Licensee’s failure to mark may limit a patent owner’s recovery of pre-suit damages even for a disclaimed patent claim

The patent owner sued alleging infringement of two patents describing methods to facilitate communication among multiple modems in a network. A jury found the patents valid and infringed, and awarded the patent owner $15.7 million in damages. The accused infringer moved for judgment as a matter of law (JMOL), which the district court denied, regarding obviousness and separately to limit damages based on the patent owner’s failure to require a licensee to mark their products. The accused infringer appealed the denial of the JMOLs and the court’s claim construction. The Federal Circuit affirmed the district court’s claim construction and denial of the JMOL on obviousness, but vacated the district court’s decision limiting damages based on marking and remanded the case for further proceedings.

Prior to trial, under 35 U.S.C. §287, the accused infringer challenged the patent owner’s ability to recover pre-suit damages based on the patent owner’s failure to require its licensee to mark products covered by one of the claims of the asserted patent, claim 40. In an attempt to avoid the issue, the patent owner withdrew claim 40 from its infringement allegations and filed a statutory disclaimer under 35 U.S.C. §253(a) with the U.S. Patent and Trademark Office, disclaiming the claim. The district court found that the patent owner’s obligation to require its licensee to mark disappeared once the patent owner disclaimed claim 40. The Federal Circuit stated that, although its precedents stated maintained when a claim was disclaimed it was as if the claim had never existed, a disclaimer relinquished the patent owner’s rights to that claim and not the public’s rights. Marking, as the Federal Circuit explained, is about the rights of the public to be on notice concerning patented articles. The Federal Circuit held that it was improper for the patent owner to use disclaimer to avoid the marking statute and vacated the district court’s denial of the accused infringer’s motion to limit damages and remanded the case for further proceedings on damages. The Federal Circuit also noted that the question of whether the limitation on pre-suit damages applied to the entire patent or on a claim-by-claim basis was before the district court but not properly part of the appeal. Nonetheless, the Federal Circuit remanded this question to the district court to address in the first instance..