By James F. Ewing and Patricia Wu, Foley & Lardner LLP
This article is part of our Summer 2010 edition of Legal News: China Quarterly Newsletter, Eye on China.
U.S. patent laws encourage marking patented products, a practice that gives constructive notice to the public and also may prevent innocent infringements and deter potential competition. The marking provisions of the patent statute are within 35 U.S.C. § 287(a), which provides:
Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure to so mark, no damages must be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement must constitute such notice.
Patent marking is an important issue in patent infringement lawsuits. The statutory scheme places the burden of compliance on the patent owner and those licensed to make and sell the patented products. If patented products are inappropriately marked, damages for patent infringement may not be recovered except for the period after the infringer is put on actual notice of the infringement.
Several U.S. Federal Circuit Court decisions have provided interpretations of the requirements of the § 287(a) statute, including:
In the event that the patentee fails to mark the product, the patentee may recover damages by giving actual notice to the alleged infringer, and the damages only accrue from the date of the actual notice and forward. To satisfy the actual notice requirement, a patentee can file an infringement suit, or the patentee can notify the alleged infringer by letter, identifying the patent and the infringing activity at issue and proposing to abate the problem such as through an offer to license.
False Patent Marking
The other side of the coin is false patent marking. The false marking provisions are within 35 U.S.C. § 292, which prohibits the use of a patent mark on an “unpatented article” with the intent to deceive. While unpatented articles refer to articles that are not covered by the marked patent, the federal courts have recently held that a product covered by an expired patent also falls within that category under § 292(a). Thus, when a product is marked by an expired patent, false marking liability may arise if the requisite intent to deceive the public is proven.
According to Federal Circuit Court decisions, the burden is on the party asserting false marking to show, by a preponderance of the evidence, that the accused party did not have a reasonable belief that the articles were properly marked. While markings of expired patents are not likely by themselves sufficient to demonstrate intent to deceive, if the defendant knew of the false marking, it is not enough for the defendant to simply say that he did not intend to deceive.
Since the statute allows a qui tam action whereby virtually any private party can sue and retain half of the penalty, false marking suits have increased in many industries during the past few years. The penalty for false marking is statutory damages of up to $500 per “offense.” In light of a recent Federal Circuit decision (Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295, Fed. Cir. 2009) that each mismarked article is an “offense,” damages under § 292 can be enormous for companies that manufacture millions of products, and changing the marking also can be costly.
Those who counsel clients on patent marking issues should keep their clients informed of the marking and false marking statutes as well as how those statutes are construed and applied by the courts. Patentees and licensees should be advised to comply with the marking requirements before releasing their products into the market. Companies with patented products should be advised to periodically review the marks for expiration and avoid false marking violations. Further, documenting the basis for including the patent in its mark can help a company to negate the intent to deceive if it is accused of false marking.