Optimal Fines for False Patent Marking

Abstract

Since January 1, 2010, plaintiffs have filed over three hundred lawsuits under 35 U.S.C. § 292, the false patent marking statute. Fueled in large part by recent Federal Circuit case law embracing an expansive interpretation of the statute, this uptick has alarmed some observers, who fear that patent owners whose products bear the numbers of expired or inapplicable patents could be liable for, literally, billions of dollars in fines. While Congress and the courts consider various responses, one issue that has failed to attract much notice thus far is the question of how to calculate appropriate fines for marking violations. Although the statute permits courts to assess a fine of “not more than $500” for every falsely marked article, it specifies neither a minimum fine nor any methodology for setting the amount of the fine. This Essay proposes that, in setting fines, courts should attempt to approximate the social harm caused by false marking by taking into account (1) the plaintiff’s loss (if any) and the defendant’s gain (if any) attributable to the marking at issue; (2) the plausibility of substantial but less easily quantifiable harms to third parties; and (3) the risks, on the one hand, of underdeterring statutory violations if the penalty is too small and, on the other, of chilling patentees from lawfully marking their products if the risk of liability is too great. In cases in which the social harm from false marking appears minimal, courts should not be reluctant to impose only nominal fines.

Keywords: false patent marking, Patent Act section 292