False marking applies on a per article basis, not a per decision to mark basisMarch 3, 2010

In Forest Group v. Bon Tool Co., the Federal Circuit held that the false marking statute applies on a per article basis, rather than on a per decision to mark basis. The Federal Circuit reversed the district court, which had imposed a fine of $500 for a single decision to falsely mark a shipment of stilts as patented when they were not patented, and instructed the district court to recalculate the fine based on the total number of stilts that were falsely marked.

More details of Forest Group v. Bon Tool Co. after the jump.

The patent in suit, U.S. Patent No. 5,645,515, relates to stilts of the type that are used in construction and painting. All of the independent claims of the '515 patent require a "resiliently lined yoke." The district court construed the term "resiliently lined yoke" to require a resilient lining that is distinct from the yoke itself. On August 3, 2007, the district court granted summary judgment of non-infringement because the defendant's stilts lacked a lining separate from the yoke. In a separate lawsuit against a different alleged infringer, a different district court had interpreted the resiliently lined yoke language in a nearly identical manner. On November 15, 2007, that other district court also granted summary judgment of noninfringement based on the allegedly infringing article not having a resilient liner that was separate from the yoke.

The patent owner's stilts also lacked a resilient lining that was separate from the yoke. The district court in the case at hand determined that as of November 15, 2007 (the date of the summary judgment in the second previous case) the patent owner knew that its stilts were not covered by the '515 patent. It further found that the patent owner placed at least one order for additional stilts after November 15, 2007 that it marked with the '515 patent number. The court assessed the patent holder a $500 fine for a single offense of false marking.

The defendant appealed the district court's award of a penalty for a single violation of the mismarking statute, as opposed to an award for each article that was mismarked. The statute in question is 35 U.S.C. § 292(a), which states in relevant part:

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

The Federal Circuit determined that the plain language of the statute requires that the penalty be imposed on a per article basis. The Federal Circuit reasoned that the offense was defined as marking any unpatented article, and that it requires a fine for every such offense. In particular, it relied on the language that prohibits false marking of "any unpatented article," and imposes a fine for "every such offense."

The Federal Circuit distinguished this case from a line of cases exemplified by London v. Everett H. Dunbar Corp., 179 F. 506 (1st Cir. 1910), which held that the false marking statute should be interpreted to impose a single fine for a continuous false marking. The Federal Circuit noted this line of cases was decided at a time when the false marking statute set a minimum penalty per occurrence, rather than a maximum penalty per article as does the current statute. The policy concern of the London line of cases was that huge fines could be quickly accumulated if the minimum fine was assessed for each article. That concern does not exist when the enumerated fine is a maximum, however. Furthermore, limiting the fine to $500 for falsely marking numerous articles based on a single decision to mark "would eviscerate the statute" because it would amount to a trivial fine in high volume and high value situations.

The Federal Circuit acknowledged that interpreting the penalty of § 292 to apply on a per article basis might encourage a cottage industry of false marking litigation by plaintiffs who have not suffered any harm. However, the court was not troubled by this, because it is consistent with the purposes of a qui tam statute such as § 292. The Federal Circuit also specifically noted that in the case of inexpensive massed produced articles a penalty of a fraction of a penny per article may be proper.

The Federal Circuit also refused to overturn the district court’s ruling that the patent owner lacked the required knowledge that the articles were not patented prior to the summary judgment ruling in the case against the third party. Therefore, despite a similar summary judgment ruling in the case at hand that predated the summary judgment date in the other case, only the articles that were marked after the date of the summary judgment in the other case were subject to the fine for false marking.

Based on this case, it is clear that the false marking statute applies on a per article basis rather then on per decision to mark basis. It also appears from this decision that the Federal Circuit will be highly differential to a district court's determination of whether and when the requisite knowledge that the marking is false exists. The case does not address how false marking that occurs in advertisements, as opposed to on the articles themselves, will be counted.

To read the full decision in Forest Group v. Bon Tool Co., click here.

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