September/October 2017
IP Litigator
By David K. Mroz; Laith M. Abu-Taleb
At some point in every patent litigation, a plaintiff must identify the specific patent claims it believes are infringed. This claim identification process can occur in the complaint, infringement contentions, expert reports, or all of the above. Complicating matters is the fact that patents often have different type of claims, i.e., some claims can be directed to an apparatus while others can be directed to a method of using that apparatus. Because of patent marking laws, the duration of the damages period can depend on the type of patent claim asserted in the case (e.g., method or apparatus). For example, if only method claims are asserted in a litigation, the patent marking laws do not shorten the damages period. But if apparatus claims are asserted (either alone or alongside method claims), the damages period depends on the time at which the plaintiff began complying with the marking statute. Thus, before asserting patent claims in litigation, a plaintiff should analyze the extent of its marking practices and carefully consider whether what types of claims to assert based on those practices.
Under 35 U.S.C § 286, "no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint." While Section 286 creates a six year window for past damages, a plaintiff is not guaranteed to benefit from the full scope that window. This is because a party cannot begin collecting damages until it provides sufficient "notice" under 35 U.S.C. § 287(a).1 For example, if notice is provided four years before the complaint was filed, then a party can collect past damages going back four years. In no event, however, can a party go back beyond six years.
Section 287(a) permits actual and constructive notice. Actual notice occurs when a party informs the accused infringer that specific products infringe particular patents (e.g., with a letter or by filing a complaint).2 Constructive notice occurs when a party marks "substantially all" of its products with patent numbers that cover the particular product.
While there is no magic number for the amount of marking necessary to satisfy the "substantially all" standard, courts have provided guidance. In two separate cases, the Federal Circuit found that marking compliance rates of 95 percent and 88 to 91 percent were sufficient.3 District courts have found that compliance rates around 83 to 85 percent were sufficient to survive a summary judgment motion of no marking.4 One district court found that marking 77 to 78 percent of the products-at-issue did not satisfy the "substantially all" standard.5
A plaintiff need not comply with the marking statute in every case. For example, a plaintiff need not comply with the marking statute if it does not physically make a product covered by the asserted patent (because there is no product to mark).6 Even if a plaintiff makes a product, that plaintiff need not comply with the marking statute if the patent at issue only has method claims.7 In these two situations, the plaintiff can collect past damages going back the full six years, provided it wins on infringement and validity.
A third scenario, which is the focus of this article, exists when two conditions are met: (1) a plaintiff makes a product covered by the asserted patent; and (2) the asserted patent has both apparatus and method claims. The marking statute does not apply in this situation if a plaintiff only asserts method claims in the litigation.8 But the marking statute does apply if a plaintiff asserts any apparatus claims, either alone or in combination with the method claims.9
It is important to be aware of the marking scenario described above when deciding what types of claims to assert in a patent litigation. If a plaintiff knows it has not marked any products in the past, it may want to consider asserting only method claims in the litigation, since doing so would allow the plaintiff to go back six years to collect damages without having to comply with the marking statute. This approach becomes even more appealing if the plaintiff can assert a viable damages theory that links the defendant’s use of the method claims to product sales (i.e., a theory that allows the plaintiff to collect product sale damages for method claim infringement).
On the other hand, if a party has been diligent about marking since six years before the complaint was filed, then the plaintiff may want to consider asserting apparatus claims, either alone or in addition to method claims. Damages theories often are simpler and more streamlined when based on apparatus claims, as opposed to method claims. This is because apparatus claims can be infringed when a party makes or sells the infringing product, while method claims are only infringed when a party uses the infringing product.
For these reasons, it is important for a plaintiff to fully examine where it stands on its marking practices when determining what types of patent claims to assert in litigation. Such an analysis allows the plaintiff to navigate liability issues (e.g., infringement and validity) without unwittingly decreasing the value of the damages case.
Endnotes
1 Am. Med. Sys., Inc., v. Med. Eng’n Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993).
2 Funai Elec. Co. v. Daewoo Elecs. Corp., 616 F.3d 1357, 1373 (Fed. Cir. 2010).
3 Maxwell v. J. Baker, Inc., 86 F.3d 1098 (Fed. Cir. 1996); Funai Elec. Co., 616 F.3d 1357, 1373.
4 Stryker Corp. v. Zimmer Inc., 2012 WL 6821683 at *4 (W.D. Mich. Nov. 29, 2012); Imagexpo, L.L.C., v. Microsoft Corp., 299 F. Supp. 2d 550, 554 (E.D. Va. 2003).
5 Universal Elecs., Inc. v. Universal Remote Control, Inc., 34 F. Supp. 3d 1061, 1097 (C.D. Cal. 2014).
6 Texas Digital Sys., Inc. v. Relegenix, Inc., 308 F.3d 1193, 1220 (Fed. Cir. 2002) (citing Wine Railway Appliance Co. v. Enterprise Railway Equip. Co., 297 U.S. 387 (1936)).
7 Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1581 (Fed. Cir. 1983).
8 Crown Packaging Tech. Inc. v. Rexam Beverage Can Co., 559 F.3d 1308, 1316 (Fed. Cir. 2009).
9 Id.
Originally printed in IP Litigator in September/October 2017. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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