Federal Circuit Affirms Marking Requirement for NPEs Who License Their Patents

While I was away last week, the Federal Circuit handed down its decision in VDPP, LLC v. Volkswagen Group of America, Inc., precedential opinion by Chief Judge Moore joined by Judges Lourie and Cunningham.  The patent at issue had expired by the time the patentee sued Volkswagen, and so the patentee could only seek damages for infringement occurring (a) prior to patent expiration and (b) within the six-year statute of limitations.  The patentee nevertheless failed to plead with sufficient particularity, much less prove, that it had made reasonable efforts to ensure that other entities to whom it had licensed the patent in suit pursuant to settlement agreements complied with the patent marking requirement set forth in 35 U.S.C. § 287(a).  The Federal Circuit affirms that that failure is fatal to the patentee’s ability to recover damages, and since that was the only relief to which it might have been entitled, it failed to state a claim upon which relief may be granted.  In addition, the court affirms an award of attorneys’ fees, for reasons discussed below, and dismisses an appeal of an award of sanctions against the patentee’s attorney.   

Readers who are not familiar with the peculiar U.S. patent marking requirement may benefit from a brief primer on what this all about, so here is a little background.  First, § 287(a) establishes a general rule that patent owners cannot recover damages for any infringement of their patents occurring before the date on which they marked their products with the patent number, or provided actual notice to the accused infringer that their products are patented.  Second, as the Federal Circuit reaffirms in VDPP, the marking/actual notice requirement is intended to “(1) help[] . . . avoid innocent infringement; (2) encourag[e] patentees to give public notice that the article is patented; and (3) aid[] the public [in] identify[ing] whether an article is patented” (opinion at 6, citation omitted).  Third, according to the case law, if a patentee licenses its patents to another entity, it must make reasonable efforts to ensure that the licensee complies with the marking requirement, if it wishes to recover damages for infringing activity that pre-dates the date on which it puts the accused infringer on actual notice.   (Actual notice can be accomplished by means of a cease-and-desist letter or, at the latest, by the service of the complaint.)  Fourth, however, the marking requirement is riddled with so many exceptions and formalisms that, in my opinion, we would be better off without it.  As I have written previously, the three policy justifications recited above

may sound reasonable, but in practice marking does not necessarily further [them], and the manner in which the statute has been interpreted produces some strange results. In particular, absent compliance with the marking requirement damages will not begin to accrue until the owner provides the infringer with actual notice, even if the infringer has acquired actual knowledge of the patent prior to that date. That seems bad enough, but now consider what happens if the owner has failed to mark but the defendant, with actual knowledge of the owner’s patent, knowingly induces a third party to infringe that patent. Under the law of induced infringement, the defendant is liable from the moment the third party takes the bait and begins infringing, precisely because the defendant had actual knowledge of the patent; and yet damages cannot accrue until the date on which the owner provides actual notice, even though common sense would suggest that such notice is superfluous. Similarly, a defendant may be adjudicated a willful infringer, and thus be on the hook for enhanced damages, based on evidence that it knowingly infringed prior to the owner’s having put the defendant on actual notice; but if the owner failed to mark its products, no damages (enhanced or otherwise) will accrue until the date of actual notice. On the other hand, if the owner successfully asserts a process patent instead of a product patent, damages accrue from the moment of infringement regardless of whether the owner provides actual notice or the defendant has actual knowledge, because there is nothing to mark. Nevertheless, if the owner asserts both a product and a process claim of a patent containing both, and sells unmarked goods covered by the product claim and made in accordance with the process claim, a defendant who infringes both product and process claims is probably not liable for damages until the owner provides actual notice. The outcome is the same if the owner asserts both claims but only prevails on the process claim. If the owner asserts only the process claim, however, it can recover damages from the date the infringement began; similarly, if the owner has two separate patents, one reciting product and the other process claims, it can recover damages for the infringement of the process patent from the date that infringement began, and it can recover damages for the damages for infringement of the product patent from the date on which it puts the infringer on actual notice.

Fifty Years of Patent Remedies Case Law: Two Steps Forward, One Step Back, 50 AIPLA Q.J. 607, 621-25 (2022) (citations omitted).  Moreover, the owner of an idle patent--that is, a patentee who doesn't manufacture, sell, or license any products covered by the patent--can recover damages from the date the infringement starts, as long as it's within the statute of limitations, regardless of whether it puts the accused infringer on actual notice prior to filing suit (see opinion, p.5).  And as my former student Bernard Cryan noted in his paper Not All Licensees Are the Same: 35 U.S.C. § 287 Should Not Require Marking by Licensees that Deny Infringement, 101 J. Pat. & Trademark Off. Soc’y 531 (2021), cases involving licenses entered into pursuant to settlements are particularly fraught, because the licensee may agree to settle simply to avoid the cost of litigation, and may believe in good faith that its products do not infringe.  To be sure, in the present case the Federal Circuit states that “the subjective view of the accused infringer” does not matter (p.6); but 35 U.S.C. § 292(a) states that “[w]hoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word 'patent' or any word or number importing that the same is patented, for the purpose of deceiving the public,” is potentially liable for a $500 fine (or in some cases damages) for false patent marking.  Should the patentee nevertheless require the settling licensee to mark its products, even if the latter doesn’t believe that the claims of the patent in suit actually read on its products?  

My opinion is that, in practice, these rules are so arbitrary that we would ought to abolish the marking requirement altogether; or, alternatively, we could mimic practice in the U.K. and condition awards of damages on actual or constructive knowledge, such that infringers with actual knowledge would not be off the hook even if the patentee has not provided actual or constructive notice, while infringers of process patents who have no pre-suit knowledge or notice of those patents would not be liable for damages accruing prior to the filing of the complaint.  Either option would be a rational, defensible rule, but in my view our current U.S. practice is not.  (For further discussion from a comparative law perspective, see my book Remedies in Intellectual Property Law (Edward Elgar Publishing 2026), pp. 129-36.)

Coming back to the present case, as mentioned above the court also affirms an award of fees, though this is only partly related to the patent marking issue:

The district court did not abuse its discretion in determining this was an exceptional case. Specifically, the court reasonably determined that “[m]any of the positions VDPP took were frivolous and objectively unreasonable,” including seeking future damages and an injunction on an expired patent, seeking past damages despite an inability to allege patent marking, failing to disclose relevant settlement agreements, and prolonging litigation with false statements about the settlement agreements. . . . The court also noted that “VDPP made sloppy errors, over and over” ranging from obviously incorrect venue allegations to initial disclosures about an unrelated patent, which made the case “even more cumbersome and difficult to handle.” . . . Moreover, the court found a “need for meaningful deterrence” based in part on VDPP’s pattern of repeat litigation over the ’452 patent involving “settlement demands far less than the costs of defense and unrelated to any damages theory.” . . . The court further rejected VDPP’s argument that the fee award should be limited to the exceptional portion of the case because “VDPP’s misconduct infected the entire litigation” (pp. 7-8, citations omitted).

The court further notes that a case may be “exceptional” even if the losing party’s conduct is not sanctionable under Rule 11 of the Federal Rules of Civil Procedure (pp. 8-9).  Further, while “‘filing a large number of suits does not, by itself, justify an inference of . . . an improper motive,’ Thermolife Int’l LLC v. GNC Corp., 922 F.3d 1347, 1363 (Fed. Cir. 2019), and ‘[t]he mere existence of these other suits does not mandate negative inferences about the merits or purpose of this suit,” SFA Sys., LLC v. Newegg Inc., 793 F.3d 1344, 1351 (Fed. Cir. 2015). But we have also recognized that ‘a pattern of litigation abuses characterized by the repeated filing of patent infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s claims, is relevant to a district court’s exceptional case determination under [35 U.S.C.] § 285,’ and ‘a district court should consider a patentee’s pattern of litigation where adequate evidence of an abusive pattern is presented.’  SFA, 793 F.3d at 1350, 1352 (emphases added)” (pp. 8-9).

Finally, the court dismisses the portion of the appeal relating to attorney sanctions, on the basis of its conclusion that the attorney “failed to timely appeal the district court’s sanctions order on his own behalf and that VDPP lacks standing to contest the sanctions for him” (p.13).

Interesting Question on the Relevance of Profits Earned on Sales of Noninfringing Goods

As I mentioned on Wednesday, after I return from my last little summer trip next week, I plan to write at least a couple of posts analyzing the recent decision of the Court of Appeal for England and Wales in Lufthansa Technik AG v. Astronics Advanced Electronic Systems, [2026] EWCA Civ 964, concerning the relationship among disgorgement of infringers’ profits, causation, noninfringing alternatives, and apportionment.  Before I go, though, I thought I would note another matter also relating to infringers' profits that was mentioned this morning on the ip fray blog, namely an order entered on August 11 by the UPC’s Munich Local Division in Edwards Lifesciences Corp. v. Meril GmbH.  In an earlier proceeding, the defendant Meril was found to have infringed Edwards’ EP No. 3 669 828, relating to a transcatheter heart valve.  The remaining questions yet to be decided concern monetary relief for the infringement.  The order anticipates a hearing next month concerning, inter alia, the extent to which the defendant may be ordered to “open its books” to the plaintiff, which in turn may depend on resolution of the other two issues.  One is whether UPC or national law applies to infringement that occurred prior to the date the UPC entered into force.  In March 2025, the Mannheim Local Division concluded that UPC law applied (see discussion on this blog here and here), so it will be interesting to see whether or not the Munich court follows this approach if the parties themselves do not reach agreement on this issue or settle.  The other issue concerns whether the court may take into account profits the defendant made on noninfringing products that the defendant offered as a substitute for the infringing products that were taken off the market.  From the order:

The judge rapporteur [Dr. Matthias Zigann] explains that, if this case is not settled or goes to the PMAC [Patent Mediation and Arbitration Centre], it will require a decision from the Court of Appeal. This is because, for the first time, the UPC will need to define the details of a claim for damages and the accompanying claims to open the books with regard to non-infringing products. Although there is some national case law, the situation at hand has not, it seems, been decided: the replacement of an infringing product by a non-infringing product during the lifetime of the patent, and the patent owner's claim that the profits with this non-infringing product must be taken into account when calculating damages. . . .

 

The judge-rapporteur shared his preliminary assessment of the main legal question of whether profits from non-infringing products could be taken into account when calculating damages, and whether they could therefore be subject to an 'open the books' application. He gave an example: A department store advertises an infringing product, 'A'. A customer sees the advertisement and visits the department store to buy the infringing product “A”. However, the product has been taken off the shelves in the meantime due to a court order. The salesperson sells the customer a non-infringing product, "B", instead. In this situation, the profits made from selling product “B” can be attributed to the patent infringement, the patent-infringing offer. In the present case, it may be necessary to take into account the profits made from non-infringing products that replaced the infringing product in open tenders. However, if the link to the sales of the non-infringing products is more tenuous, this might be viewed differently.

This is a very interesting issue.  I’m inclined to think that, although there is a causal connection between the profits earned on sales of the noninfringing substitutes and the earlier offer for sale of infringing products, that causal connection should be viewed as too attenuated.  (My understanding of German law, should that factor into the mix, is that it doesn’t have a proximate cause doctrine as such, but that German courts employ the concept of haftungsausfüllende Kausalität to cut the causal chain where damages are too remotely connected to the wrongful act.)  Under U.S. utility patent law, there is no disgorgement of the infringer’s profits, so I don’t think this precise issue would come up (unless it were somehow relevant to determining a reasonable royalty, which seems a bit of a stretch).  According to Rite-Hite Co. v. Kelley Corp., 56 F.3d 1538 (Fed. Cir. 1995) (en banc), however, infringers can be liable for lost profits on sales of noninfringing goods that compete with infringing products—but not for lost profits on sales of noninfringing complementary products that the patent owner ordinarily sells along with the patented article, unless they “function together with the patented component in some manner so as to produce a desired end product or result” and are therefore “analogous to components of a single assembly or be parts of a complete machine, or . . . constitute a functional unit.”  I think that logic would exclude the recovery of the infringer’s profits on noninfringing goods, even if U.S. law otherwise permitted disgorgement in utility patent cases.  Of course, UPC law or domestic national law within the E.U. could chart a different path.

Update:  Now that I've thought about the matter some more, I'm beginning to wonder if my reasoning above is correct.  Suppose that a defendant makes an infringing offer that bears a causal connection to its subsequent sale of noninfringing goods.  Maybe it would make sense, if U.S. patent law permitted the recovery of infringer's profits, to say that the profits earned on the sales of noninfringing goods are recoverable.  The noninfringing goods may well compete with the plaintiff's patented goods, after all.  Note also that in Germany, it appears that the plaintiff could recover damages from the defendant's sales of products made outside of Germany, or on sales of complementary goods, or on sales of products made following the completion of the patent term, as long as there is a sufficient causal connection between the infringing act and these sales.  See discussion on this blog here, here, and here.  Maybe that logic makes more sense.

Court of Appeal for England and Wales Issues Important Ruling on Disgorgement of Profits

The decision, which I just became aware of today though it was released on July 27, is Lufthansa Technik AG v. Astronics Advanced Electronic Systems, [2026] EWCA Civ 964.  The principal opinion is by Lord Justice Arnold, in which Lord Justices Lewison and Nugee concur.  Lord Justice Lewison also writes a separate opinion, in which Lord Justice Nugee concurs, and Lord Justice adds a very short separate opinion of his own.  The decision is long (92 pages altogether, with 353 paragraphs), and while the principal topic is the principles applicable to awards of infringers’ profits (including the relevance of noninfringing alternatives, but-for and proximate causation, and apportionment), the case also presents issues relating to double recovery and prejudgment interest.  Lord Justice Arnold’s opinion cites some of my work, as well as work by Professor Norman Siebrasse and a chapter I coauthored (with Siebrasse, Chris Seaman, Brian Love, and Masabumi Suzuki) that was published in the edited volume Patent Remedies and Complex Products (Cambridge Univ. Press 2019). Rather than rush to get something out, I want to do justice to this important and thoughtful decision, and I suspect that doing so may require two or three separate, rather detailed, blog posts.  For today, then, I’m simply providing the link to the decision (above) for readers who have not read it yet but are interested in the relevant topics, and will summarize what I view as the three most important holdings, all pertaining to disgorgement of profits.  The first is that “there are some cases in which it is possible to say that all of the profits in issue are derived from the infringement” (para. 159).  The second is that a “differential profits analysis”—under which the profits attributable to the infringement are measured by the difference between the profits the infringer actually earned and the amount if would have earned in the counterfactual world in which it deployed the next-best available noninfringing alternative to the patented invention—can in some cases be “a useful tool to identify the profits derived from the infringement” (para. 160), but that there are numerous difficulties concerning its use in the real world (see paras. 150-58).  The third is that “there is a well-established alternative to differential profit analysis, which is for the court to make a fair apportionment of the profits in issue,” and that “[t]his approach is to be adopted when the case does not fall into either of the [preceding] two categories . . . that is to say, it is not a case where all of the profits are derived from the infringement or where a differential profit analysis can readily be undertaken” (para. 161; see also para. 111, describing apportionment as "normally the appropriate approach").  The opinion then goes on (starting at paragraph 191) to discuss some principles relating to how apportionment may be carried out.

Again, this is a very important decision on one of the most practically and intellectually challenging topics in all of IP remedies law.  My plan is to return with a detailed, probably multipart, analysis, probably starting the week after next (I will be away for one more little summer jaunt next week).  

Federal Circuit Reaffirms No Presumption of Irreparable Harm

The case is Socket Solutions, LLC v. Import Global, LLC, a short precedential opinion by Chief Judge Moore (joined by Judge Prost and District Judge Seeborg) handed down last Tuesday.  Plaintiff Socket Solution “owns U.S. Patent No. 9,509,080, which is directed to an indoor electrical

wall outlet cover that permits use of a wall outlet while concealing the outlet contact openings” (p.2).  “Socket Solutions sued Import Global, alleging Import Global’s Neat Socket product infringed claim 19 of the ’080 patent, and moved for a preliminary injunction” (id.).  The district court granted the preliminary injunction, but the Federal Circuit reverses and remands.  In particular, the appellate court concludes that the district judge erred in construing two terms (“backplate” and “pin”) used in claim 19, and therefore vacates and remands for further consideration on the issue of “likelihood of success on the merits” (pp. 5-9).  Of greater interest, however, to the law of remedies, is the appellate panel’s discussion of irreparable harm:

Because we remand to the district court on the likelihood of success factor, we do not reach Import Global’s irreparable harm arguments. We hold only that the court erred to the extent it relied on a presumption of irreparable harm when a clear showing of patent validity and infringement has been made. . . . We note that this presumption cannot be justified after eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393–94 (2006).

 

In eBay, the Supreme Court reversed a grant of permanent injunction where the appeals court applied a “general rule” unique to patent disputes “that a permanent injunction will issue once infringement and validity have been adjudged.” 547 U.S. at 393–94 (citation omitted). The Supreme Court explained that patent disputes are no different than in other cases governed by the “traditional principles of equity,” and thus the traditional four-factor framework should apply. Id. After eBay, we confirmed the presumption of irreparable harm was abolished as it applied to determining injunctive relief. Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011) (“We take this opportunity to put the question to rest and confirm that eBay jettisoned the presumption of irreparable harm as it applies to determining the appropriateness of injunctive relief.”). Although eBay and Bosch involved permanent injunctions, we see no reason to depart from their holdings in the preliminary injunction context.

 

It is not clear here that the district court applied the presumption of irreparable harm to its fact findings rather than simply note there is such a presumption. . . . In any event, the court may analyze irreparable harm in a manner that does not rely on the presumption, if it reaches this issue on remand (pp. 9-10).

By itself, the above discussion is pretty unremarkable, inasmuch as it merely reaffirms the Federal Circuit’s long-standing understanding of eBay, albeit in the context of preliminary relief.  The absence of a presumption of irreparable harm nevertheless remains a fraught issue, with Collision Communications having argued (unsuccessfully) before Judge Gilstrap, and more recently before the Federal Circuit (where the matter remains pending), that it is entitled to such a presumption because that would have been the practice in courts of equity in 1789, and under Trump v. CASA federal courts are obligated to apply the law of equity as it would have been understood as of that time.  For previous discussion on this blog of Collision Communications v. Samsung, see here; for recent discussion of the pending appeal, see the write-up last week on Patently-O, here.  My own long-standing view is that, while the eBay opinion is not a paragon of legal reasoning, the eBay standard remains a necessary tool, at least in U.S. practice, for reducing the harms resulting from patent holdup.  I also wonder whether, doctrinally, even if U.S. courts are obligated to apply the standards that a court of equity would have applied in 1789 (sigh), if a district court today can award post-judgment reasonable royalties but could not have done so in 1789 absent proof of an established royalty, that should render the presumption of irreparable harm nugatory--or does that argument only work if ongoing royalties are characterized, contrary to current Federal Circuit case law, as a form of legal relief authorized under 35 U.S.C. § 284?  See pp. 1162-63 of this paper; cf. Plaintiff’s Brief at p.53, citing an 1887 Supreme Court decision (McConihay v. Wright) for the proposition that “The adequate remedy at law, which is the test of equitable jurisdiction in [federal] courts, is that which existed when the judiciary act of 1789 was adopted, unless subsequently changed by act of congress”).

Tomimoto, Osuga, and Suzuki on Japanese SEP Litigation

Koji Tomimoto, Shigeru Osuga, and Mitsuhiro Suzuki have published an article titled Japanese SEP litigation--from the 2014 Grand Panel decision to the 2025 Tokyo District Court's Pantech v. Google Case, 5/2026 GRUR Patent, pp. 239-43.  Here is the abstract:

This article traces Japanese SEP/FRAND litigation from the 2024 Grand Panel decision in Apple v. Samsung, which set such a high bar for finding an "unwilling licensee" that it caused an eleven-year stagnation in Japanese FRAND disputes, to the Tokyo District Court's June 2025 judgment in Pantech v. Google, the first case in Japan in which an injunction against a FRAND-declared SEP was granted.  The court found Google to be an unwilling licensee based on its refusal to disclose sales data and engage constructively in court-mediated settlement discussions.  This article explains the judgment as a significant step toward aligning Japanese practice with global FRAND standards, which is further reinforced by the new Litigation and Mediation Protocols published by the Tokyo District Court in January 2026. 

For previous discussion of Pantech on this blog, see my post "FRAND in Japan" here. 

Also in this issue of GRUR Patent are an essaye by Dr. Henrik Holzapfel titled Die extraterritoriale Durchsetzung von Patenten—vom Kuriosum zum Königsweg? (Extraterritorial Enforcement of Patents—from Curiosity to Royal Road?"), and an article by Katalin Tözsér, Florian Schweyer, and Oliver Schön titled Europäische Gerichte als «worldwide super infringement courts« (“European Courts as ‘Worldwide Super Infringement Courts”).  I have not read these yet, but since I am writing about extraterritoriality I plan to, and may have some comments here in due time.  The issue also includes an article by Oliver Bäcker and Marc Berninger on the Munich Landgericht's January 8, 2026 decision in the FRAND dispute between Wilus and Asus, concerning, inter alia, the defendant's obligation to provide security. 

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I will be taking a blogging break next week.