The US Patent Act precludes persons and entities from knowingly marking an article as patented or as covered by a pending patent application when the article is not covered by a patent or pending patent application.1 Section 292 provides a private right of action to redress instances of false marking. Anyone – whether directly affected or not – may bring an action for false marking against anyone who marks an article as patented or having a patent pending, without a reasonable belief that the marked article is actually covered by a patent or pending application.2 Because a successful false marking plaintiff shares the proceeds of an action with the US government,3 an action for false marking is essentially a qui tam proceeding.
Under the Patent Act, a party who falsely marks shall be penalized “not more than $500 for every such offense.”4 For the past century, courts typically understood section 292 to require either a single fine regardless of how many articles were falsely marked,5 or a time-based fine for continuous false marking.6 Given the modest amount of the maximum penalty – and the requirement that any recovery be shared with the government – competitors and third parties had little incentive to bring actions under section 292.
The Federal Circuit’s recent decision in The Forest Group, Inc. v. Bon Tool Co.,7 however, interprets the penalty provision of section 292 more broadly. Criticizing prior decisions as rendering section 292 “completely ineffective,” the Federal Circuit held that section 292’s penalty applies to each falsely marked article. In other words, if a widget is falsely marked, each widget made or sold constitutes a separate offense for which a penalty must be assessed. The court reasoned that “these injuries occur each time an article is falsely marked. The more articles that are falsely marked, the greater the chance that competitors will see the falsely marked article and be deterred from competing.”8 And, recognizing the paucity of past enforcement proceedings, the court explained that a per article penalty provides financial motivation for private parties to bring claims against false markers.9
The issue of false marking now demands greater attention from both patent owners or licensees that make or sell patented products and from those seeking defenses or counterclaims in response to claims of infringement. Indeed, the greater financial penalty – and consequent reward for plaintiffs bringing false marking claims – will no doubt lead to an increase in those claims and, perhaps, to the creation of a new “cottage industry” of “false marking trolls” on the lookout for potential false marking claims as a source of revenue. Best practices suggest that manufacturers of patented products consult their patent counsel to help establish programs for ensuring that product marking and/or packaging does not run afoul of section 292.