Patent False-Marking Lawsuits: Could Your Company Be Next?

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May 06, 2010

If you own U.S. patents and mark your products as patented or patent pending, you could find yourself defending a federal lawsuit. A recent Federal Circuit Court of Appeals decision has opened the floodgates for qui tam plaintiffs to challenge the accuracy and validity of patent marking, requesting to split any statutory damages award with the government—assessed “per article.”

Although most patent owners know that the patent laws provide a strong incentive to mark products as patented, they might not realize that patent marking can be a double-edge sword. Whoever marks an unpatented article as patented or patent pending for the purpose of deceiving the public can be fined up to $500 per offense under 35 U.S.C. § 292(a).

Additionally, 35 U.S.C. § 292 is one of the few qui tam statutes still in existence, which allows any person to sue for the penalty, splitting the award with the federal government.

Most recent false-marking suits involve expired patents. However, false-marking plaintiffs also have asserted claims related to “patent pending” marking when no patent application covering the product is pending and claims related to patent marking where the scope of the marked patent does not cover the product on which it is marked.

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The recent uptick in false-marking cases is due to the Federal Circuit’s decision in The Forest Group, Inc., v. Bon Tool Company, addressing how statutory damages for false marking are calculated. For nearly a century, courts limited damages under this statute by interpreting the “every such offense” language broadly, for example by determining a single offense as each product line continuously manufactured or each decision to mark, rather than each offending article. The Bon Tool court, however, disapproved these longstanding decisions, holding that Section 292(a) of the statute requires courts to determine false-marking penalties on a “per article” basis. For patentees selling mass-produced articles that can number in the millions, potential damages under the statute can be catastrophic.

Ballard Spahr’s Intellectual Property Litigation Group has experience defending patent false-marking litigation and can advise patent holders about the best strategies and defenses to such claims. If false-marking claims are asserted against your company or you have concerns about your existing patent-marking program, please contact Melissa J. Lore, [email protected] or 215.864.8249 or Lynn E. Rzonca, [email protected] or 215.864.8109

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