Another Late Season Christmas Gift to False Marking Plaintiffs?

It was the end of December 2009 when the Federal Circuit issued its decision in The Forest Group Inc. v. Bon Tool Company, 590 F.3d 1295 (Fed. Cir 2009), wherein the Court addressed the following prescient point:

Forest argues that interpreting the fine of § 292 to apply on a per article basis would encourage “a new cottage industry” of false marking litigation by plaintiffs who have not suffered any direct harm. This, however, is what the clear language of the statute allows.

As if the Federal Circuit's decision alone was not enough to encourage the "new cottage industry," on remand, the Southern District of Texas set the per article amount of the damages award at "the highest point of the price range" ($180) for the falsely marked article (a spring-loaded stilt used in the construction industry). The per article amount is viewed as an anomaly because there were only 38 articles at issue, making the total fine $6840.

Another late season holiday gift has been given to false marking plaintiffs (qui tam relators). The Northern District of Georgia granted a default judgment award in a false marking case involving Christmas tree stands, Polytree (Hong Kong) Co., Ltd., et. al. v. Forests Manufacturing, Ltd., 1-09-cv-03377 (GAND December 20, 2010, Order). The Northern District of Georgia cited to the District Court decision in Forest Group to support its determination of an award based on the middle price point of the falsely marked articles ($84.75). Ironically, the false marking award is nearly 30x greater ($2,339,100) than the infringement damages award ($79,200) granted to Polytree in the same case. While the false marking award is striking (especially when compared to the infringement award), this case is probably another anomaly. It was a default judgment against a competitor/counterfeiter that, in addition to copying the stand design, copied the plaintiffs' patent numbers and implicitly admitted this after an exchange of cease-and-desist letters by Polytree. The case was also unusual because it involved a violation under the first clause of the False Marking Statute (35 U.S.C. § 292), which the Court referred to as "patent mismarking," for claiming specific patent coverage without the consent of the patentee.

Regardless of the distinctions, expect even non-competitor false marking relators to raise Polytree in addition to Forest Group if they ever make it to the damages phase of a false marking case.

Happy Holidays!

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