Rosebud LMS v Adobe Systems (Fed. Cir. 2015)

Ignorance of patent applications may be a justifiable way to avoid damages for patent infringement, even amidst a lawsuit for infringement of a related patent in the same patent family. This Federal Circuit (“FC”) case interpreted the “actual notice” requirement in 35 USC § 154(d) to require actual knowledge of a published patent application, which is a higher standard and distinct from “constructive notice.” A patentee seeking to collect damages under § 154(d) has a high bar to meet in proving actual notice. Knowledge of related patents, even those sharing a description, and indirect references to a published patent application in emails may not be sufficient to prove actual notice. In this case, the FC affirmed the district court’s order granting summary judgment that denied pre-issuance damages under § 154(d) because there had been no actual notice of the published patent application.

Background

In 2014, Rosebud LMS Inc. (“Rosebud”) filed an action against Adobe Systems Inc. (“Adobe”) alleging that Adobe’s Collaborative Live feature in Adobe Acrobat infringed certain method claims of US Patent No. 8,578,280 (“the ′280 patent”). [2] The ′280 patent is a continuation of US Patent No. 8,046,699 (“the ′699 patent”), which is a continuation of US Patent No. 7,454,760 (“the ′760 patent”). Prior to this action, Rosebud had filed two additional patent infringement actions against Adobe regarding the ‘669 patent and the ‘760 patent. [2]

Adobe moved for summary judgment. Adobe argued that Rosebud was not entitled to post-issuance damages because Adobe has discontinued using the Collaborative Live feature prior to the issuance of the ‘280 patent; and that Rosebud was not entitled to pre-issuance damages because Adobe had no actual notice of the published application which led to the ‘280 patent. [3] Rosebud did not oppose Adobe’s position in respect of post-issuance damages, but took issue with whether or not Adobe had actual knowledge of the published ‘280 patent application. [3] Rosebud argued since the ‘280 patent was a continuation of two other patents involved in prior litigation between Adobe and Rosebud, Adobe had actual knowledge of the parent patents of the ‘280 patent and would have searched for related patents and applications in the family.

The district court granted summary judgment for Adobe, finding no evidence of actual notice. The district court noted that Rosebud’s evidence did not identify the ‘280 patent application by number and was evidence of constructive notice at best. [4]

Interpreting “Actual Notice”

  • 154(d) provides a patent owner the right to obtain a reasonable royalty from the date of publication of the application to the date the patent is issued if a patent infringer had “actual notice of the published patent application.” The FC noted that § 154(d) provides a patentee the extraordinary remedy of collecting damages before its patent issues. [8] “Actual notice” is required, which is a higher standard and distinct from “constructive notice.” The FC interpreted “actual notice” to require “actual knowledge of the published patent application.” [12] The FC cautioned that the extraordinary remedy provided for in § 154(d) should not be awarded unless an alleged infringer actually knows about a patent application and engages in infringing conduct with such knowledge. However, the FC noted that “actual notice” is not limited to affirmative acts by a patentee and can include knowledge obtained without an affirmative act of notification. [8]

Determining Whether There Was “Actual Notice”

Adobe argued that it first received notice of the published ’280 patent application when Rosebud threatened this lawsuit in 2014 — after Adobe had discontinued use of the patented technology. [12] Rosebud disagreed and argued that there was sufficient circumstantial evidence proving actual notice. Rosebud’s evidence fell in three main categories:

  1. Adobe had knowledge of the ‘760 patent – the grandparent patent to the ‘280 patent

Rosebud attempted to argue that Adobe’s knowledge of the ‘760 patent indicated that it had actual notice of the published ‘280 patent application. [14] The FC did not agree with Rosebud’s position. Knowledge of related patents does not necessarily qualify as actual notice. While the FC noted that the ‘760 patent and the ‘280 patent shared a description, the notice requirement is not limited to the specification. The notice requirement requires an alleged infringer to have notice of the claims of the published patent application and the fact that the applicant is seeking a patent to cover those claims.

  1. Adobe followed Rosebud and its products and wanted to emulate the product’s features

Rosebud presented seven exhibits of emails from Adobe employees in support of this allegation, which the FC found insufficient to prove actual notice. [15] The emails were dated more than two years prior to the publication of the ‘280 patent application. The FC did not find anything in the emails that suggested that Adobe or its employees were monitoring Rosebud and its products.

  1. Adobe discovered the published ‘280 patent application from prior litigation

Rosebud argued that it is standard practice for defending parties in a patent infringement action to search for patents and applications related to an asserted patent. [16] Rosebud thus argued that Adobe’s outside counsel would have discovered the published ‘280 patent application while preparing for litigation regarding the ‘699 patent. The FC disagreed, noting that Adobe would not have discovered the published ’280 patent application because the lawsuit regarding the ‘699 patent never reached the claim construction stage.

Abuse of Discretion

Rosebud alleged that the district court abused its discretion by granting summary judgment prior to the completion of Adobe’s discovery. [17] The FC disagreed. Rosebud had notice of and failed to oppose Adobe’s intent to file an early motion for summary judgment. [18] Additionally, Rosebud delayed filing its discovery until after it received Adobe’s motion for summary judgment.

The FC affirmed the district court’s order and granted summary judgment for Adobe.