12 June 2010

US Court of Appeals explains how False Patent Marking can be Prevented

According to Forest Group vs. Bob Tool Company of the Court of Appeals for the Federal Circuit (CAFC) earlier this year, false patent marking with an intent to deceive the public into believing that a product is patented when such is not true is punishable by fine up to USD 500 for each falsely marked product (see e.g. here). A product is falsely marked if it identifies a patent ostensibly covering the product where (i) no such patent exists; (ii) the patent is expired; or (iii) the patent listed does not cover the product.

Now the CAFC has ruled in Pequignot v. Solo Cup  (No. 2009-1547, Fed. Cir. June 9, 2010) that:
  • intent to deceive the public must be proven by a "preponderance of the evidence";
  • marking with an expired patent is false marking, just as marking with a patent that does not exist or which does not cover the product;
  • false marking raises a rebuttable presumption of intent to deceive;
  • the presumption is rebuttable if the manufacturer proves good faith underlying the false marking, e.g. by relying on advice of counsel, delaying the removal of the patent number to avoid costs and business disruption, taking steps to mitigate the false marking.
In the case, as reported here, the defendant’s products were marked with expired patent numbers.  However, before the patents expired, Solo Cup consulted with its patent counsel.  Because the products were produced and labeled with molds with molds that would be expensive to replace, the counsel advised Solo Cup that it would not need to engage in wholesale replacement of the molds immediately upon patent expiration.  Instead, the attorneys advised Solo Cup that it could simply replace the molds (with proper patent markings) as they wore out or became damaged in the ordinary course of business.  The CAFC found this fact to be “credible evidence that [Solo Cup's] purpose was not to deceive the public.” 

The court also ruled that a marking stating that "this product may be covered by one or more U.S. or foreign pending or issued patents" combined with a further indication such as "for details, contact [company]" is not a false marking that would reflect an intention to deceive the public if the statement is true, even if all the products so marked were not covered by a listed patent. The court accepted the evidence that such marking is not deceitful, especially where the alternative is inconvenient from a logistical and financial perspective.

The decision clarifies that if products are marked by a phrase such as "may be covered by the following patents [patent nos.]", it is well advisable to add "for details, contact ... [company name, address and or web site]".

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