A recent decision by the Federal Circuit in Forest v. Bon Tool substantially altered the way courts calculate the penalty for falsely marking a product as patented. Section 292 of the Patent Act provides that if a party falsely marks a product as being protected by a patent with intent to deceive the public with such marking, any person (including those that are not harmed by such false marking) may sue that party to recover a statutory penalty of up to $500 for each such offense, with the plaintiff keeping half of the collected penalty and the remaining half going to the government. These types of cases are referred to as qui tam actions. In qui tam actions, ordinary citizens are permitted to police a field, initiate an action and keep half of any collected amount.
Prior to the Federal Circuit’s decision in Forest, courts typically imposed a $500 per offense fine. In other words, the fine was typically imposed for each occasion when a party decided to falsely mark articles. Therefore, in many instances, the maximum fine was limited to $500. Now, each offense is defined as each falsely marked article. In other words, if a party sold 1,000 items that were falsely marked, the liability can now be as much as $500,000. As a result, we anticipate that the volume of qui tam lawsuits based on false marking allegations will increase significantly.