As we reported through our Fish & Richardson
Bulletin and related webinar, the Federal Circuit's
recent decision in Forest Group, Inc. v. Bon Tool Co.
announced a new standard for imposing fines under the false marking
statute, 35 U.S.C. § 292. The ruling supplanted the former
"per occurrence" basis (which considered mismarking of
multiple articles or an entire product line as a single statutory
violation) with a "per article" rubric. Now, parties
found liable for false marking face fines of up to $500 for
each mismarked product.
Two recent opinions implement the Federal Circuit's approach in
Bon Tool, and a third case addresses the applicable
statute of limitations.
Forest Group, Inc. v. Bon Tool Co.,
Civil Action No. H-05-4127 (S.D. Tex. April 27, 2010)
(Memorandum and Order).
On remand from the Federal Circuit, the Bon Tool district
court set out to recalculate false marking fines on a "per
article" basis in this high-profile case. After summarily
denying as speculative plaintiff's request to reopen discovery
regarding the falsely-marked spring-loaded parallelogram stilts,
the court imposed a fine of $180 per mismarked article, even though
the stilts were sold at a price ranging between $103 and $180. The
resulting penalty amounts to $6,840.
The court explained that it set the fine at $180 per article
because "[t]his will deprive [plaintiff] of more than it
received for the falsely-marked stilts, fulfilling the deterrent
goal of § 292's provision." Id. at *5. In
accordance with § 292, $3,420 will be awarded to Forest Group,
as Relator, and the remaining half goes to the United States.
Presidio Components Inc. v. American Technical Ceramics
Corp., No. 08-CV-335-IEG (NLS), 2010 WL
1462757 (S.D. Cal. April 13, 2010).
In a patent litigation case Presidio brought in the Southern
District of California, defendant American Technical Ceramics Corp.
asserted a false marking counterclaim based on Presidio's
monolithic, multilayered capacitors sold for broadband application.
On October 24, 2008, Presidio conceded a mistaken belief that its
products embodied the inventions claimed in the patent but were, in
fact, falsely marked.
The court later granted summary judgment for false marking that
occurred after October 24, 2008, but denied summary
judgment on the issue prior to that date. During trial in
December 2009, the jury found no intent to deceive the public as to
marking that occurred before October 24, 2008.
Post-trial, the court faced two issues: (1) determining the number
of falsely-marked units post-October 24, 2008, and (2) determining
the amount of the fine per unit.
On the first issue, the court found that Presidio shipped
651,675 units of falsely marked products during the relevant time
period. This amount is based on actual and interpolated sales data
pertaining to both marked and unmarked
capacitors, as Presidio referred to the patent at issue in its
advertising for all the products, thus satisfying § 292.
The court then attempted to "strike a balance" and avoid
a disproportionate liability for an inexpensive, mass-produced
article – "by penalizing Presidio at a rate of about
32% of Presidio's overall average sales price of $1.07 per BB
capacitor, the fine is substantial enough to enforce the public
policy embodied in the statute and to deter any similar violations
in the future" without "over-penalizing."
Id. at *42. Specifically, the court adopted a fine of
$0.35 per unit, resulting in a total penalty of $228,086.25 to be
shared equally between the Relator and the United States.
Seirus Innovative Accessories, Inc. v. Cabela's,
Inc., 3-09-cv-00102 (S.D. Cal. April 20,
2010) (Huff, J.).
In another case from the Southern District of California, Judge
Huff applied the statute of limitations on a "per article
basis" as well. Reasoning that "per article" was the
correct approach for assessing the limitations period, the court
rejected the argument that "because Cabela's alleges that
Seirus began falsely marking more than five years ago, [the]
counterclaim is time barred. ..."
Rather, the court interpreted 28 U.S.C. § 2462 to mean that a
finding of false marking under § 292 "requires a fine to
be imposed for every offense of marking any unpatented
article." A new claim for false marking therefore accrues and
resets the limitations period each time a mismarked article is
sold. Accordingly, to the extent the Cabela's false marking
claim is based on markings that occurred before that five-year
cutoff, the claim is barred by the statute of limitations.
If you would like more information on false patent marking, please
visit www.fr.com/falsemarking where you will find our
recent False Marking webinar audio recording and slides.
If you would like to subscribe to our False Patent Marking Alert
service, please visit http://www.fr.com/subscriptions/ .
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.