False Patent Marking
False patent marking is a legal statute with a qui tam right. Under this qui tam right, any individual can file a case against a company for false patent marking on behalf of the government. If the company is found guilty, the individual is paid half of the damages, and the US government gets the other half.
Patent Marking is the act of printing the corresponding patent number straight onto a product. The manufacturer of a product will do this to dissuade potential infringers. This marking makes it possible for patentees to take legal action against infringers and ultimately collect damages. Likewise it lets the buyer know that the product is patented; therefore the design is solely that company’s property.
False patent marking is the act of printing a patent number that either is expired or does not pertain to that specific product. Likewise, false patent marking occurs when a product that has no patent pending is marked as “patent pending.” Under the 35 U.S.C. 292, none of these conditions are cause to bring action unless the false patent marking was done “for the purpose of deceiving the public.”
The false patent marking law, section 292, has remained nearly unchanged since the Patent Act in 1870. The most notable change is that the act formerly demanded a minimum of $100 per offense. At the conclusion of London v. Everett H. Dunbar Corp. (1910), it was decided that “the statute does not prescribe a distinct penalty for the offense of marking, and that, therefore, where the marking is all done on the same day at the same time, so that it is practically a single, continuous act… though more than one article may have been marked.” The decision was focused mainly on cases in which the products being marked were of very little value, meaning that an itemized punishment would be incredibly disproportionate to the profits gained. Until recently this was the common application of the law.
In contrast, section 292 now states the penalty cannot be “more than $500 for every such offense.” With this transformation came a change of ideas in punishment. If the retribution was merely a fraction of a penny per product marked, then every product could count as an offense. Then in December of 2009, The Forest Group Inc. vs. Bon Tool Co. set a new precedent. The Forest Group had sued Bon Tool Co. two years prior for false marking because Bon Tool Co. stopped buying products from them and instead bought Chinese imitations but still stamped the same patent number on the items. Although the Forest group lost this case, they appealed it constantly until Bon Tool Co. sued them back for false marking. Apparently The Forest Group had been stamping their products with an expired patent number. It was during this case that the judge reevaluated the assessment of damages, concluding that statute 292 specifies that marking the patent number on an object constitutes one offense, and damages should be paid per article stamped. The final punishment was $180 per product created, the selling price of the object in question.
Since this decision, the courts have been inundated by false marking cases, totaling 17% of all patent cases. In the four months following the decision, 175 false patent marking cases were filed. When asked to justify the Bon Tool decision the judge emphasized the hazards of false marking, including that it deters competitors from entering the field, it slows innovation, and can force competing companies to waste money on design in an attempt to avoid patent infringement. Likewise, he cited the qui tam right as proof that the congressional stance on the matter was quite serious. In addition, the $500 damage per occurrence would not be enough reward to incite qui tam action from private individuals. Qui tam is an important and underused provision of the false patent marking law.