Litigation

Product marking ? a word of caution to patentees

By Rick Boyd

Marking a product as patented serves a beneficial purpose:  it puts the public on notice of a patentee?s rights.  However, "false marking," which generally involves marking or advertising an unpatented article as patented with an intent to deceive the public, can stifle competition and increase consumer costs.  Section 292 of the Patent Act prohibits intentional false marking, provides penalties, and allows any person to sue for false marking on behalf of the federal government.

False marking occurs if a party continues to mark products as patented following expiration of a patent, or marks products that are not covered by the claims of an otherwise valid patent.  False marking can also include marking products as "Patent Pending" after an application for patent is abandoned, or after all claims covering a product are cancelled during patent prosecution.

For one hundred years, courts have treated each decision to falsely mark products as a single offense, without regard for the actual quantity of articles produced.  That changed last week when the U.S. Court of Appeals for the Federal Circuit, in The Forest Group, Inc. v. Bon Tool Co., held that the statutory penalty of "not more than $500" applies to each individual improperly-marked article.  For example, if a defendant sells 100 articles, each improperly marked, he is liable for 100 individual offenses, and 100 times the per-article penalty determined at trial.

Although the statute allows courts to set the per-article penalty at a fraction of a penny in the case of inexpensive, mass-produced goods, the Forest decision nonetheless greatly increases the potential penalties for false marking of mass-produced products.  Likewise, it potentially increases the incentives for opportunists, entitled by statute to 50% of any penalties awarded, to file lawsuits on behalf of the government.  In this new environment, patentees should exercise ever more heightened diligence to ensure their goods are properly marked at all times.

Full post as published by Northwest Business Litigation Blog on January 05, 2010 (boomark / email).