CBA IP LITIGATION COMMITTEE MEETING FEBRUARY 23, 2010 “Patent Marking: How the General and IP Lawyer Can Advise Clients” Brett A. Schatz, Wood, Herron & Evans, L.L.P. 441 Vine Street, 2700 Carew Tower, Cincinnati, Ohio P: , F: ,

35 USCS § 287 § 287. Limitation on damages and other remedies; marking and notice (a) Patentees…may give notice to the public that the same is patented, either by fixing thereon the word "patent" or the abbreviation "pat.", together with the number of the patent… In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement...

35 USCS § 292 § 292. False Marking (a)…Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word "patent“…for the purpose of deceiving the public;...Shall be fined not more than $ 500 for every such offense. (b) Any 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.

THE DILEMMA POSED TO CLIENTS BY 35 USCS §§ 287 AND 292: INFRINGEMENT DAMAGES -VS- POTENTIAL LIABILTY FOR FALSE MARKING  Inability to recover lost profits or reasonable royalty for pre-suit (or pre-notice) infringement  Potential liability of up to $500 for every offense (Court’s Discretion)

POTENTIAL LIABILITY FOR FALSE MARKING:  “Offense” = every article falsely marked  Maximum of $500 for every article falsely marked  Court Discretion - Balance public policy of avoiding public deception against imposing disproportionately large penalties for “small, inexpensive items produced in large quantities”  “In the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty.” No courts have applied these comments from the Federal Circuit.

CLIENTS’ OPTIONS FOR AVOIDING POTENTIAL LIABILITY FOR FALSE MARKING:  Don’t mark (but risk losing potential damages)  Make sure that at least one claim of every patent with which the article is marked in fact covers the article.

CLIENTS’ OPTIONS FOR AVOIDING POTENTIAL LIABILITY FOR FALSE MARKING (Cont.): If a client elects to mark, and does so incorrectly, does liability automatically attach? No – 35 U.S.C. § 292 requires the mismarking to be “for the purpose of deceiving the public.” No – 35 U.S.C. § 292 requires the mismarking to be for “advertising”??: “Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article…”

“FOR THE PURPOSE OF DECEIVING THE PUBLIC”  Plaintiff must show that party did not have a reasonable belief that the articles were properly marked.  Proof that the party knew marking was false is enough to warrant a rebuttable inference of fraudulent intent.  Mere assertion that the party did not intend to deceive is insufficient to rebut the inference.

“FOR THE PURPOSE OF DECEIVING THE PUBLIC” (Cont.):  Honest and reasonable, albeit mistaken, belief: opinion of counsel client investigation of article resolve any factual information that suggests to the party that article is not covered avoid marking with expired patents “although some presumption of deceptive intent exists when a product is knowingly marked with an expired patent, that presumption is weaker than when a product is marked with an unexpired patent that does not cover the product.”