False Patent Marking Suits Surge in Wake of Forest Group Decision

Erin Coe of Law360.com reports that 114 false patent marking claims have been filed in federal court since the Federal Circuit’s December decision in The Forest Group Inc. v. Bon Tool, 590 F.3d 1295 (Fed. Cir. 2009).

In Forest Group, the Federal Circuit held that liability for false patent marking under 35 U.S.C. § 292 applies to each instance of false marking, and not generally to the decision to falsely mark.  In other words, each article falsely marked as being covered by a patent that has expired or is otherwise inapplicable to the article “constitutes an offense” under the statute, and is subject to a fine of up to $500.

Though the per article fine is still a matter of discretion within the district courts, the potential for significant fines in the aggregate has incentivized the filing of claims under the statute.  Previously, there was little such incentive, as § 292 had been interpreted in London v. Everett H. Dunbar Corporation, 179 F. 506 (1st Cir. 1910), to impose a fine not for each instance of false marking, but for the singular decision to falsely mark.  London effectively created a $500 ceiling on recovery, even in cases where millions of falsely marked products had been distributed.  In Forest Group, however, the Federal Circuit cited policy and the plain language of the statute in declaring that § 292 “clearly requires a per article fine.”

As Coe reports, it is possible that courts will establish fractional penny fines in cases where falsely marked products have been mass-produced and distributed.  Even where fines are of the fractional penny magnitude, however, recovery could be substantial.  For instance, in Pequignot v. Solo Cup, 640 F.Supp.2d 714 (E.D. Va. 2009), originally filed in the Eastern District of Virginia, defendant Solo Cup admitted to having falsely marked and distributed 21 billion cup lids, though it denied having done so with an intent to deceive the public.  The EDVA granted summary judgment in favor of defendant Solo Cup, and plaintiff Matthew A. Pequignot appealed.  If the Federal Circuit determines on appeal that Solo Cup is indeed subject to fines under § 292 and Forest Group, recovery would be a product of the 21 billion lids.

We previously blogged about the Solo Cup case in June 2009 and July 2009, prior to Forest Group.

The currently pending Patent Reform Act purports to eliminate standing under § 292 where a party has not suffered a “competitive injury.” Such a change would apply both prospectively as well as to any pending cases, and could have a chilling effect on the numbers of § 292 claims filed thereafter.

Dennis Crouch recently posted a snippet from a press release by the Public Patent Foundation, citing the benefits of § 292 qui tam suits to both citizens and government, and cautioning that the Patent Reform Act’s amendment “would eliminate an important method of protecting the public from false and deceitful statements.”