Liability for False Patent Marking

This blog post has been updated due to the America Invents Act enacted September 16, 2011.  See Virtual patent marking and false patent marking post.

The benefit of marking a product with a patent number is that damages accrue upon infringement and not upon actual notice of the patent.  However, if the product is incorrectly marked with patent pending or an incorrect patent number then the patentee may be liable for false patent marking.  Recent case law has increased the potential liability for falsely patent marking.

Under the false marking statute (35 USC 292), a patentee may be liable up to $500 per falsely marked product.  This means that the maximum potential liability for 1000 units falsely marked is $500,000.  Certainly, the maximum potential liability is large especially in light of the potential profitability of lower cost items.  In Bon Tool, the Court clarified that the potential liability under the statute is a maximum amount and not a floor which can be adjusted by the court.  Nonetheless, the potential for such large liability should be considered when developing a patent marking policy.

In Pequignot v Solo Cup Company, 2009-1547 (June 10, 2010), the Court focused on the “intent” required for liability under the false marking statute.  False patent marking liability arises when a product is falsely marked as patent pending or patented and the patentee had the “intent” to deceive.  Solo cup received a patent on its lid for cups.  The patent number was embedded in the molds for making the cup lids.  After the patent expired, the patent number still remained on the cup lids since the molds for the cup lids lasted longer than the patent term.  Under current case law, falsely marking a product as patented with “knowledge” creates a rebuttable presumption of an intent to deceive.

In this case, Solo Cup was able to rebut the presumption based on opinion of legal counsel.  When Solo Cup discovered that the cup lids were marked with an expired patent, Solo Cup sought the advice of its counsel.  Based on specific advice of its legal counsel, Solo Cup decided to delay replacement of the molds containing the expired patent number and to remove the expired patent number as the molds were being replaced during normal wear and tear.  The Court held that since the Solo Cup did not provide mere blind assertions of its good faith but its counsel’s advice and that its intent was not to deceive but to reduce cost and business disruption, Solo Cup did not have the intent to deceive.  Thus, Solo cup was not liability under the false patent marking statute.

Based on the foregoing, it is important to seek the advice of patent counsel in determining when and how to mark your products with one or more patent numbers or patent pending.

Should you have any questions, please feel free to contact me.

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James Yang is a patent attorney whose practice encompasses all areas of intellectual property law including patents, trademarks, copyrights and trade secrets.

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