I. Introduction
The patent statute requires patent owners who make, offer for sale, or sell products covered by an apparatus patent to provide notice of their rights by marking a patented article, or in some cases its packaging, with a suitable patent notice. Failure to suitably mark can have a significant financial impact on such a patent owner, as up to six years of potential damages may be lost under the statue, i.e., during the period before the patent owner provided an accused infringer with actual notice of its infringement allegations.
In the wake of the United States Supreme Court’s ruling in Bilski,1 software-related inventions are as important as ever. However, marking software products with a suitable patent notice is not as self evident as with physical products. What should be marked? How should the marking appear — electronically when the software is used, or physically on the packaging, or both? This article considers the applicability of the patent marking statute in such circumstances and provides practical strategies for patent marking in the context of software-related inventions.
II. Background
A patentee can collect damages in an infringement action from the time of actual notice or constructive notice to the alleged infringer of the existence of the asserted patents, whichever is sooner. An “affirmative communication of a specific charge of infringement by a specific accused product or device” provides actual notice to a potential infringer.2 The filing of a complaint alleging patent infringement constitutes notice, but a letter sent to a potential infringer that merely identifies the patents does not necessarily do so.3
Absent actual notice of infringement to defendant, a patentee who makes, offers for sale, or sells products covered by an apparatus patent can comply with the marking statute in order to preserve the availability of damages for pre-suit infringement. By consistently marking its products that embody one or more claims of an asserted patent in compliance with the marking statute, the patentee provides constructive notice to potential infringers:4
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, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or when, from the character of the article, this cannot be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. 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.
35 U.S.C. § 287(a) (emphasis added). The Federal Circuit has explained the policy behind the marking statute in Nike, Inc. v. Wal-Mart Stores, Inc.:5
The marking statute serves three related purposes: (1) helping to avoid innocent infringement . . . ; (2) encouraging patentees to give notice to the public that the article is patented . . . ; and (3) aiding the public to identify whether an article is patented. . . .
Thus, a patentee who manufactures a patented article must mark (or provide actual notice) to be eligible for pre-suit damages. What about a patentee who practices a patented method? Early on, the Supreme Court faced the problem of how to provide the public such notice of “intangible” inventions, such as methods. In Wine Ry. Appliance Co. v. Enterprise Ry. Equipment Co.,6 the Court held that marking “can only be given in connection with some fabricated article”; the law did not require patentees “who did not produce” a patented article to provide notice to an infringer recover damages.7 The Federal Circuit has ruled similarly, explaining that because there is usually nothing to mark, section 287 does not apply to method claims.8
III. Does The Marking Statute Apply To Software-related Inventions?
Software-related inventions fall into several classifications. They may strictly be method claims carried out by a computer. They may take the form of “computer readable medium” claims, in which they are in apparatus form and operable to instruct a computer to perform certain steps. And they can also take the form of system claims.
As a general proposition, the marking statute applies to apparatus/system claims but not to patents that contain only method claims.9 But what about patents with method claims as well as apparatus/system claims? Because software-related inventions may include multiple types of claims, we will address this issue further.
The Federal Circuit considered this issue in American Medical Systems v. Medical Engineering Corp.,10 where the court explained that the marking statute does not apply to method claims because there is usually nothing to mark. But “[w]here a patent contains both apparatus and method claims, to the extent that there is a tangible item to mark by which notice of the asserted method claims can be given, a party is obliged to do so if it intends to avail itself of the constructive notice provisions of section 287(a).”11 Several district courts have come to the same conclusion.12 Thus under American Medical Systems, if a patent contains both method and apparatus claims, the patentee is required to mark the products that embody the patent.
A few courts have taken a different view over the years — that a patentee can escape the marking requirement with artful pleading (only asserting the method claims of a patent that contains both method and apparatus claims).13 A more recent Federal Circuit panel decision, Crown Packaging Tech., Inc. v. Rexam Beverage Can Co.,14 appears to espouse such artful pleading.
IV. What Is A “Tangible Item”?
In patents that include apparatus/system claims, or apparatus/system claims and method claims, the marking statute applies to the extent there is a “tangible item” to mark. In the context of software-related inventions, determining what constitutes a tangible item is not always easy.
For example, is a website a “tangible item”? The parties presented this exact question to the Eastern District of Texas in Sovereign Software LLC v. Amazon.com, Inc.15 In Sovereign Software, defendant submitted screen shots of websites that included patent notices to prove that a website could be marked.16 Defendant also submitted evidence that a licensee of plaintiff’s predecessor-in-interest included a patent mark identifying the patent at issue in its website’s legal notices section. Importantly, the patents-in-suit contained both method and apparatus claims. The court rejected plaintiff’s view of an item’s status as “tangible or intangible defined apart from whether it can be marked” as contradicting the three purposes of the marking requirement that the Federal Circuit explained in Nike, Inc. v. Wal-Mart Stores, Inc, discussed above.17 Instead, the Sovereign Software Court did not “divorce an item’s status as tangible or intangible from its ability to be marked, but rather define[d] ‘tangible item[s],’ as used in American Medical Systems, as those items that can be marked and intangible items as those that cannot be marked.”18 This being so, the Sovereign Software Court granted defendant’s motion for summary judgment on that issue.
Is a website a “tangible item” if the commercial embodiment of the patented invention is accessed and used through patentee’s website, but the patent claims do not cover the website itself? The District of Delaware addressed this related question in IMX, Inc. v. Lendingtree, LLC.19 IMX dealt with a patent covering a method and system for trading mortgages in real-time that was utilized in a software application. The court determined the marking statute applied because the website was “intrinsic” to the patented system:20
Although [plaintiff] does not make or sell the computer components through which its patented system is processed, and although [plaintiff’s] website itself is not the patented invention, nevertheless, consistent with the purpose of § 287(a) as interpreted by the Federal Circuit, the website is intrinsic to the patented system and constitutes a ‘tangible item to mark by which notice of the asserted method claims can be given.’ given’. . . .Therefore, [plaintiff] had the duty to mark if it is claiming pre-litigation damages.
Is software downloadable from a website a “tangible item”? The District of Minnesota in Northbrook Digital Corp. v. Browster, Inc.21 determined that the marking statute applied when the software downloads were the commercial embodiment of the patents at issue and available on the patent licensee’s website. (The licensee was the defendant in an earlier action in which patentee had previously accused that same download of infringing.) The Northbrook Court determined that the marking statute applied because the websites that offered the software could “easily contain the requisite marking information.”22
In the context of software-related inventions then, the threshold issue of what constitutes a “tangible item” essentially becomes “can it be marked?” If so, it is seemingly a tangible item within the Federal Circuit’s holding of American Medical Systems, at least according to several district courts.
V. Practical Strategies For Marking Software-related Inventions
A patentee should mark the article itself unless “from the character of the article, this cannot be done. . . .”23 Thus, if “computer readable medium” patent claims are at issue, to the extent there is sufficient room, a patentee should consider including patent markings directly on the disc that includes the claimed software-related inventions.
On the other hand, courts have been somewhat liberal in determining compliance with section 287 on this issue. For example, over a hundred years ago, the Supreme Court allowed marking on a product’s packaging in Sessions v. Romadka,24 where the patent at issue related to devices (“spring catches”) used in the manufacture of trunks and patent marking on the smaller size devices would not have been legible after they were tinned.25 The Court focused on whether the public received notice through packaging marking.26 Other courts have decided this issue on a similar basis.27
Alternative marking of the package may sufficiently comply with the marking statute when some reasonable consideration exists for not marking the article due to physical constraints or other limitations or, for reasons that go to the very purpose of the statute, marking the article itself would not provide sufficient notice to the public.28 In Rutherford v. Trim-Tex, Inc.,29 the District Court explained the implications of physical constraints:
Where a small article is affixed with the appropriate marking, the marking itself may be too small to afford the public adequate notice. Even where the article is large, the marking on the article must be large enough to easily read for notice to be effective and comply with the statute. Thus, a marking that required a magnifying glass to read fails to give the required notice to the public.
Non-physical characteristics of the article (e.g., cost) can be relevant considerations for alternatively marking the package.30
However, if the patented article contains non-patent markings or printing on it, a patent markings on the package rather than the product might not be sufficient. In Creative Pioneer Products Corp. v. K-Mart Corp.,31 the Southern District of Texas determined that patent marking on the tool’s package was insufficient to comply with statute when the wire stripper tool had other lettering and calibrations embossed on its handle. The Court explained that “the character of the product was such that a marking on the product would have been a relatively simple matter.” 32
Patent marking in the context of software installation raises additional issues. In Computer Acceleration Corp. v. Microsoft Corp.,33 Microsoft moved for judgment as a matter of law that plaintiff’s “transient marking” during software installation was legally insufficient. Microsoft argued that the patent marking should have been shown during actual use of the product, for example in the user interface on the “help” screen or a screen shown upon application launch.34 Plaintiff opposed, noting that during installation of the software covered by the patent at issue, a user was presented with notice of the patents, and had to click “Next” to get to the subsequent installation steps.35 The court never ruled on the motion due to a verdict, and thus it is a potential issue for another court to consider.
One should also provide a clear nexus between the patent for which notice is being provided and the tangible item. In IMX,36 discussed above, the court determined that access to the patent-in-suit on the patentee’s website was not sufficient notice under the marking statute:
The court concludes that it has not provided a sufficiently clear nexus between the ‘947 patent and the patented “system.” On the two website pages where [plaintiff’s] patents are mentioned, “IMX Exchange” refers to the corporate entity, not the patented system; the patented technology is described as “unique loan information and real-time trading system.” Where “patented technology” is mentioned in connection with [plaintiff’s] products, it refers to “patented pricing technology” or “patented technology” for the “Private Label for Lenders” product, as opposed to the “IMX® Exchange for Lenders” product. [Plaintiff], therefore, has failed to give the public adequate notice that its “IMX Exchange” system is protected by the [patent-in-suit].
Thus, the patentee should provide reasonably specific notice to potential infringers.
VI. Conclusion
Software-related inventions can take the form of system claims, apparatus claims, or method claims. Many patents directed to software-related inventions contain all of these claim forms. Unless the asserted patent contains solely method claims, the patentee should consider marking the disc used to install the software product, embedding the patent numbers in the software so that it is visible during at least installation, and listing the patents on accompanying documentation. This includes websites operating with patented software.
*This article first appeared in the July/August 2011 issue of IP Litigator.
