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False Patent Marks Can Add Up to Big Fines

A little known statute has become a big headache for patent owners, thanks to a recent . Forest Group Inc. v. Bon Tool Co. held that if a company falsely marks a product as patented, it can be slapped with fines of up to $500 per wrongly marked item. That can add up to a hefty amount if a company produces mass market products--such as razor blades--that happen to list an expired patent number.

The December 2009 Federal Circuit decision overturns a century of judicial rulings that imposed much lower fines for violations of the false marking statute, 35 U.S.C. ? 292. Under a line of cases stretching back to the 1st Circuit's 1910 decision, London v. Everett H. Dunbar Corp., the courts ruled that each incorrectly marked product did not constitute a separate violation of the false marking statute. Instead, a continuous false marking--such as the entire production run of a product--amounted to a single offense.

Because Forest Group greatly boosted the fines for violating the false marking statute, and because half the fines in a successful suit go to the party that brought the qui tam action to enforce the statute, many experts expect the decision to provoke a sharp rise in the number of false marking suits.

"The fear is that the case might breed a new breed of plaintiffs who don't care about the patent system or patent marking; they are just looking to bring lawsuits for damages or to shake down companies," says Paul Ackerman, a partner at Dorsey & Whitney.

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