False Patent Marking

March 11, 2010 – Firm News

In the United States it is unlawful to falsely mark articles with “patent” or any word or number indicating the same is patented or use such designations in advertising for the purpose of deceiving the public. While this feature of U.S. law is not new, a recent decision from the U.S. Court of Appeals for the Federal Circuit, Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), has increased interest in this provision of 35 U.S.C. § 292. Specifically, this decision has clarified that a penalty of up to five hundred dollars per falsely marked article may be imposed as a result of false marking, so long as half of the false marking fines collected go to the United States government. Accordingly, a new industry appears to be emerging in the United States where plaintiffs bring suit under 35 U.S.C. § 292 to seek financial gain from those who have, for example, listed U.S. patent numbers on their products or advertisements.

Sensing a new source of potential revenue, various plaintiffs, with apparently no association with the subject products or patents, are commencing false marking lawsuits against large corporations, such as 3M, Cisco, Pfizer, Oreck, Merck, etc. In some instances, the claim for false marking is based on marking articles with expired patents. What makes this type of litigation attractive for plaintiffs is that a penalty is available of up to five hundred dollars PER ARTICLE, which could potentially result in large fines for companies that are found to have falsely marked their products and sell large quantities of consumer products in the United States.

Despite the Bon Tool decision and the recent increase of false marking lawsuits in the district courts, a number of important legal issues relating to these types of lawsuits have yet to be ruled on by the U.S. Court of Appeals for the Federal Circuit. By way of example, different district courts have ruled differently on the issue of whether qui tam false marking plaintiffs have standing to sue. Compare Stauffer v. Brooks Bros., Inc., 615 F. Supp. 2d 248, 252-55 (S.D.N.Y. 2009) (dismissing qui tam plaintiff’s false marking lawsuit for lack of standing) with Pequignot v. Solo Cup Co., 640 F. Supp. 2d 714, 717-25 (E.D. Va. 2009) (determining that qui tam false marking plaintiff has Article III standing). By way of further example, at least one district court has ruled on summary judgment that knowingly marking products with expired patent numbers evidences a weakened presumption of intent to deceive the public that can be definitively rebutted by evidence of good faith reliance on advice of counsel and out of a desire to reduce costs and business disruption. Pequignot v. Solo Cup Co., 646 F. Supp. 2d 790, 798-800 (E.D. Va. 2009).

We are presently available to provide further information and guidance on this false marking issue.