Bobak P. Jalaie

Hefty Fines For False Patent Marking

February 5, 2010

As many patent owners and licensees are aware, U.S. law allows manufacturers of patented products to mark the product with the number of the relevant patent (or simply “patent pending” if a patent has been applied for).  This not only allows a patent plaintiff to collect damages for infringement which occurred prior to the accused infringer receiving actual notice, but also may provide a benefit with respect to the perceived quality of the product.  However, the law also imposes penalties for products which are improperly marked.

Under the statute, a party who falsely marks an unpatented article with a patent number or even the word “patent” may be subject to a fine of “not more than $500 for every such offense.”  35 U.S.C. § 292.  The statute also contains an intent element, requiring that liability be limited to those cases where the false marking was done “for the purpose of deceiving the public.”

Despite the language referring to a penalty “for every such offense,” many courts have interpreted the statute as limiting the total damages to a single $500 fine, even in cases where large quantities of a product are mismarked over a period of time.  This interpretation is based in part on London v. Everett H. Dunbar, a 1910 1st Circuit case evaluating a previous version of the statute.  179 F. 506.  That version, before being revised in 1952, listed the statutory damages as “not less than one hundred dollars” for each offense.  The London court held that the total damages should still be limited to $100, reasoning that a minimum $100 fine for each unit sold would be out of proportion to the product value in cases involving very cheap products.  Courts continued to follow this interpretation, even after the damages provision was revised from “not less than $100” to “not more than $500” per offense.

However, a recent ruling from the Federal Circuit held that each falsely-marked unit of a product may qualify as a “separate offense” when evaluating damages under the statute.  In Forest Group, Inc. v. Bon Tool Co., the court found that the 1952 statutory revision from a minimum to a maximum fine eliminated the policy concerns regarding excessive damages for cheaper products, as courts now have the discretion to award damages based on a much lower per-unit amount.  93 U.S.P.Q.2d 1097 (Fed. Cir. 2009).  The opinion also noted that Congressional intent favored a per-article award based on another statutory provision which permits members of the public to bring false marking actions on behalf of the government and keep half of any proceeds, reasoning that no plaintiff would go to the expense of pursuing litigation in order to split a single $500 award.

Based on the holding in Forest, manufacturers should to be careful to ensure that any product marked with a patent number or “patent pending” is covered by the listed patent and that the patent is still enforceable.  Particular attention should be paid to products which are manufactured in large quantities, as a total damage award for false marking may quickly escalate based on the per-unit calculation.

Please contact us if you would like more information on patent marking.


Trademarks: First Madrid Protocol Affidavits Coming Due

January 26, 2010

In a recent blog update (link below), USPTO Director David Kappos issued a reminder that the first affidavits for extensions of trademark protection issued under the Madrid Protocol will be coming due between February 1, 2010 and February 1, 2011.

The Madrid Protocol is a procedure by which trademark filers may apply for a single international registration which may then be “extended” to individual member countries.  Depending on the circumstances, this can result in significant savings for the registrant when protection in multiple countries is desired.  The United States became a member on November 2, 2003 and subsequently began issuing extensions of protection to qualified applicants on February 1, 2005.

As with traditional US federal trademark filings, registrants using the Madrid system are required to file affidavits of commercial use or excusable nonuse to keep their extensions of protection in force starting with the fifth year after registration.  However, there are some discrepancies between the two systems concerning the statutory procedures and limitations for filing affidavits.  For example, the US federal system allows a six month grace period for filing affidavits.  For registered extensions of protection, however, there is currently no grace period for the first affidavit and only a three month grace period for subsequent affidavits.  Trademark registrants and their counsel need to be aware of these differences, as a missed deadline can result in cancellation.

Director Kappos’ blog post referenced above makes it clear that although the USPTO supports legislative changes to bring the two statutory schemes into agreement, the Office will continue to enforce the filing deadlines as mandated under the current statutes.  Trademark practitioners and registrants would therefore be wise to begin reviewing their portfolios and docketing procedures to ensure that all relevant deadlines are being met for extensions of protection issued starting in 2005.

Link to Director Kappos’ blog entry: USPTO Blog