Intellectual Property Law

Patent False Marking: Not Dead Yet

By Stephen Altieri

One of the biggest issues in patent law recently comes from the seemingly mundane topic of patent marking. Of course, very few cared about this issue until the CAFC decided Forest Group v. Bon Tool Company, a case in which the court interpreted the damages for false marking, codified in 35 U.S.C. §292, to be up to $500 per article not per offense, as courts had traditionally ruled. Consider the example of a company that has produced 1,000,000 false marked products. Under the pre-Forest Group system, a company?s liability would max out at $500. After Forest Group, however, this penalty would be slightly larger: $500,000,000. Because of this new calculus and because §292 is a qui tam action (i.e. any individual can sue so long as the damages are split with the government), the number of false marking suits exploded almost immediately following Forest Group.

Since then, the CAFC seemed to rein things in a bit. In Pequignot v. Solo Cup Company the court reaffirmed that the plaintiff has the burden of showing the false marker?s intent to deceive. This standard is higher than mere knowledge. Knowledge only creates a rebuttable presumption of intent to deceive. The false marker can evade penalty if it can show, by a preponderance of the evidence, that it lacked the intent to deceive, as Solo did in this case. While Solo Cup appeared to take the wind out of the sails of false marking cases, the CAFC has recently suggested that this area of litigation is still valid. Just a couple of weeks ago, the court held, in Stauffer v. Brooks Brothers, Inc., that these suits cannot be dismissed on the grounds that a plaintiff lacked standing due to lack of injury. Not surprisingly, the court held that standing stems from qui tam nature of the lawsuit: the government has standing to enforce its own laws and the false marking statute assigns this right to ?any person? to sue on the government?s behalf. Therefore, it looks like the CAFC is not prepared to dispense with false marking suits so easily. Where this area of litigation is going, however, is anyone?s guess.

Full post as published by BC Law Intell. Prop. & Tech. Forum on September 16, 2010 (boomark / email).