1. GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWW.GTLAW.COM ©2010. All rights reserved. Ensuring Compliance with Patent Marking Requirements While Avoiding Civil Penalties for False Marking Presenter: Paul F. McQuade, Washington D.C. Office (202) 331-3187  mcquadep@gtlaw.commcquadep@gtlaw.com

2. - 2 - Goals of Brief Presentation: 1.Highlight recent developments in false patent marking 2.Review why marking is important 3.Outline steps to ensure your clients or company minimize potential risks

3. - 3 - Why relevant?  In this era of patent trolls and IP hunting expeditions, a new twist: □ Fed. Cir. recently construed the penalty imposed by the false marking statute, 35 U.S.C. § 292, in a way that significantly increases the potential liability of patent owners, licensees, manufacturers and distributors. Forest Group, Inc. v. Bon Tool Co., Case No. 2009-1044 (Fed. Cir. Dec. 28, 2009)

4. - 4 - One Might Expect a Wave of these False Marking Suits  About a dozen false marking cases were filed in the past two years against patentees, licensees, manufactures, and distributors of high-volume products.  Within the past two months (post-Forest Group), more than 28 false marking suits were filed.  Yesterday = 9  Tuesday =11 (and that’s just this week)

5. - 5 - Patent Marking  Natural tension between increased risk from recent decisional law and the marking requirements of the Patent Statute. (35 U.S.C. §287).  Recovery of damages for infringement requires notice of patent protection. No marking = No money.  Notifies potential competitors that this product should not be copied.  While you cannot collect on damages on a pending application, but “patent pending” can dissuade others from entering the market place or relying on absence of markings. (Note: 35 U.S.C. §154d)

6. - 6 - False Marking—Civil Penalties  § 292: Provides that whoever marks upon, or affixes to, or uses in advertisement in connection with any patented article, the word “patent,” “patent pending,” or any word or number importing that the same is patented, for purpose of deceiving the public… shall be fined not more than $500 for every such offense.  §292(b): Qui Tam provision: 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.

7. - 7 - Fines Imposed For Each Falsely Marked Article  Forest Group v. Bon Tool Co. (Fe. Dir. Dec. 28, 2009) □Violations of 35 U.S.C. 292 are assessed per article. □Fine Discretionary – may be as low as a fraction of a penny to as high as $500 per article falsely marked.  The Court explained that policy considerations support such interpretation of the statute because false marking: 1) deters scientific research from continuing in light of an apparent risk of infringement, 2) dissuades potential competitors from entering the same marketplace, and 3) causes unnecessary expenses to develop design-around products and assess the perceived risk of infringement.

8. - 8 - 2 Elements for a Violation of §292  1. Mismarking – what’s listed is not correct  2. Intent to Deceive the Public – the battleground during discovery

9. - 9 - Element 1 - Examples of False Marking  Enforceable Patents That Don’t Apply: □ At least one claim in each patent listed must read on the product.  Doctrine of Equivalents coverage - consider outside counsel confirmation to bolster “reasonable belief” that the product is covered by a claim. –Clontech Labs., Inc. v. Invitrogen Corp. (D. Del.) –United States Gypsum Co. v. Pacific Award Metal.  Expired Patents: □ Commonly the basis for false marking (19 new cases). □ Pequignot v. Solo Cup Co. (E.D. Va., 2009) (dies not changed)

10. - 10 -  "Patent Pending" □ No applications on file. □ All pending applications in a product family have matured but label hasn’t changed.  “Covered by One or More of the following patents: " □ Federal-Mogul case alleges sophisticated corporation necessarily knew that some patents listed did not “read on” wiper blades (Feb. 2010). □ Publicly traded companies can expect plaintiffs to use SEC reporting requirements to leverage settlements. Element 1 - Examples of False Marking

11. - 11 - Element 2 - Intent to Deceive Forest Group  Fed. Cir. Held that Forest, the party accused of falsely marking, had the requisite knowledge of false marking after receiving adverse claim construction and summary judgment orders in two different cases.  Forest placed at least one order to its manufacturer for a product incorrectly marked with a patent number that does not cover the product, even after the second summary judgment order of non-infringement.  The Federal Circuit noted that multiple claim construction or summary judgment orders are not required to prove the requisite knowledge for false marking.  Placed burden on patentee to audit patent markings after adverse Markman hearings and/or obtain opinion of counsel while on Appeal.

12. - 12 - Intent to Deceive  Clontech,406 F.3d 1347 (Fed. Cir. 2005) establishes an inference (which EDVA characterized as a rebuttable presumption) of intent to deceive when the accused party knows the falsity of its patent marking. □ To show intent to deceive the accusing party must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked. □ Reasonable belief is a question of fact.

13. - 13 - Defending Against These Cases  Battle to be fought during discovery  Nuanced proofs – knowledge+action - what was known, what was done/not done. Lack of evidence of corrective action has been enough in some cases to fail to overcome what the EDVA has characterized as a presumption of deceptive intent upon a showing of sufficient knowledge that marking was inaccurate or patent had expired, etc. Sometimes the action is merely the continued selling w/out changing molds  Now is the time for more stringent holdings

14. - 14 - A Patent Marking Compliance Program

15. - 15 - Compliance Program to Avoid False Marking 1.Review current labeling regimes – Are markings accurate? 2.Review each patent listed - Does each have a claim that reads on this product? 3. Use “patent pending” only when an application is on file. 4. Close calls – Verify coverage with outside counsel. 5. Product changes - As commercial products change, confirm that new versions are still covered, or change the markings appropriately.

16. - 16 - 6. Pay attention to expiration notices, docket reports, and updates and cross-reference these periodically to mitigate risk of claims. (Change reporting letter/docketing notice practices?) 7. Periodically review the patent family to update markings with newly issued patents, and remove expired patents, and/or applications no longer pending. 8. In Litigation: Adverse claim construction decision may require reconsideration of patent markings. Outside opinion may be needed to confirm reasonable belief in coverage pending appeal. 9. Patent Licensing/Manufacturing/Distribution Agreements: include indemnification for false marking if instructed to label products; shift risk of error appropriately.

17. GREENBERG TRAURIG, LLP ATTORNEYS AT LAW WWW.GTLAW.COM ©2010. All rights reserved. Questions? TCO 358,276,089