Monday, December 28, 2009

The Forest Group v. Bon Tool Company

35 U.S.C. § 292 prohibits falsely marking a product with a patent number or “patent pending.” It allows anyone to sue to enforce this provision and split the fine with the U.S. The maximum fine is “not more than $ 500 for every such offense.”

At issue in FOREST GROUP V. BON TOOL was whether that maximum fine applied on a per “decision to mark” basis or on a per article basis. The Federal Circuit concluded that it “requires courts to impose penalties for false marking on a per article basis.” (p. 14.) This of course has the potential to result in substantial penalties, and to provide an incentive for “the possible rise of ‘marking trolls’ who bring litigation purely for personal gain.” (p. 12.) However, the court also noted that the $500 figure was a maximum and so “[i]n 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.” (p. 13.) Moreover, the statute explicitly allows for such suits and the court mentioned several policy reasons for discouraging improper marking:

  • Acts of false marking deter innovation and stifle competition in the marketplace.
  • False marks may also deter scientific research when an inventor sees a mark and decides to forego continued research to avoid possible infringement.
  • False marking can also cause unnecessary investment in design around or costs incurred to analyze the validity or enforceability of a patent whose number has been marked upon a product with which a competitor would like to compete. (p. 11.)

Because “[t]hese injuries occur each time an article is falsely marked,” the court determined the penalty should be applied per product in the marketplace and qui tam suits should not be discouraged.

The take away: Double check your products to make sure they aren't being marked with expired patents.

For a discussion on standing, see STAUFFER V. BROOKS BROTHERS, INC.