Forest Group v. Bon Tool: Fines in False Marking Cases

In The Forest Group, Inc. v. Bon Tool Company, 590 F.3d 1295 (Fed. Cir. 2009), the Federal Circuit held that penalties must be imposed on a per article basis in false marking cases brought under Section 292(a) of the Patent Act.  Thus, district courts have discretion to assess fines up to $500 per article, although they should not impose fines that are disproportionately large.

The Forest Group, Inc. (“Forest”) is the assignee of U.S. Patent No. 5,645,515 (the ‘515 Patent), which discloses an improved spring-loaded parallelogram stilt of the type often worn on the legs of construction workers.  A district court in Texas found that Forest had, with requisite intent, falsely marked its construction stilts with the ‘515 patent number by placing at least one order from their manufacturer for stilts bearing the '515 number after being advised by counsel to revise the stilt design to include a claimed feature and after a district court in Minnesota (in an unrelated case) had granted a motion for summary judgment of non-infringement against Forest concerning the original design.  However, the district court in Texas assessed a single fine of $500 on Forest for a single offense of false marking.

On appeal, the Federal Circuit held, among other things, that the plain language of Section 292(a) requires penalties be imposed on a per article basis.  The Federal Circuit noted that Section 292(a) expressly defines false marking by reference to conduct in connection with any unpatented article.  The Court also noted that Congress’ intent to prevent false marking was so great it encouraged third parties to bring qui tam suits and split recoveries with the government.  The Federal Circuit ordered the district court on remand to recalculate fines based on a determination of how many articles were falsely marked, noting that the lower court had discretion to lessen the fine imposed per article.

Forest Group v. Bon Tool underscores the importance of exercising caution in marking products.  The opinion is also likely to encourage a wave of additional claims by so-called “marking trolls.”