False Marking
To help clients understand and prepare for the potential impact of changes in false marking law, Banner & Witcoff offers the following content as a resource to monitor and analyze developments in false marking. Background
On Dec. 28, 2009, the Court of Appeals for the Federal Circuit (CAFC) handed down its decision in Forest Group, Inc. v. Bon Tool Co, in which the Federal Circuit held that the false marking statute "requires" a fine of up to $500 for "each article." Under this reading of the statute, just one act of false marking can potentially lead to devastating consequences. This Federal Circuit decision ushered in a wave of false marking cases.
Since the Forest Group decision, the CAFC has handed down three major decisions on the issue of false marking, Pequignot v. Solo Cup Co., Stauffer v. Brooks Bros. Inc., and In Re BP Lubricants USA Inc. In Pequignot v. Solo Cup Co., the Federal Circuit again analyzed the false marking statute, this time finding that marking a product with either an expired patent or with the phrase “may be covered by one or more patents,” can give rise to false marking liability. The Court also provided a stronger defense to accused false marking defendants within the “intent to deceive” prong under the test for false marking.
In Brooks Brothers, the Court examined the issue of false marking from yet another angle—whether an individual plaintiff has constitutional standing to bring a false marking suit. The Court answered this in the affirmative.
Importantly, although the Court found that an individual plaintiff has standing to bring a false marking lawsuit, the Court nevertheless indicated that it would be potentially receptive to other defense arguments. Indeed, the Court explicitly left open for another day the issue of whether the false marking statute is constitutionally sound.
On March 15, 2011, the U.S. Court of Appeals for the Federal Circuit issued a precedential order in the case In Re BP Lubricants USA Inc., creating a heightened pleading standard for false marking cases. The Federal Circuit directed a district court to dismiss a complaint against BP under section 292 of the Patent Act. The complaint asserted that BP marked its Castrol products with the number of a patent that had expired and that BP knew or should have known the patent expired.
The CAFC ruled that false marking claims must meet the requirements of Rule 9 (b) that “a party must state with particularity the circumstances constituting fraud or mistake.” The court said the complaint “provided only generalized allegations rather than specific underlying facts from which we can reasonably infer the requisite intent . . . .”
This order creates a heightened pleading standard and will have a significant impact on many pending false marking cases.
Though the courts have imposed limitations on false marking claims, Congress may soon step in to redefine the current statute. On January 7, 2011 the “Patent Lawsuit Reform Act of 2011,” a bill “To amend title 35, United States Code, to modify the penalty for false marking, and for other purposes,” was introduced in Congress. This bill, H.R. 243, is identical to H.R. 6352, the false marking bill introduced last Congress.
On March 14, Rep. Issa (R-California) introduced a new bill on patent false marking, H.R. 1056. The bill would prohibit fines against a person or company that marked a product with an expired patent number as long as there was “no change in the manufacturing or production process.”
Banner & Witcoff will continue to monitor and provide updates on significant developments in false marking law.
Court Documents & Pending Legislation
- Forest Group v. Bon Tool – Federal Circuit Decision
- Pequignot v. Solo Cup – Federal Circuit Decision
- Stauffer v. Brooks Brothers – Federal Circuit Decision
- In Re BP Lubricants USA Inc. – Federal Circuit Decision
- Status and full text of H.R. 243
- Status and full text of H.R. 4954
- Status and full text of H.R. 6352
- Status and full text of H.R. 1056
Media
Banner & Witcoff attorneys are available to answer questions and discuss false marking. Media inquiries should be directed to Colleen Strasser at (312) 463-5465 or cstrasser@bannerwitcoff.com.
related news
12.01.2010 | Binal J. Patel and Bradley C. Wright discuss the top IP issues of 2010 in InsideCounsel magazine
09.08.2010 | Joseph J. Berghammer comments on the Stauffer v. Brooks Brothers, Inc. decision in IP Law360.
09.01.2010 | Patent Law Update: Stauffer v. Brooks Brothers
06.10.2010 | Patent Law Update: Pequignot v. Solo Cup
related library documents
