Another Push to Legislatively Overturn Forest Group False Marking Decision

By Kurt R. Karst –      

Earlier this year we posted on the effects of the U.S. Court of Appeals for the Federal Circuit’s December 2009 “false marking” decision in Forest Group, Inc. v. Bon Tool Co.  False marking is the act of placing an item in commerce that is intentionally marked with a patent number that has expired or that does not protect the item.  In Forest Group, the Federal Circuit ruled that the $500 maximum penalty for a “false marking” in violation of 35 U.S.C. § 292 attaches to each individual article that is falsely marked, potentially resulting in astronomical monetary damages.  The false marking statute includes a bounty hunter (i.e., qui tam) provision providing that “[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.”  Scores of lawsuits ensued, as identified on the Gray On Claims Blog.

Since our last post, many more complaints have been filed alleging false marking by various parties in the FDA-regulated industry, including Ranbaxy, Roche Diagnostics Corporation, Walgreens, Bristol-Myers Squibb, Eisai, Takeda, Watson, and many, many  others.  Even Pop Rocks® Crackling Candy has not been safe from the vagaries of the false marking bounty hunters! 

Although the Federal Circuit once again addressed 35 U.S.C. § 292 in Pequignot v. Solo Cup Co. in a June 2010 decision in which the Court held that that a rebuttable presumption of intent to deceive under 35 U.S.C. § 292 is created when a manufacturer prints expired patent numbers on its products with knowledge that the patents are expired, that decision does not appear to have put a damper on false-marking claims.  Indeed, qui tam relators likely took heart from the Federal Circuit’s August 2010 decision in Stauffer v. Brooks Brothers, Inc. in which the Court addressed standing under 35 U.S.C. § 292.  In that case, the Court ruled that “even though a relator may suffer no injury himself, a qui tam provision operates as a statutory assignment of the United States’ rights, and the assignee of a claim has standing to assert the injury in fact suffered by the assignor” (internal quotation omitted).

The latest attempt to legislatively quash false marking qui tam lawsuits came from Representative Bob Latta (R-OH), who recently introduced the Patent Lawsuit Reform Act of 2010 (H.R. 6352) to amend 35 U.S.C. § 292.  (Previous attempts to amend the law as part of the Patent Reform Act have thus far failed as the reform bill has been stalled.)  According to Rep. Latta, the bill “would strengthen the vague language [of 35 U.S.C. § 292] to revert back to the pre-Forest Group decision and assess one $500 fine if found guilty of deceiving the public under Section 292 and not allow for the interpretation of being fined for each product on the market.”  Moreover,  H.R. 6352, which has been referred to the House Judiciary Committee would “also require the individual bringing the lawsuit to have suffered a competitive injury as a result of the violation.”  A one-two punch for Forest Group and Stauffer!