Patent Mismarking

"Patent Marking" refers to the notice "US Pat. No. 7,654,321" and "PATENTED" and the like placed on products to advise the public that the product is patented. The Federal Circuit this week issued a major decision in the context of false patent marking under 35 U.S.C. Section 292 in Forest Group v. Bon Tool Co. Section 292 provides that whoever marks or advertises an unpatented product as "patented" or "patent pending" for "the purpose of deceiving the public ... shall be filed not more than $500 for every such offense." Anyone is entitled to bring a cause of action under Section 292, and any award is split evenly between the person suing and the United States.

The District Court in Forest Group found that Forest Group had falsely marked its products and imposed a single $500 fine for its decision to mark the product after it knew or should have known that the product was not covered by the patent. The Federal Circuit vacated that portion of the district court's ruling, holding that “[t]he plain language of the statute does not support the district court’s penalty of $500 for a decision to mark multiple articles. Instead, the statute’s plain language requires the penalty to be imposed on a per article basis.” In other words, the statutory fine is properly imposed for each and every article that is falsely marked , even where the articles are mass produced.

Another important aspect of the Forest Group decision is that the $500 fine is not a mandatory amount, but rather an upper limit. Specifically, the Federal Circuit stated that Section 292 "provides the district courts the discretion to strike a balance between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small inexpensive items produced in large quantities. In the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty."

The ramifications of the Federal Circuit's decision in Forest Group may be most harsh for those selling a product covered by an expired patent. In Pequignot v. Solo Cup Co. (E.D. Va, 2008), the court held that listing expired patents on a product can constitute false marking. The court also held that using words such as "may be covered" by a patent is insufficient to avoid a finding of false marking.

Though Pequignot, who is an attorney in Washington D.C. and was not involved in the industry anyway, was ultimately unable to prove that Solo had the requisite intent to deceive, the potential risk for continuing to mark a product after the patent expires is significant. If a party can prove that the seller knew that the patent had expired but continued to mark the product despite such knowledge, a finding of false marking under Section 292 is possible. Care should be taken to ensure that products are properly marked, including removal of expired patents.

The Federal Circuit's decision in Forest Group v. Bon Tool can found by clicking here.