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Mitigating Risks Of Patent Licensing After Forest Group vs Bon Tool Co

Keith R. Derrington

Bracewell & Giuliani LLP, Associate, Houston, TX

Jeffrey S. Whittle

Bracewell & Giuliani LLP, Partner, Houston, TX

Whoever marks an article with a false patent number shall be fined “not more than $500” for every offense. The Federal Circuit redefined “an offense” in its Forest Group opinion to mean every time something is marked with a false patent number. Because the potential liability for false marking has been significantly expanded, both licensees and licensors should now implement proper product marking procedures so that appropriate patent numbers are identified on products and services. Moreover, the probability of false marking allegations can be reduced by assigning marking responsibilities, warranties, and indemnification in licensing agreements.

Facts Behind False Marking Allegations In Forest Group

The patent at issue in Forest Group claimed stilts used by construction workers. The inventors listed on the patent were William Armstrong and Joe Lin, who each formed their own company that sold stilts covered by the ‘515 patent. Mr. Lin created Forest, and Mr. Armstrong created Southland Supply Company (Southland) and both assigned their rights in the ‘515 patent to Forest. Southland sold stilts under a license from Forest and Bon Tool was a purchaser of the stilts from Southland. Bon Tool ceased their purchases from Southland and instead purchased stilts from Shanghai Honest Tool Co., Ltd. (Honest Tool). The stilts manufactured by Honest Tool and purchased by Bon Tool were identical to the stilts sold by Southland, but were not licensed from Forest.

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