35 U.S.C. § 292 requires a penalty for falsely marking articles with a patent or patent number on a per article basis, rather than for each decision to falsely mark.

The Forest Group, Inc. v. Bon Tool Company, No. 2009-1044 (Fed. Cir. Dec. 28, 2009)

A district court found that plaintiff falsely marked its products with the number of one of its patents and assessed plaintiff a $500 fine for a single offense of false marking under 35 U.S.C. § 292. Plaintiff was found to have the requisite knowledge that its product was not covered by the patent after a different district court in a related case granted summary judgment of noninfringement for another defendant on November 15, 2007. Defendant appealed, arguing that the district court erred in concluding that plaintiff did not have the requisite knowledge prior to November 15, 2007, and more importantly, that it erred in its interpretation of 35 U.S.C. § 292 when it determined that the statute provided for a penalty based on each decision to mark rather than on a per article basis.

The Federal Circuit first affirmed the finding that plaintiff lacked intent to deceive prior to November 15, 2007. Here, the patent application was written by experienced patent counsel who had an exemplar of the product on which the inventors sought the patent, and neither of the inventors had “strong academic backgrounds” or “in-depth appreciation of patent law.” In other words, there was sufficient evidence that plaintiff genuinely believed its products were covered by the patent prior to the finding of noninfringement on November 15, 2007.

Next, the Federal Circuit found that the plain language of 35 U.S.C. § 292 did not support the district court’s penalty of $500 for a decision to mark multiple articles. Instead, the statute’s plain language requires the penalty to be imposed on a per article basis, as it prohibits false marking of “any unpatented article” and it imposes a fine for “every such offense.” Policy considerations further support the per article interpretation because acts of false marking deter innovation and stifle competition in the marketplace; moreover, these injuries occur each time an article is falsely marked. That the statute provides for qui tam actions further supports the per article construction – penalizing false marking on a per decision basis would not provide sufficient financial motivation for plaintiffs (who would share the penalty with the government) to bring suit. Accordingly, district courts have discretion to assess the per article fine at any amount up to $500 per article, and can therefore strike a balance between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small, inexpensive items produced in large quantities.

A copy of the opinion can be found here.