In what promises to be a financial wake-up call for individuals and companies that mark products with a patent number or “patent pending” label, a recent Court interpretation could multiply the penalty for illegal marking.
And with the proliferation of patent marking trolls — those who troll around, looking to make false marking claims, whether or not they are damaged by them — it’s much less likely that such infringement will simply go unnoticed.
Not after a ruling by the Federal Circuit in Forest Group, Inc. versus Bon Tool Co., a patent-marking case that established more of a financial deterrent to faulty patent marking. It wasn’t so much the facts of the case that are relevant here, but how penalties are applied, as the fine for false marking is now based on the total number of falsely marked articles, up to $500 per product.
Under previous interpretations, the fine was $500 overall for each incident. “It wasn’t much of a deterrent if you’re only assessing by one decision, given the amount of damage that was done by flooding the market with these [falsely marked] products,” noted said attorney Kristine Strodthoff of Whyte Hirschboeck Dudek, who has written about the ramifications of the Bon Tool case. “It’s more of a deterrent if it’s assessed on a per-article basis.”
Indeed, the legal services organization Mayer Brown is warning that 2010 may go down in history as “the year of the false patent-marking suit,” as scores of such suits have hit the courts thus far.
Trolling for Trouble
With the predicted cottage industry of patent-marking suits well underway, IB spoke to Strodthoff about how businesses — whether they are patent holders, licensees, or defendants in a lawsuit — can protect themselves.Patent trolls could be any individual or entity, including a business, and they are looking to nab anyone with slipshod patent management.
According to Strodthoff, patent owners are supposed to be marking products to put people on alert that they have a patent on the product, but the product must be covered by the claims of the patent. “You can get a patent on something, but if your product is missing an element of the claim, as in the Bon Tool case, it won’t be covered,” she said.
In this case, Forest Group, Inc. was missing a particular feature — a “resiliently lined yoke” — that was required in the claim for its patent on S2 construction stilts. Therefore, the stilts were not covered by the patent, and they were falsely marked.
The false marking statute prohibits the use of a patent number in connection with a product that is not covered by the patent. It also prohibits the use of the “patent pending” label when there is no application pending.
Violation requires intent to deceive the public, and since Forest Group, Inc. knew the S2 stilts were not covered by the patent as the result of another court decision, and continued to make the stilts with the patent number, it was vulnerable to a counterclaim.
That’s exactly what Bon Tool did when it was charged with infringement — it countersued for false marking. Strodthoff advised plaintiffs in a patent marking case to check for the possibility of filing a counterclaim against the patent holder for falsely marking its products. There is a five-year statute of limitation for false marking, which allows an adversary to reach back to past false marking offenses.
Her advice for licensees of patented products is along the lines of “watch your back.” To protect themselves, she suggests that licensees get an indemnification by the patent holder. “You’re a licensee, so you want an indemnification against any charge of false markings,” she counseled. “If they [patent holder] are telling you that you need to mark the product as part of the license, you want to be sure that you are not going to be charged with a false marking, and that they are assuring that the product you’re licensing is actually covered by the claims of the patent.”
Expiration Date
More recently, in Pequignot v. Solo Cup Company, the Federal Circuit Court addressed marking a product with an expired patent number. It’s instructive because Solo Cup was able to rebut the presumption of intent to deceive by showing that, even though it knew the marking was inaccurate, it did not have the required intent to deceive the public.
According to Strodthoff, Solo Cup showed that it developed a course of action to gradually replace the molds for stamping the expired patent numbers out of a desire to reduce costs and business disruption. “The court found Solo’s action was based on a good faith belief that the action was appropriate and lacking in deceptive intent,” she noted.
A patent generally lasts for up to 20 years, assuming the patent holder has paid the required maintenance fees at prescribed intervals. A patent attorney can review patented products, which is especially important if they have been modified and, as a result, are no longer are covered. Repeated Strodthoff: “You need to make sure that the product is actually covered by what’s claimed in the patent.”
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