Brooks Brothers is facing legal claims that it marked its bow ties with expired patent numbers, which could cost the company as much as $500 per tie.
The U.S. Court of Appeals for the Federal Circuit in Washington yesterday gave the go-ahead for lawyer Raymond Stauffer to pursue his claim against the Brooks Brothers.
It's illegal to mislabel products with the wrong patent numbers, and the U.S. lets individuals sue on the government's behalf and keep half of any penalties, which can be as much as $500 for each item.
Brooks Brothers incorrectly marked 120 different styles of ties, which sell for about $45 to $100 a piece, Stauffer told the Wall Street Journal. So if Stauffer wins and nets $250 per tie ... cha-ching!
Patents have a 17 or 20 year life span. 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.
Brooks Brothers got the lawsuit thrown out in May 2009 by a judge who said Stauffer, a patent lawyer from New Jersey, didn't have the standing to bring the case.
Companies can fend off such lawsuits by proving they didn't mean to deceive customers when posting the expired patents. The outcome of the case will likely be closely watched by some 350 companies who have similar lawsuits pending against them.
What are Penny Stocks
The lucrative and dangerous world of penny stocks.View Course »