Wednesday, February 19, 2020

Federal Circuit Reaffirms Importance of Patent Marking

In a precedential decision this morning, Arctic Cat Inc. v. Bombardier Recreational Prods., Inc., the Federal Circuit reaffirmed the importance of patent marking to the recovery of damages for pre-complaint infringement.  As I explained in 2017, in connection with an earlier appeal in this matter:
U.S. Patent Act section 287(a) reads as follows: 
Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or by fixing thereon the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this cannot be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice.In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.
Generally speaking, then, a patent owner can recover damages for patent infringement that occurs only after the owner has put the defendant on either actual notice (e.g., by sending an appropriately worded cease-and-desist letter, or serving a complaint for infringement) or constructive notice (by complying with the patent marking statute). By encouraging patent owners to provide public notice of the patent-protected status of their products, the statute is said to help both implementers and the general public to identify which products are subject to patent protection. The rule has many complications and exceptions, however, and for what it's worth my view is that we'd be better off if we didn't condition the availability of damages on marking. . . . 
Anyway, in 2014 the plaintiff sued the defendant for infringement of two patents relating to a thrust steering system for personal watercraft (PWCs).  During the relevant time period, the plaintiff itself did not make PWCs, but until 2013 its licensee Honda did.  (Defendants argued that Honda was making patented PWCs until 2018, but as we'll see it doesn't matter.)  In the previous appeal in 2017, the Federal Circuit held that the plaintiff bears the burden of proving compliance with the marking statute.  On remand, the plaintiff apparently conceded that the PWCs made by Honda embodied the patented technology and were not marked.  It argued nevertheless that it was entitled to damages for the period of time, preceding the filing of the complaint, that Honda wasn't making any PWCs embodying the technology.  The plaintiff also argued that the defendant was willfully infringing during the entire six-year period preceding filing of the complaint--and thus was aware of the patents in suit--and that this actual knowledge should satisfy the "actual notice" requirement under § 287.   Consistent with prior case law, however, the Federal Circuit doesn't buy it:
. . . the issue presented is whether the cessation of sales of unmarked products excuses noncompliance with the notice requirement of § 287 such that a patentee may recover damages for the period after sales of unmarked products ceased but before the filing of a suit for infringement. We hold that it does not.
Arctic Cat argues that, because § 287 is written in the present tense, the statute by its terms only applies while a patentee is “making, offering for sale, or selling” its products. Thus, according to Arctic Cat, the statute limits damages only during periods when the patentee is actually making, offering for sale, or selling the patented article. Bombardier responds that, to begin recovering damages after sales of unmarked products have begun, § 287 requires that a patentee either begin marking its products or provide actual notice to an alleged infringer; cessation of sales of unmarked products is not enough. We agree with Bombardier.
We begin with the language of the statute. .  .  . While § 287 describes the conduct of the patentee in the present tense, the consequence of a failure to mark is not so temporally limited. Section 287 provides that “in the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter” (emphasis added). The statute thus prohibits a patentee from receiving any damages in a subsequent action for infringement after a failure to mark, rather than merely a reduced amount of damages in proportion to the amount of time the patentee was actually practicing the asserted patent.
Arctic Cat’s obligation to mark arose when its licensee began selling patented articles. The cessation of sales of unmarked products certainly did not fulfill Arctic Cat’s notice obligations under § 287, nor did it remove the notice requirement imposed by the statute. The notice requirement to which a patentee is subjected cannot be switched on and off as the patentee or licensee starts and stops making or selling its product. After all, even after a patentee ceases sales of unmarked products, nothing precludes the patentee from resuming sales or authorizing a licensee to do so. In the meantime, unmarked products remain on the market, incorrectly indicating to the public that there is no patent, while no corrective action has been taken by the patentee. Confusion and uncertainty may result. Thus, once a patentee begins making or selling a patented article, the notice requirement attaches, and the obligation imposed by § 287 is discharged only by providing actual or constructive notice.
This reading of § 287 comports with the purpose of the marking statute. The policy of § 287 is to encourage marking, not merely to discourage the sale of unmarked products. We have explained that the notification requirement of § 287 “serves three related purposes: (1) helping to avoid innocent infringement; (2) encouraging patentees to give public notice that the article is patented; and (3) aiding the public to identify whether an article is patented.” Arctic Cat I, 876 F.3d at 1366 (citing Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1443 (Fed. Cir. 1998)). Requiring a patentee who has sold unmarked products to provide notice in order to begin recovering damages advances these objectives by informing the public and possible infringers that the article is patented. Arctic Cat’s proposed interpretation, on the other hand, would undermine these objectives. In Arctic Cat’s view, § 287 should be read to allow a patentee to mislead others that they are free to make and sell an article that is actually patented, but nonetheless allow the patentee to recover damages without undertaking any corrective action. We reject this view.  .  .  .
Arctic Cat also argues that, regardless of its failure to mark, it should nevertheless recover the maximum amount of pre-suit damages allowed by 35 U.S.C. § 286 because the jury’s finding that Bombardier willfully infringed the asserted claims should be sufficient to establish actual notice under § 287. Arctic Cat acknowledges, as it must, that this argument is foreclosed by our precedent. . . .  
Aside from our inability to reverse the decision of an earlier panel . . . we reiterate the conclusion that willfulness, as an indication that an infringer knew of a patent and of its infringement, does not serve as actual notice as contemplated by § 287.
In my view, the court is right on the law, but the result is a bit ridiculous as a matter of policy.  I've argued previously that the patent marking statute makes little sense in the modern world, and I adhere to that view today.  For previous discussion, see here and here.

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