Forest Group Decision Triggers a Flood of Patent False Marking Suits

23 March 2010 Publication
Authors: Cynthia J. Rigsby

Legal News Alert: IP Litigation

Observers’ worst fears about the Federal Circuit’s recent decision in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), appear to be coming true. As discussed in our December 30, 2009 Client Alert — available at http://www.foley.com/publications/pub_detail.aspx?pubid=6695 — this decision made patent false marking lawsuits much more lucrative. Less than three months later, plaintiffs have filed more than 100 lawsuits against at least 140 defendants in industries running the gamut from pharmaceuticals and software to cleaning products and crayons. Everyone who sells a product marked with a patent number needs to take notice.

The false marking statute, 35 U.S.C. § 292, prohibits parties from falsely marking products or packaging with inapplicable patent numbers. The statute permits plaintiffs to sue on behalf of the government and keep 50 percent of the proceeds for themselves. Before Forest Group, such suits were rare because of court decisions limiting the total recovery under the statute. In Forest Group, the Federal Circuit made such suits more enticing, concluding that § 292 must be interpreted to impose a penalty of up to $500 for each falsely marked article rather than for each decision to mark any number of articles. Other decisions have suggested that products marked with expired patents can be deemed to fall under § 292. Thus, under Forest Group, a company that marks 10,000 products with an expired patent is potentially subject to a $5 million penalty.

It did not take long for enterprising plaintiffs to take advantage of this significant change in the law. False marking suits have now been filed in at least 23 states, and more are being filed every day. This has prompted legislative proposals to amend the statute to substantially limit these suits, perhaps even retroactively. Regardless of the ultimate outcome of these efforts, it is no exaggeration to say that everyone who marks a product with a patent needs to know about the Forest Group decision and evaluate their marking practices.

Members of Foley’s False Marking Team recently presented a Web conference on the topic of false marking, and materials from this event are available online at   http://www.foley.com/news/event_detail.aspx?eventid=3224.

 


Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:

Larry Shatzer
Chair, IP Litigation Practice
202.672.5568
lshatzer@foley.com

Cynthia Franecki
Vice Chair, IP Litigation Practice
414.297.5580
cfranecki@foley.com