After remand from the Federal Circuit, the United States District Court for the Southern District of Texas ruled that, due to the penal nature of the false marking statute, the appropriate penalty for marking a product with an incorrect or invalid patent number should be assessed at the maximum price the articles were sold, rather than the profit margin or economic benefit to the defendant. Forest Group, Inc. v. Bon Tool Co., 2010 U.S. Dist. LEXIS 41291 (S.D. Tex. Apr. 27, 2010). In Forest Group, the district court imposed a fine of $180 per mismarked article, even though the stilts were sold at a price ranging between $103 and $180. The court noted that, by basing the penalty on the highest sold price, the wrongdoer would be deprived “of more than it received for the falsely-marked stilts, [thereby] fulfilling the deterrent goal of § 292’s fine provision.”
Prior to remand, the Federal Circuit set the stage for the increased damages calculation. Previously, courts calculated damages against false marking defendants on a "per decision" basis. In December 2009, the Federal Circuit distinguished a century’s worth of precedent and declared that every article falsely marked is subject to a penalty up to the maximum fine. In other words, the maximum fine for violation of the federal false marking statute should be applied on a per article basis, rather than the “per decision” basis applied by a majority of district courts in the past. See Forest Group v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009).
Parties have not hesitated to take advantage of the Federal Circuit’s decision. In fact, since that decision was rendered there have already been about 140 false marking claims filed.
Patent holders should also be aware that more change is likely. The Federal Circuit has already heard oral argument on the Pequignot v. Solo Cup case, with an opinion expected within the next few months. Central issues in that case include liability for marking products with expired patents, the relevant burden of proof for Section 292 cases, and what type of evidence is required to overcome a presumption of intent to deceive when knowingly engaging in false marking.
In light of this shift in jurisprudence, patent holders should take steps to mark their products with appropriate patent numbers, and, in appropriate circumstances, should obtain opinions of counsel when doing so. Businesses should also take care to inspect their products and make certain that expired or non-applicable patent numbers have been removed.