Frolow v. Wilson Sporting Goods Co.

.Addressing for the first time whether marking a product with a patent number creates an estoppel preventing a later assertion that the product is not covered by the patent, the U.S. Court of Appeals for the Federal Circuit refused to adopt the doctrine of “marking estoppel,” but nonetheless reversed a lower court’s summary judgment ruling in favor of the defendant, finding that the lower court had erred in holding that defendant’s marking was irrelevant to whether defendant could now argue that marked products were not covered by the patent. Frolow v. Wilson Sporting Goods Co., Case No. 12-1185 (Fed. Cir., Mar. 15, 2013) (Moore J.) (Newman, J., concurring).

Wilson had an exclusive license to Jack L. Frolow’s patent covering certain tennis rackets. Frolow sued Wilson for breach of license agreement and for patent infringement after finding that Wilson was not paying royalties on all licensed articles. The lower court dismissed the infringement claim for failure to state a claim in view of the license agreement. In the breach of contract case, the lower court made a determination of what constituted licensed articles, i.e., rackets covered by unexpired valid claims of the patent. The court granted summary judgment for Wilson for 37 of the 42 racket models upon Wilson’s showing that the rackets did not meet a specified “moment of inertia” limitation of the claims. The court found that Wilson’s marking of 14 racket models with Frolow’s patent number did not raise an issue of material fact because Wilson’s marking had “no bearing on whether literal or doctrine of equivalents infringement has occurred.” The court also declined to find that Wilson’s marking prevented it from challenging whether the accused racket models were licensed articles under a doctrine of “marking estoppel” recognized in some circuits.

On appeal, the Federal Circuit vacated summary judgment on the 14 marked racket models because the lower court had ignored the circumstantial evidence presented by the patent marking, calling it a form of extrajudicial admission that the product falls within the patent claims, which was sufficient under the facts of the case to create an issue of material fact, precluding summary judgment. The Court, however, refused to create a separate equitable doctrine unique to patent law when Congress had already created a remedy under the False Marking Statute, 35 USC § 292.

Judge Newman wrote a concurring opinion, taking the position that Wilson, not Frolow, should bear the burden of showing that marked products were not licensed articles. She disagreed with the majority that the marking statute was related to providing an appropriate remedy for a breach of patent license. Emphasizing that the dispute arose under a contract, she asserted that a party to a contract may be bound to the course of performance of the agreement, which could be an indicator of a waiver or modification to the terms of the contract. Disagreeing with the majority that patent marking and royalty payments were merely circumstantial evidence or admissions, she suggested that Wilson may have waived its right to dispute that the marked products were not licensed articles in view of Wilson’s repeated markings and its exploitation of the full value of the patent as the exclusive licensee over a long period of time. Judge Newman found it incorrect to place the patent-law burden of proving infringement on Frolow, which would ignore his performance and reliance under the contract. She would have the Court place on Wilson the contract law burden of establishing that a different interpretation of the contract than that established by the course of performance. Disagreeing with Judge Newman, the majority asserted that the plaintiff had the burden of proof in a breach of contract claim and the contract interpretation issues raised by her concurrence were evidentiary issues that the court might consider but which did not, however, create any presumption that would shift the burden of proof.