| News & Articles |
| |  | | Damage Awards Increased for Falsely Marking Products as Patented ©2010, Barry C. Kane, All Right Reserved Another in the Smart StartSM Series. It is common to see “Pat Pend,” or “U.S. Patent X,XXX,XXX” or language of similar import on products. The notice essentially says, “Stay away or face a lawsuit.” Moreover, the notice enhances the patent holder’s ability to recover damages for patent infringement in the event a lawsuit is filed. A December 2009 decision by the United States Court of Appeals for the Federal Circuit in the case of The Forest Group, Inc. v Bon Tool Company et al substantially increases liability exposure to companies producing patented products. Congress recognized that others might abuse the marking of products as protected by patents. False marking deters innovation and stifles competition in the marketplace. If an article within the public domain is falsely marked, potential competitors may be dissuaded from entering the same market. False markings may deter scientific research where the researcher sees a patent notice and decides to forego continued research to avoid possible infringement. False marking can also cause unnecessary investment in design-around costs and costs incurred in analyzing the validity or enforceability of a patent whose number has been marked upon a product a competitor wants to make or sell. These types of injuries can occur each time an article is falsely marked. To prevent abuse, Congress enacted a law that prohibits a company from marking or advertising a product as patented or using any word or number importing the same is protected by patent, for the purposes of deceiving the public. The penalty is a fine of not more than $500 for each offense. The statute explicitly permits members of the public to sue accused abusers on behalf of the government. Citizens who successfully prosecute false marking claims split any damage award with the government. These actions are known as qui tam suits. Over the last several years, there has been a dramatic increase in the number of qui tam lawsuits throughout the United States seeking damages for false marking. In the Forest case, the defendant owned a patent on an improved spring-loaded parallelogram stilt of the type commonly used in construction. The claimed stilt contained a loor platform, a shoe platform, and extendable vertical supports that can be used to move the shoe platform to different heights. The platforms and supports are pivotally connected in a parallelogram configuration. A leg support was attached to the side of the rear vertical support and attached to the shoe platform by a clamp defined as a yoke. The improvements were in the yoke design and the design of a strap attaching the leg support to the user’s leg. The claims required that the yoke contain a liner. The defendant knew how the claims of the stilt patent had been interpreted to require the liner to the yoke. The defendant’s stilt product did not contain the liner for the yoke, yet the products were marked with the defendant’s patent number. The defendant sued an alleged infringer who filed a counterclaim for false marking, alleging the patent did not cover the stilts sold by the defendant because it omitted the yoke padding. The Court of Appeals held the defendant falsely marked the stilts as protected by the patented knowing the claims required the yoke liner. The Court also held the marking was intentional done to deceive the public. The Court also construed the statute as allowing plaintiff to recover up to $500 for each stilt manufactured and sold containing the false patent marking or notice. The importance of this decision is the award is calculated on a per item or piece basis. For manufacturers who mass-produce items, the potential damage award can be in the millions if not more. As a result, it is likely others will strictly scrutinize the marking practices of companies. If you currently are a patent owner, or manufacture product under license of a patent owner, and placing the patent number on a product, it is highly recommended you review the scope of the patent claims to ensure it claims the product. If the product deviates even slightly from the claims of the patent, you may be subject to a qui tam “false marking” suit and exposed to pay out substantial amounts as damages. If you would like additional information about the marking requirements, or have questions concerning patent notices, please feel free to contact Barry Kane by email at bkane@kaneplc.com or Eric Hultman at ehultman@kaneplc.com. You may also call our office at (616) 726.5905 to speak with one of our attorneys. | 
