More False Marking: Forest Group v. Bon Tool

The Forest Group v. Bon Tool

A company that falsely marks or advertises a product as patented "for the purpose of deceiving the public" can be held liable to the government for "not more than $500" for each offense. 35 USC 292. The statute gives standing to "any person" to sue and collect one-half of the award.

Forest Group originally sued Bon Tool for infringement of its patent on stilts used primarily in construction work such as hanging drywall.   Forest's claims were dismissed on summary judgment for lack of infringement.

Based on the court's claims construction, It turns out that Forest Group's stilts are not covered by its own patent either. You see, the asserted patent requires "a resiliently lined yoke" but Forest Group's products (marked as patented) do not include that element.

The court found a false marking elements were met, but refused to find false advertising under Section 43(a) of the Lanham Act because Bon Tool did not prove that the deceptive marking was "likely to influence the purchasing decision" of consumers.

On damages, the court awarded only $500 (with $250 going to the government) because Bon Tool could point to only one factory-order of marked products after Forest Group had "knowledge" that its stilts were not covered by the listed patent.

"That single decision constitutes a single offense for purposes of calculating damages under § 292. The Court assesses a penalty in the amount of $500.00 against Forest pursuant to § 292(b)."

The case is on appeal at the Federal Circuit. Patent Attorney Paul Hletko filed an amicus brief in that appeal arguing that damages should be applied on a per-article basis. Hletko's company Heathcote Holdings sued Church & Dwight for false marking of its Mentadent products.

• District Court Decision 282158.pdf
• Hletko Brief Brief 07-11-09 235833.pdf

Comments

[Paul F. Morgan]

Thanks! I hope that others impacted by this now-important issue wake up to the fact that this CAFC panel may decide this issue without any amicus input from them before any of their own cases get there?

[6]

"http://techdirt.com/articles/20090710/0340345512.shtml#comments"

In soviet russia you fine yourself.

[Ken Brooks]

I must say that I ignored the false marking statute for years once I discovered that courts took the teeth out of it much like they did the Federal Tort Claims Act. However, upon revisiting the statute and in light of my understanding of Unfair Competition and Anti-trust, it appears to me while one may not garner much monetarily in light of an action under the false marking statute . . . it may be a keystone to a successful complaint of Unfair Competition and Anti-trust. False marking is fairly easy to prove. Thus, it would appear once that proof has been established all that is left to do in the Unfair Competition and Anti-trust actions is to determine damages. Any thoughts on this?
Ken Brooks

[Fred Smith]

I must say that a decision like this might help to control such activities to a great extent. It is having the right kind of deterrent effect on others who may get involved in such activities. In my opinion, if the person is found guilty in doing such activities a couple of times then stringent action is required to be taken.

[Quotidian Dude]

Fred

You're not coming across. By "such activities" do you mean the false marking or filing the qui tam action?

We're talking civil action here, as I understand it. Where is there a finding of guilt? Besides if the defendant gets a $500 penalty for falsely marking 5 million products, isn't that encouragement to keep on falsely marking?

Does anyone know of any recent significant recoveries for one of these qui tam suits? What about a retailer who sells products that the retailer knows are falsely marked?

[Ken Brooks]

Hey Dude: (sorry always wanted to appropriately use that line in a blog)
If I understand the law of false marking correctly, there is only one penalty of $500.00 for the 5 million products. I saw another post somewhere that is $500.00 per run of product. Therefore, assuming that individual was correct, were two manufacturing runs required to product the 5 million products, then the suit would be a whopping $1,000.00. That is why I suggested bootstrapping more lucrative business causes of actions based upon the finding of liability for False Marking.
Ken Brooks

[Quotidian Dude]

Ken

I'm out of my depth here, having never brought or defended a marking case, but I agree with you that there's got to be a way to leverage 292 into something worthwhile.

It smacks of fraud: misrepresentation, relied upon by plaintiff to plaintiff's detriment. If plaintiff is a competitor and does not manufacture the product because of the marking, you can see the detriment.

But I can't see a consumer making a fraud case. Does anyone seriously buy a product because it's patented? And if they do and it's not patented does the consumer lose anything?

As to the $500 per unit, etc. This keeps coming up but I don't see a final resolution. It's a good example of another poorly written law, apparently left for the courts to sort out.

[Ken Brooks]

I bet I could make a good Unfair Competition action out of a False Marking case.

[inviting body punches]

Question: when was the $500 figure enshrined into law, and how much would it be in today's dollars?

If it were any substantial sum, that would seem to militate against any "per unit" interpretation.

[hackwriterwriterhack]

Ken Brooks wrote, "False marking is fairly easy to prove."

Is it?

Isn't it a "quasi-criminal" statute? Doesn't that mean the intent element must be proven, not inferred, not "should have known"?

For most cases, I would think proving the intent prong would be difficult.

How many companies do you (question to group, that is) think actually intend to falsely mark their products?

I'd think most often the mis-marking falls into the categories of honest mistake. Or initial correct marking with subsequent product change that takes the product outside the scope, then (due to inertia) no one thinks to go back and change the packaging.

[Noise above Law]

hackwriterwriterhack,

Please see the concurrent thread (False Marking Case Dismissed), especially the link:

http://caselaw.lp.findlaw.com/data2/circs/fed/031464p.pdf

for an exposition on the intent element. Hint - the mark IS the status.

People seem to overlook the simple premise that marking is a regulated activity that has legal requirements. One simply cannot mark without regard to the law.

[hackwriterwriterhack]

Noise, thanks for the link to the Invitrogen CAFC.

I don't think I have argued that one can mark "without regard to the law".

Consider management of a product portfolio encompassing tens of thousands of SKUs, and on the order of 500-1000 different pieces of packaging and labeling artwork.

Some of the packaging artwork, such as for flagship brands, will be updated (and thus reviewed) fairly routinely.

On the other hand, for less "hot" brands (by number, the bulk of your SKUs), no product updates are taking place, so your artwork will not be changed for 5, 10, 15 years. And without a change to artwork, no one looks at it - they just keep having the vendor print the packaging year in and year out.

Meanwhile, patents expire naturally or aren't maintained, products themselves are changed in ways the product developers deem "transparent to the customer" (but maybe not transparent with respect to the patents covering the product), etc. And for the bulk of your product line, no one has looked at the artwork for years.

The case above seems to me to be a special circumstance - the company was actually told by a court that its patent claims did not cover its product, so clearly that had been brought to its attention.

But if the CAFC follows your desire, and/or Hletko's, then I guess companies will start routinely reviewing all their artwork regardless of business need (outside of the patent marking statute). Maybe this will be a good thing.