Source: https://www.marshallip.com/donald-w-rupert/news/federal-circuit-issues-important-decision-involving-false-patent-marking/
Timestamp: 2020-02-17 06:27:35
Document Index: 208781573

Matched Legal Cases: ['§ 292', '§ 292', '§ 292', '§ 292', '§ 292', '§ 292', 'art 2']

Federal Circuit Issues Important Decision Involving False Patent Marking | Donald W. Rupert
Federal Circuit Issues Important Decision Involving False Patent Marking
On December 28, 2009, the U.S. Court of Appeals for the Federal Circuit issued a decision in The Forest Group v. Bon Tool Company, Case No. 2009-1004. The case considered the application of the patent false marking statute, 35 U.S.C. § 292(a). In part, that statute provides:
Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public… Shall be fined not more than $500 for every such offense.
The Court concluded that an “offense” under the statute is measured on a per article basis and that the penalty is to be applied on a per article basis. In other words, the penalty of up to $500 applies to each and every article that is falsely marked. This decision could affect many companies who routinely mark their products with patent numbers, and at a minimum, will require the companies to ensure that the products so marked are actually covered by the listed patents.
In the Forest case, Forest sued for patent infringement and Bon Tool counterclaimed alleging false marking pursuant to 35 U.S.C. § 292(a) because Forest’s commercial product bore a patent number that did not cover its product. Each independent claim of the patent required that the claimed product have a “resiliently lined yoke.” Although Forest made and sold products of the same general type as described in the patent, none of them had a “resiliently lined yoke.” Indeed, Forest was involved in earlier litigation over this same patent and, in that case, the court granted the defendant summary judgment of non-infringement because the “resiliently lined yoke” was missing from the then-accused device. At that time, Forest’s counsel advised that Forest should modify its products to include a resilient lining. Forest then placed at least one order to its supplier for additional products having no resilient liner, but which were marked with the patent number.
The district court found that Forest had knowledge of the improperly marked product, as of November 15, 2007, at least as a result of the summary judgment determination in the earlier litigation. The court then concluded that the “offense” committed by Forest was the ordering of additional products after November 2007 and that the offense was a one-time offense. The court thus assessed a penalty of $500 for the offense.
On appeal, the Federal Circuit reversed the district court’s determination of the “offense” and vacated the penalty amount. According to the Federal Circuit, 35 U.S.C. § 292(a) has two elements: (i) placing a patent marking on an unpatented article, with the (ii) intent to deceive the public. As to the intent, the Court held that a “party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked.” (Slip Op. at 6). Here, the Court acknowledged that the level of requisite knowledge does not depend on claim constructions or summary judgment rulings, but can arise when the party acts with sufficient knowledge that what it is saying is not correct. (Slip Op., at 6-7). Ultimately, the Court concluded that the district court did not err when it determined that Forest lacked any intent to deceive the public prior to November 15, 2007. However, the Federal Circuit affirmed the district court’s determination that Forest’s knowledge of the “resiliently lined yoke” claim requirement as a result of the prior litigation established an intent to deceive as of the November 2007 summary judgment decision.
The Federal Circuit then addressed the nature of an offense under 35 U.S.C. § 292(a). This is the critical point of the decision. Earlier court decisions had the view that an offense should be measured as the decision to apply the false marking, and should not necessarily be measured on a per-unit of falsely marked product basis. (Slip Op., at 8-10, collecting cases).
The Federal Circuit concluded that the plain language of the statute “requires the penalty be imposed on a per article basis.” The Court also concluded that this reading of the statute comports with the policy underlying § 292. According to the Court, false marking can dissuade competitors from entering a market or cause unnecessary investment in design-around costs or in analyzing the validity or enforceability of a patent whose number has been improperly applied to a product.
Implications of Forest
The Forest decision raises many decision points for companies who mark their products with patent numbers. These include the following:
Companies should ensure that the products are indeed covered by at least one claim of the patent.
For patent markings that include multiple patent numbers, companies should consider whether the product is covered by at least one claim of each of the listed patents. Although this issue was not addressed inForest, the Federal Circuit had previously suggested in passing that one claim of each listed patent must cover the product. See Clontech Laboratories, Inc. v. Invitrogen Corp., 406 F.3d 1347, 1351 (Fed. Cir. 2005).
For markings that reproduce the patent number of expired patents, companies should consider whether to remove them. This issue was not addressed in Forest, and there is no Federal Circuit authority directly on point.
For markings that include the phrase “May be covered by one or more of the following patents …” or similar language, companies may want to consider whether this approach is appropriate, given that the Federal Circuit has not addressed it in any published cases.
There are, of course, many other marking scenarios that should be analyzed in light of the Forest decision. Indeed, because the marking penalty is now to be applied to each improperly marked article, there is the possibility of large penalties for violation of the statute. Prudence suggests that companies should review carefully their patent marking procedures and seek guidance from counsel when deciding whether to mark, or continue to mark, any product.
Finally, companies should understand that the penalty amount of up to $500 per article found in § 292 provides a district court with discretion on setting the exact penalty. Although the Federal Court noted that the penalty could be “a fraction of a penny per article,” the Court provided no guidance to the district courts on the factors that should be considered in reaching any final per article penalty amount. (Slip. Op., at 13).
For additional information, see the related articles titled, "Trolling For Dollars: A New Threat To Patent Owners," and "Trolling For Dollars - Part 2," by Donald W. Rupert.
Donald W. Rupert is a partner in the intellectual property law firm of Marshall, Gerstein & Borun LLP in Chicago. Mr. Rupert can be reached at [email protected] or at 312.474.9571.
The views expressed herein are solely those of the author and are not to be attributed to his firm or any past, present, or future client of his firm.
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