Stemming the Tide of False Marking Cases

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In December 2009, the Federal Circuit's Forest Group decision seemingly opened the flood gates for false marking complaints by interpreting the false marking statute, to authorize fines up to $500 for every falsely marked article. Acknowledging the likely "cottage industry" that might result, the Federal Circuit construed the false marking statute as explicitly permitting qui tam false marking actions. The court went so far as to note that penalizing false marking on a per decision basis, rather than a per article basis, "would not provide sufficient financial motivation for plaintiffs . . . to bring suit."

As predicted, the number of false marking complaints dramatically increased following Forest Group. In 2010 alone, almost 800 new false marking suits were filed. This contrasts with the roughly 30 suits filed in 2009. The trend continues, with approximately 200 new cases filed in the first quarter of 2011. It is noteworthy that a large proportion of the recent false marking complaints were filed by so-called "marking trolls"—litigants who bring such suits for personal gain rather than as a result of competitive harm or injury.

In light of the potential for extremely high penalties given the new per article basis for calculating fines, companies who find themselves on the defensive side of false marking suits have sought a variety of means for defending against them. These defenses include, inter alia, motions to dismiss for lack of standing, personal jurisdiction, failure to state a claim, and of primary importance to this article, challenges to § 292's constitutionality. Constitutional challenges have primarily focused on the "Take Care" and "Appointments" Clauses of Article II of the U.S. Constitution. As discussed below, the question of § 292's constitutionality under the "Take Care" Clause of Article II is of particular interest and is likely to be addressed by the Federal Circuit in the very near future.

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Published In: Civil Procedure Updates, Constitutional Law Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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