Giving With One Hand, Taking Away With The Other

Submitted by patentadmin on Thu, 12/31/2009 - 20:23

“Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word ‘patent’ or any word or number importing that the same is patented, for the purpose of deceiving the public … Shall be fined not more than $500 for each such offense.” 35 U.S.C. §292(a)

“… [a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” 35 U.S.C. §292(b)

These two statutes, taken together, seem to create a happy hunting ground for justice-seeking individuals (politically correct term for “trolls”) who can sue a corporation for mis-marking one or more of its products and keep half of the recovery. The only hang-up is the meaning of the phrase “each such offense.” Assume, for example, a production run of 10,000 widgets which are mis-marked. Is this one offense – one production run – or 10,000 offenses? If the former, the potential recovery is no more than $500, of which half goes to Uncle Sam. Clearly, no self-respecting troll – an oxymoron if ever there was one – would be interested. If the latter, however, the potential recovery is $5 MILLION, a much more enticing amount.

A century ago, the First Circuit Court of Appeals (this was before the creation of the C.A.F.C.) held that the false marking statute should be interpreted to impose a single fine for continuous false marking. Over the years, a number of district courts followed this precedent. Well, no more! The C.A.F.C. has now ruled that EACH MISMARKED ARTICLE is an “offense.” (Forest Group, Inc. v. Bon Tool Co.)

While settling an arcane issue in patent law, this decision is not likely to initiate a troll stampede to the courthouse. The appellate court went on, “[t]his does not mean that a court must fine those guilty of false marking $500 per article marked. The statute provides a fine of ‘not more than $500 for every such offense’ [emphasis in the original]. In the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty.” A hint like that is likely to dampen the spirits of even the most aggressive troll.

THE LESSON TO BE LEARNED: Suits for false marking are not the key to riches.

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