The U.S. Court of Appeals for the Federal Circuit recently held that a patentee could not use disclaimer to avoid the patent marking statute. Even when a licensee is selling the patented product, it must mark the patent number on the product for the patent owner to receive damages for the time period before filing the complaint or providing actual notice of infringement. The intent of the marking statute is to protect the public; although disclaimer surrenders any rights the patent owner may have, the rights of the public are preserved.
The patent marking statute requires patent owners to mark their patented products with the patent number in order to collect damages for patent infringement for the time period prior to the filing of a complaint unless the patent owner previously provided notice of the alleged infringement to the accused infringer. Licensees or other entities authorized by the patent owner must also mark the products covered by any claims of the patent. By requiring a patent owner to identify whether a product is patented or not, the marking statute protects the public by helping to avoid innocent infringement.
In Rembrandt Wireless Technologies, LP v. Samsung Electronics Co., Rembrandt sued Samsung, alleging patent infringement of two patents involving Bluetooth technology. Before trial, Samsung tried to limit a potential damages award by arguing that it should not pay pre-notice damages because Rembrandt’s licensee had not marked the products covered by one claim of the patent. Rembrandt then withdrew that specific claim from its infringement allegations and disclaimed nineteen claims of the patent with the USPTO, effectively eliminating those claims from the original patent. A California district court denied Samsung’s motion to limit damages, and the jury found Samsung infringed the patents.
Rembrandt brought an infringement suit against Samsung alleging infringement of two patents directed to the Bluetooth enhanced data rate standard. Prior to filing the litigation, Rembrandt licensed both of the asserted patents to Zhone Technologies. The Zhone license agreement did not, however, specifically state that Zhone was required to mark its licensed products.
Before trial, Samsung argued that damages should be limited to those incurred after Samsung received notice of Rembrandt’s patents. Specifically, Samsung alleged that Zhone had sold products that practiced one claim of the patent without marking the product with the patent number. Thus, Samsung had only received notice of the patents when Rembrandt filed its complaint. In response to Samsung’s arguments, Rembrandt withdrew its infringement allegation for nineteen claims, including the one claim that Zhone’s product practiced and filed a statutory disclaimer of that claim with the USPTO. The district court denied Samsung’s motion to limit damages, stating that the disclaimer required the court to treat the claim as if it never existed.
The Federal Circuit Decision
On appeal, the Federal Circuit emphasized that the patent marking statute serves to protect the public. The notice requirement’s intent is that the public can rely upon the lack of notice in exploiting an unmarked product’s features and designs, without worrying about innocent infringement. There is no liability for damages until the patentee gives either constructive notice, such as marking, or actual notice, such as a cease-and-desist letter or filing of an infringement suit.
Although a disclaimer such as that done here surrenders any rights the patent owner may have, the court held that disclaimer does not relinquish the rights of the public. The Court rejected the position that disclaimer could avoid the marking statute because otherwise it gives the opportunity for an end-run around the statute and would undermine its purpose. Therefore, the Court held that using disclaimer after the fact will not remedy a failure to mark products and will not revive pre-notice damages.
The Court therefore vacated the judgement and remanded the case to the district court.
Strategy and Conclusion
This case shows it is important to include in a license agreement, the requirement for licensees to mark products with applicable patent numbers. The license agreement should also reserve a right to inspect the products to confirm that licensees are following this requirement because they cannot avoid the obligation through disclaimer at a later point.
Further Information The Rembrandt opinion can be found here.
Originally printed in LES Insights on May 9, 2017.