Will Bon Tool open the floodgates to patent marking trolls?

Intellectual Property and Technology News

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In one of its last opinions of 2009, the United States Court of Appeals for the Federal Circuit may have opened the floodgates for a cottage industry of new litigation to “enforce” the false marking statute – a potential wave of so-called patent marking trolls. The decision is Forest Group Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009).

 

Companies often mark products with patent numbers in order to trigger constructive notice for purposes of seeking damages. Federal law, however, prohibits marking products with a patent number when the product does not fall within the scope of the patent, for the purpose of deceiving the public. This is commonly referred to as “false marking.”

 

The statutory penalty for false marking is a fine of “not more than $500 per offense.” Over the last hundred years, most courts have found that each decision to falsely mark, or each continuation of decisions to falsely mark, is a single offense irrespective of the number of products improperly marked.

 

On December 28, 2009, in the Bon Tool decision, the Federal Circuit overruled the prior decisions and found that the penalty can be up to $500 per article sold.

 

This decision already has spawned new false patent marking litigation by non-practicing entities. While we await two important Federal Circuit decisions on this issue, the next year promises to bring a series of district court decisions as well – on important issues like standing – that will impact the economic viability of this potential cottage industry.

 

To learn more, please visit this page or contact Andrew P. Valentine.