To Collect Damages for Patent Infringement, a Patentee Must Affirmatively Provide (1) Constructive Notice by Marking Products or b) Actual Notice to the Accused Infringer
| March 11, 2020
ARCTIC CAT, INC. v. BOMBARDIER RECREATIONAL, INC.
February 20, 2020
Lourie, Moore, and Stoll (Opinion by Lourie)
Summary
Arctic Cat sued Bombardier for patent infringement. Despite the court’s holding that Bombardier “willfully” infringed, Arctic Cat was unable to collect any damages for pre-trial sales, much less treble damages due to the courts holding that Arctic Cat did not provide proper notice as required under 35 U.S.C. 287, whether provided (a) constructively through proper patent marking or (b) actually through direct notice to Bombardier. The Federal Circuit also emphasized that the facts that Bombardier had actual knowledge of the patents and even willfully infringed were immaterial, and explained that affirmative notice by the patentee is statutorily required.
Background
a. Factual Setting
Arctic Cat, Inc. (Arctic Cat) sued Bombardier Recreational Products, Inc. (Bombardier) for infringement of U.S. Patent Nos. 6,793,545 and 6,568,969 related to steering systems for personal watercraft.
Artic Cat only sold product via its licensee, Honda. According to the terms of the licensee agreement, Honda was expressly not required to provide patent marking to provide constructive notice of the ‘545 or ‘969 patents to which the licensed products applied.
b. Procedural Background
Arctic Cat initially sued Bombardier in the Southern District of Florida for infringement of the ‘545 and ‘969 patents. The district court held that Bombardier willfully infringed. Additionally, the district court also held that Bombardier failed to meet its burden to prove that unmarked products sold by Honda practiced the claimed invention.
Bombardier previously appealed to the Federal Circuit, and the Federal Circuit previously affirmed the district courts holding of willful infringement. However, the Federal Circuit previously remanded the case back to the district court on the issue of patent marking, explaining that the burden was on the patentee to prove that the identified products do not practice the claimed invention once the alleged infringer identifies a product alleged to practice the claimed invention.
On remand, the district court held that Arctic Cat was unable to recover any pre-complaint damages for failure to provide constructive or actual notice to Bombardier.
The Federal Circuit’s Decision
Patent Marking Statute
In the opinion, the Federal Circuit explains that “[i]n this appeal, we are tasked with interpreting the marking statute, 35 U.S.C. § 287. Statutory interpretation is a question of law that we review de novo.”
Under 35 U.S.C. 287, “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 … by fixing thereon the word “patent” … . 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.”
Requirements under the Patent Marking Statute
The Federal Circuit explains that under 35 U.S.C. 287, “a patentee who makes or sells patented articles can satisfy the notice requirement of § 287 either by providing constructive notice—i.e., marking its products—or by providing actual notice to an alleged infringer,” and explains that “[a]ctual notice requires the affirmative communication of a specific charge of infringement by a specific accused product or device.”
Constructive Notice
With respect to the requirement of “constructive notice,” Arctic Cat argued that such notice wasn’t required because after initially selling unmarked products, Honda ceased sales. As a result, Arctic Cat asserts that such cessation of sales excuses non-compliance with the notice requirement in a similar manner to how a patentee that does not make any sales is not required to provide such notice. However, the Federal Circuit explained that after an unmarked product is sold into the market, such products “remain on the market, incorrectly indicating to the public that there is no patent,” and held that “once a patentee begins making or selling a patented article, the notice requirement attaches, and the obligation imposed by 35 U.S.C. 287 attaches and is discharged only by providing actual or constructive notice.”
Actual Notice
With respect to the requirement of “actual notice,” Arctic Cat argued that the defendant had actual knowledge of the patent and, thus, had actual notice of the patent. Moreover, Arctic Cat argued that such actual knowledge was also evidenced by the district court’s holding of “willful” infringement. However, the court explained that “whether a patentee provided actual notice must focus on the action of the patentee, not the knowledge or understanding of the infringer, and that it is irrelevant whether the defendant knew of the patent or [even] knew of his own infringement.”
Licensees
With respect to sales through licensees, the Federal Circuit explained that “[a] patentee’s licensees must also comply with § 287.” While licensees have such an obligation, the court further explained that “courts may consider whether the patentee made reasonable efforts to ensure third parties’ compliance with the marking statute.” However, the court noted that in this case Arctic Cat’s “license agreement with Honda expressly states that Honda had no obligation to mark.”
Takeaways
- With respect to “constructive notice,” an important take away is to remember that constructive notice can be provided at any time by starting proper patent marking. Thus, in the event that a patentee initially does not provide proper patent marking, proper patent marking can be correctively initiated at a later date.
- With respect to “actual notice,” an important take away is to remember that an alleged infringer’s “actual knowledge” of the patent (and even “intentional” or “willful” infringement of that patent) is irrelevant to the notice requirement under 35 U.S.C. 287, which is entirely dependent on the actions of the patentee.
a. For example, if an infringer is aware that the patentee’s product is not marked, the infringer could potentially continue infringement without concern of potential damages until receipt of actual notice from the patentee.
- With respect to sales of patented products through licensees or third parties, an important take away is to remember that such licensees or third parties “must also comply” with 35 U.S.C. 287. However, the court indicates that “a court may consider whether the patentee made reasonable efforts to ensure third parties compliance with the marking statute.” Accordingly, another important takeaway is to ensure that licensing agreements include reasonable requirements for marking by the licensee.
- With respect to the requirement of patent marking, the opinion also provides some other helpful reminders that:
a. The patent marking requirement does not apply in the context of “process” or “method” claims. Notably, this provides another reason to consider inclusion of “method” or “process” claims.
b. The patent marking requirement also does not apply in the event that a patentee never makes or sells a product. Notably, this provides some advantage to non-practicing entities (NPEs).
