While filing a deed to your property in the Registry of Deeds is nice, placing a highly visible “BEWARE OF DOG” sign is much more likely to warn potential trespassers to stay off.
Similarly, where patent claims delineate the metes and bounds of your intellectual property, properly marking your products with the appropriate patent numbers can place potential infringers on notice of your patents, providing future patent litigation with some extra “bite.”
In patent litigation, proving infringement is only the first step – the ultimate goal is practical economic benefit. Even when a patent holder can establish infringement, damages are available only from a point in time at which an infringer is on notice of the patent and of the infringing activity.
Generally speaking, U.S. Patent Law provides two ways of placing an alleged infringer on notice: (1) giving constructive notice by properly marking your product with your patent number; or (2) providing the infringer with actual notice by sending a notice letter or filing a complaint.
By the time you send that cease-and-desist letter, however, your company may have already lost significant profits due to the infringement. Further, sending a notice letter runs the risk of providing the alleged infringer with a basis for filing a declaratory judgment action in a venue of their choice (i.e., as inconvenient for you as possible).
On the other hand, once you start properly marking your products with the patent numbers that cover your product, you place the world on notice that your product is protected by patents, and damages accrue upon subsequent infringement.
Therefore, properly marking your products with your patent numbers maximizes the value of your patents, and leaves you with some flexibility with respect to your enforcement strategy.
With the benefits that patent marking can provide, it is important that you mark your products properly. Failure to properly comply with the marking requirement may limit your ability to recover substantial damages, and in some instances improper marking may subject you to civil penalties.
Two relatively recent cases highlight some pitfalls in marking your products.
In Clontech Laboratories v. Invitrogen Corp. (Fed. Cir. 2005) the plaintiff, Clontech Laboratories, filed a lawsuit alleging that the defendant, Invitrogen Corp., falsely marked its molecular biology products with patent numbers that did not cover those products.
Falsely marking a product with a patent number or even the word “patent” or “patent pending” can violate U.S. patent law if done with the intent to deceive the public. The federal District Court trial judge found Invitrogen liable for false marking.
On appeal, the Federal Circuit reviewed the false marking findings on a product-by-product basis, and affirmed that Invitrogen had falsely marked its cDNA library products with patents that did not cover those products.
In its attempt to justify the false marking, Invitrogen argued that “there is no harm in marking products with patents even when those products do not fall within the bounds of properly construed claims.”
The Federal Circuit disagreed, holding that under U.S. patent law, a patent holder must have a “good faith belief that the marked article falls within the subject matter” of the claims.
In Soverain Software v. Amazon.com (E.D. Texas 2005), the defendant, Amazon.com, paid $40 million to the plaintiff, Soverain Software, to settle a patent case in the U.S. District Court for the Eastern District of Texas. While settling patent cases prior to trial is nothing new, an interesting pre-trial decision in the case is instructive.
Amazon moved for partial summary judgment, alleging that Soverain and its patent licensees failed to comply with the patent marking statute to provide Amazon with either actual or constructive notice of Soverain’s patents. The patents at issue were “e-commerce” patents relating to the use of a virtual shopping cart and to customer recognition and tracking on a website.
On Aug. 8, 2005, the trial court judge granted Amazon’s motion for partial summary judgment regarding the licensees’ failure to properly mark their websites. In doing so, the judge held that websites incorporating patented software are “tangible items” under U.S. patent law, and therefore must be marked to give constructive notice to potential infringers.
The judge emphasized that Soverain’s patents contained both method and apparatus claims. Soverain and its licensees were required to mark “to the extent that there is a tangible item to mark by which notice of the asserted method claims can be given.”
Things to Keep in Mind
When your patent finally issues, here are some things to keep in mind:
Be vigilant when marking your products. While marking can enable you to collect greater damages, make sure you are vigilant in marking your products consistently and continuously. Failure to do so may prevent you from benefiting from the statute.
Make sure you are properly marking your products. Make sure your products are truly covered by your patents before marking them. As in Clontech, you must have a good faith belief that the marked article falls within the subject matter of the claims, or you may find yourself paying civil fines.
If appropriate, mark your website. Although the Soverain decision was by a U.S. District Court for the Eastern District of Texas, and thus, is not binding precedent in other jurisdictions, the lesson is clear – mark your websites that incorporate your patented software with your patent numbers. It is much easier to mark your website, rather than risk losing potential recovery by having to argue why the Eastern District of Texas is not persuasive.
Police your licensees. Make sure your patent licensees are properly complying with the patent marking statute. Soverain’s licensees failed to mark their websites, allowing Amazon to argue that it did not have “constructive notice” and possibly mitigate its potential exposure to damages for infringement.
Patents have value. Even after a ruling against Soverain that may have affected its amount of potential recovery for infringement, Soverain’s patents for virtual shopping carts nonetheless garnered $40 million in a pre-trial settlement.
James Coe is an associate with Hamilton, Brook, Smith & Reynolds, P.C focusing on intellectual property litigation, portfolio development and enforcement for technology companies. He can be reached at [email protected] or (978) 341-0036.