong with aggressively promoting your business’s products. But you should always take care to ensure your well-intended boasting does not violate federal or Florida laws governing false or misleading advertising. If you need the advice of an experienced South Florida business lawyer, contact John S. Sarrett in Naples today.

This entry was posted in Business Law and tagged , , , . Bookmark the permalink.