Analyzing the New Penalties for False Patent Marking

Marshall, Gerstein & Borun Partner Reflects on New Court Decision, The Forest Group v. Bon Tool Company, and its Implications for Patent Marking

Chicago, IL (PRWEB) January 14, 2010 -- Marshall, Gerstein & Borun LLP partner Donald W. Rupert offers insight into a new Federal Circuit Court Case decision, The Forest Group v. Bon Tool Company, that clarifies the potential problems companies may face when marking and listing the patents on their products.

"The implications of this decision will require more due diligence by companies that routinely mark their products with patent numbers," said Rupert. "Extra attention must be paid to ensure that the marked products are covered by the listed patents, as large penalties may result from improper use of a patent marking. For the first time, the Federal Circuit held that penalties are to be determined on a per-article basis, that is, the penalty can be applied for each article that carries an improper patent marking."

The implications of this decision will require more due diligence by companies that routinely mark their products with patent numbers

Extra attention must be paid to ensure that the marked products are covered by the listed patents, as large penalties may result from improper use of a patent marking. For the first time, the Federal Circuit held that penalties are to be determined on a per-article basis, that is, the penalty can be applied for each article that carries an improper patent marking.

This is the key point of the decision - a penalty of up to $500 can apply to each and every article that is falsely marked with a patent marking, not just a one-time penalty amount

May be covered by one or more of the following patents…

Companies should perform a careful review of their patent marking procedures and seek guidance from counsel when deciding whether to mark, or continue to mark, any product, because of the possibility that per-article penalties could result in substantial amounts.

Trolling For Dollars: A New Threat To Patent Owners

Trolling For Dollars - Part 2

In the Forest case, Case No. 2004-1004, the Forest Group sued Bon Tool Company for patent infringement, whereupon Bon Tool counterclaimed, alleging false marking because Forest's product displayed a patent number that did not cover its product. The district court found that Forest had knowledge of the improperly marked product, and the "offense" committed by Forest was the ordering of additional products; a penalty of $500 was assessed for what the court determined was a one-time offense.

The Federal Circuit, however, reversed the district court's determination of the offense, vacated the penalty amount and addressed the nature of the offense. The Federal Circuit ruled that the penalty under the patent false marking statute is to be imposed on a "per article basis."

"This is the key point of the decision - a penalty of up to $500 can apply to each and every article that is falsely marked with a patent marking, not just a one-time penalty amount," Rupert says. "Think of the penalty that would be imposed on the maker of a widely distributed product that had a false patent marking on it, such as a plastic cup or a metal fastener. With hundreds of thousands of incorrectly marked products, the total of the per-article penalty can be enormous. Fortunately, the Court recognized that the statute provides for a maximum penalty of $500 per article and that district court can set a lower penalty if such is warranted."

There are other implications flowing from this decision. Companies who mark their products with patent numbers should:

Ensure that the products are indeed covered by at least one claim of the patent listed in the patent marking. Consider whether the product is covered by at least one claim of each of the listed patents when patent markings include multiple patent numbers. Assess whether or not to remove the patent number of expired patents. Consider whether patent marking language such as "May be covered by one or more of the following patents…" is appropriate.

Finally, Rupert points out that the Federal Court provided no guidance to the district courts on the factors that should be considered in reaching any final per-article penalty amount, meaning that the district court has discretion on setting the exact penalty. "Companies should perform a careful review of their patent marking procedures and seek guidance from counsel when deciding whether to mark, or continue to mark, any product, because of the possibility that per-article penalties could result in substantial amounts."

Additional information can be found in the related articles by Rupert, "Trolling For Dollars: A New Threat To Patent Owners" (http://tinyurl.com/trolling1) and "Trolling For Dollars - Part 2" (http://tinyurl.com/trolling2).

Donald W. Rupert is a partner with Marshall, Gerstein & Borun, LLP and focuses on complex technology matters, having handled more than 100 intellectual property lawsuits in his career. Rupert has also been the lead intellectual property attorney in licensing and corporate transactions with a cumulative value in excess of $15 billion.

For more than 50 years, Marshall, Gerstein & Borun LLP (www.marshallip.com) has maintained an exclusive focus on the practice of intellectual property law. The firm's strengths include patent and trademark prosecution, copyrights, trade secrets, licensing, litigation and technology transfer. Throughout its history, the firm's attorneys have handled many matters that established fundamental principles in patent law, and they have always been at the forefront of intellectual property issues involving the latest developments in the sciences and engineering. Clients include FORTUNE 250 corporations, universities, research foundations, and international companies.

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