Infringers Need to Receive Actual Notice of a Published Patent Application to Recover Damages for Infringing Activity Occurring Before a Patent Issued

Authored by D. Brian Kacedon and John C. Paul

Abstract

A patent owner may have "provisional rights" to recover reasonable royalty damages accruing between the time its patent application published and the time the patent issued if the infringer received "actual notice" of the published patent application. A Delaware court recently held that evidence merely indicating that the accused infringer could or should have known of the published application fails to establish that the accused infringer had actual notice and did not entitle the patent owner to such provisional rights.

A patent application must mature into an issued patent before a patent owner can collect damages for infringement. But, in certain circumstances, patent owners may recover a reasonable royalty for infringing acts that occurred after the patent application published, but before the patent was issued. The right to recover for infringing activity occurring before a patent issued—known as provisional rights—arises only if the infringer had actual notice of the published patent application. Recently, in Rosebud LMS, Inc. v. Adobe Systems, Inc.,¹ a Delaware court held that merely showing that the accused infringer could, or should have, known of the published patent application is not enough to show actual notice.

Background

Rosebud LMS, Inc. sued Adobe Systems, Inc., alleging that Adobe's Collaborative Live feature in Adobe Acrobat infringed one of Rosebud's patents. Rosebud could not recover damages for patent infringement because Adobe stopped using the Collaborative Live feature before the Rosebud patent was issued. However, Rosebud claimed it had provisional rights under the Patent Act to recover a reasonable royalty for Adobe's infringing activity during the period after the patent application published up until Adobe discontinued the Collaborative Live feature. Adobe asserted, however, that Rosebud could not recover such damages because Adobe did not have actual notice of Rosebud's published patent application. The court agreed.

The Decision

The court noted that the statute grants provisional rights only if the infringer had actual notice of the published patent application, differentiating actual notice from constructive notice. According to the court, actual notice means notice "expressly and actually given," while constructive notice means that a party is charged with knowledge of a fact because it should have discovered certain information through proper diligence. The court acknowledged that the Patent Act does not go so far as requiring the patent applicant to provide actual notice by an affirmative act or to explain the nature of the allegedly infringing conduct.

Rosebud argued that Adobe had actual notice of the published patent application because 1) the same information in the published patent application was contained in a different patent application from a previous lawsuit between the parties; 2) Adobe's source code referenced a "Rosebud sample"; (3) some Adobe's emails referenced a Rosebud product and the patent from the previous lawsuit; and (4) Adobe's attorneys would have searched for patents and applications related to the patent from the previous lawsuit.

The court, however, emphasized that none of this evidence expressly identified the published patent application. And, although the parties had extensive litigation history on similar subject matter, the court rejected Rosebud's theory that Adobe had an affirmative duty to search for Rosebud's published patent applications. As a result, the court held that Rosebud's evidence, at best, amounted to constructive notice of the published application, which precluded Rosebud from recovering damages for infringing acts that occurred before the patent issued.

Strategy and Conclusion

This case shows the value in monitoring the marketplace for infringement and giving actual notice of a patent application when it publishes or as soon as possible afterwards. Because the law requires actual notice of a published patent application to recover royalties for infringing acts that occurred before a patent issued, it is difficult to show that actual notice occurred at an earlier time merely by cobbling together whatever facts existed previously. As this case shows, a patent owner's attempt to impute knowledge of the published application to an infringer may fail, even where the parties have extensive litigation history on related patents.

Endnotes

¹ The Rosebud decision can be found at http://www.finnegan.com/files/upload/LES_Insights_Column/2015/Rosebud_v_Adobe.pdf.