Patent Marking or mismarking; It's getting more alarming, Recent article on Patent marking risks, there is more news Options

[Andy McKinney]

In a recent issue of ALMA News, I addressed a recent Patent Case with important implications for those who mark goods with "patent pending" or with patent numbers.

We have some significant new developments to report.

To summarize the topic for you here, this past December, the US Court of Appeals for the Federal Circuit (CAFC) rendered a decision which should motivate everyone to carefully review how their products are marked, because the downside risk of mis-marking goods or packaging has effectively just been made much more severe. In Forest Group, Inc. v. Bon Tool Co., the Federal Circuit held that penalties (i.e., a fine of up to $500) for violation of 35 U.S.C. § 292 (i.e., on false marking), should be imposed on a “per article basis.”

Thus, each mis-marked article (e.g., each loudspeaker driver) brings, potentially, a $500 fine. So ten drivers brings a risk of $5000, etc. These numbers add up dramatically, as does the risk.

When we say “potentially”, don’t be too quick to dismiss the risk. This Forest Group case was appealed and, on remand, the District Court has just awarded a penalty of $180 per tool (per article), meaning that the District Court, after having studied the Federal Circuit’s guidance, fined the mis-marking tool seller more money, per tool, than the seller earned in gross receipts.

We can confirm that several self-interested “patent marking whistle blowers” are actively seeking out and then suing companies over “False Marking.” In the few weeks since the Forest Group decision discussed earlier, the patent community is reporting on a number of recently filed cases. Some of these suits were filed by what appear to be newly created entities organized solely for this kind of litigation.

The newly filed cases include:

- Hollander v. Etymotic Research, Inc., No. 2:10-cv-00526-PBT (E.D. Penn.) (complaint filed Feb. 5, 2010), and
- Patent Compliance Group, Inc. v. Activision Publ'g, Inc., No. 3:10-cv-00288 (N.D. Tex.) (complaint filed Feb. 12, 2010), among many others.

Traditional manufacturers are also filing these suits. Last week, a well known sound equipment manufacturer filed a claim against another:

- Peavey Electronics Corp/ v. Behringer Commercial Offshore De Macau Limitida, Behringer Holdings (PTE) Ltd., Behringer USA, Inc. (et al), Music Group Ltd and Red Chip Company Ltd, No. 2-10-cv-02064 (N.J.) (filed 4/23/2010).

It remains to be seen how this change in the law of patent marking will play out, but the clear message here is that you should carefully review your product labels, web content and other marketing materials to ensure that you have not left stale and no longer accurate patent related information on those materials.