Forest Group v. Bon Tool.

The plain language of 35 U.S.C. § 292 requires courts to impose penalties for false marking on a per article basis.

(Fed. Cir. 2009, 09-1044)

William Armstrong and Joe Lin are the named inventors on U.S. Patent No. 5,645,515 (the ’515 patent), which claims an improved spring-loaded parallelogram stilt of the type commonly used in construction. Mr. Lin and Mr. Armstrong each formed a company for selling stilts covered by the ’515 patent. Mr. Lin created Forest, and Mr. Armstrong created Southland Supply Company (Southland). Southland sold stilts to Bon Tool, a tool reseller. Bon Tool later stopped purchasing from Southland and started purchasing stilts from a foreign supplier, Shanghai Honest Tool Co., Ltd. (Honest Tool), which manufactured identical replicas of Southland’s stilts without a license from Forest.

In December 2005, Forest sued Bon Tool for infringement of the ’515 patent. Bon Tool counterclaimed alleging false marking pursuant to 35 U.S.C. § 292, among other claims. The district court found that Forest falsely marked its S2 stilts with its ’515 patent number after November 15, 2007, because the stilts did not have a separate lining as required by the court’s claim construction, and assessed Forest a $500 fine for a single offense of false marking. Bon Tool appealed to the CAFC, arguing that the district court erred in its interpretation of the false marking statute, 35 U.S.C. § 292, when it determined that the statute provided for a penalty based on each decision to mark rather than on a per article basis.

The two elements of a § 292 false marking claim are (1) marking an unpatented article and (2) intent to deceive the public. See Clontech Labs. Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005). “Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true.” ld. (citing Seven Cases of Eckman’s Alterative v. United States, 239 U.S. 510, 517–18 (1916)). A party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked. Id. at 1352–53.  An assertion by a party that it did not intend to deceive, standing alone, “is worthless as proof of no intent to deceive where there is knowledge of falsehood.” Id. at 1352.

Section 292 provides a civil penalty for false marking of goods. It states in relevant part:

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public . . . Shall be fined not more than $ 500 for every such offense. 35 U.S.C. § 292(a) (2006).

The CAFC held that  plain language of the statute did not support the district court’s penalty of $500 for a decision to mark multiple articles. Instead, the statute’s plain language requires the penalty to be imposed on a per article basis. The statute prohibits false marking of “any unpatented article,” and it imposes a fine for “every such offense.” The statute requires a fine to be imposed for every offense of marking any unpatented article. The act of false marking is the offense punished by the statute. The phrase “for the purpose of deceiving the public” creates an additional requirement of intent but does not change the relationship between the act of marking an article and the penalty.

Accordingly, the CAFC concluded that the statute clearly requires that each article that is falsely marked with intent to deceive constitutes an offense under 35 U.S.C. § 292, and vacated the $500 fine imposed by the district court. The case was remanded to the district court for a determination of the number of articles falsely marked and recalculation of the fines.