Federal Circuit Interprets False Marking Statute

Last summer, I wrote about several cases involving allegations of false marking.  These posts can be found here and here.  In one of the cases in particular, Judge Brinkema dismissed the case against Solo Cup to “get [the] case teed up for the Federal Circuit” because she did not know what standard to apply for the false marking statute’s “intent to deceive” requirement.

The Federal Circuit provided some guidance in The Forest Group, Inc. v. Bon Tool Co.    The case primarily deals with interpretation of the “per article” penalty provision of the statute.  The court also provided guidance on the other statutory requirements.

Intent to Deceive

The Federal Circuit cited an earlier decision in holding that

[i]ntent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true.

The court went on to provide what a party must show to prove intent to deceive in the false marking context.

A party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked.

Penalty to be Applied “Per Article”

Section 292(a) of the Patent Act reads as follows:

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word “patent” or any word or number importing the same is patented, for the purpose of deceiving the public . . . Shall be fined not more than $500 for every such offense.

In Forest Group, the district court had interpreted this provision to mean that each decision to falsely mark products constituted an “offense” within the meaning of the statute and fined the patent owner a total of $500 for its decision to continue to falsely mark its products.  The Federal Circuit reversed this part of the district court’s decision.

First, the Federal Circuit noted that the plain language of the statute prohibits false marking of “any unpatented article,” and imposes a fine for “every such offense.”  The court held that each falsely marked article constitutes a separate offense.  Under prior patent statutes, the minimum fine that could be levied was $100 for each offense.  In the 1952 Patent Act, Congress changed this to a maximum of $500 per offense.  This showed congressional intent to charge the fine to a per article basis.

Next, the court noted that charging a single $500 fine would eviscerate the statute.  Such a small fine would hardly be a deterence to falsely marking products.  False marking deters scientific research and causes competitors and the public to make unnecessary investments into the validity and enforceability of patents that do not cover the products upon which they are marked.  The greater the number of articles that are falsely marked, the greater this injury to the public.

Standing to Sue

The patent owner argued that by interpreting the statute to impose a fine of $500 per article “a new cottage industry” may arise where plaintiffs who have suffered no direct injury will simply search for products that are falsely marked and bring lawsuits against the patent owners.  As noted in the earlier posts, we know that this is already happening.

The court held that this is exactly what the plain language of the statute allows.  “Any person” means any person.  Congress clearly intended for members of the public to assist with enforcement of the false marking statute.  Permitting only a $500 fine per decision to falsely mark would not be sufficient motivation for members of the public to provide such assistance.

There may be cases where it is inequitable for the court to fine the patent owner $500 per article, such as when the number of articles is quite large and the balance of the equities would prove to disproportionately harm the patent owner.  The statute provides for such cases as well.  The patent owner shall be fined “not more than $500.”  Thus, the fine need not be $500 for each article.

Conclusion

In the prior cases, district courts seemed to be unclear as to the meaning of the statute and reluctant to enforce its provisions.  This decision by the Federal Circuit should answer most questions concerning false marking so that the cases will not need to be “teed up” for the Federal Circuit in the future.

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One Response to “Federal Circuit Interprets False Marking Statute”

  1. reverse email lookup Says:

    How long has this blog been around? I have been searching for this kind of information for the past week and a half.

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