Patent Lawsuit Reform Act

October 20, 2010 – Blog Post

The patent statutes provide fines and a private cause of action against those who falsely mark articles to deceive the public into believing that the articles are patented. Section 292(a) states that violators shall pay a maximum fine of $500 “for every such offense.” Subsection (b) then provides that “any person may sue for the penalty,” with half of the penalty awarded to the person bringing suit and the other half awarded to the government. Last December, the Federal Circuit ruled inThe Forest Group, Inc. v. Bon Tool Co. that the statute imposes a $500 fine for each falsely-marked article, overturning a district court ruling calling for a $500 fine for each decision to falsely mark multiple articles. When a company manufactures many falsely-marked articles of a single type, damages consistent with theForest Group ruling would often be orders of magnitude greater than those consistent with the district court’s ruling.

Rep. Bob Latta (R., Ohio) recently introduced bill H.R. 6352, the proposed Patent Lawsuit Reform Act of 2010. Like proposed legislation from Rep. Issa (R., Calif.) and Sen. Leahy (D., Vt.), the proposed Patent Lawsuit Reform Act seeks to prevent excessive false marking lawsuits by requiring anyone bringing false marking claims to have suffered a competitive injury resulting from the alleged violation. If this bill is enacted, it will decrease the number of lawsuits for false marking by shutting out plaintiffs who stand to gain only by collecting their shares of the monetary award.

The proposed Patent Lawsuit Reform Act goes further than the previous bills in addressing excessive damages in these suits by limiting damages to “$500, in the aggregate” for all offenses connected with the falsely-marked articles. This measure would discard the damages rule of Forest Group, decreasing damages drastically in some cases over the current Federal Circuit interpretation, and preventing high monetary awards for those bringing false marking suits. As a result, parties with little or no competitive interest would have little incentive to bring suit, protecting false markers from suit by those looking merely to profit and leaving only truly injured parties to initiate the private component of enforcing the false marking laws.