This article first appeared in Managing Intellectual Property
The marking requirement of 35 USC § 287 serves as a limitation on damages. When a patented article is sold, either by the patentee or his licensee, the seller may give constructive notice of the patent by marking the patent number. If this marking is not done, the patent owner may be precluded from obtaining damages for the period of non-compliance, up to the time the infringer receives actual notice of the infringement.
It is generally accepted as well-settled under Federal Circuit precedent that the marking requirement does not apply to method claims per se (see Bandag, Inc v Gerrard Tire Co, 704 F2d 1578, 1581 (Fed Cir 1983)). Wellsettled, however, does not necessarily mean correct. The holding in Bandag was based, in part, on the premise that the term "patented article" in Section 287 has a clear meaning that excludes a process or method. That premise is called into question by the Supreme Court's decision in Quanta Computer Inc v LG Electronics, Inc, 553 US 617, 128 S Ct 2109, 170 L Ed2d 996 (2008), which held that a method patent was exhausted by the sale of an item that "embodied" the method. In view of Quanta, it is possible the Supreme Court would construe "patented article" to encompass any article that embodies a patented invention, regardless of whether the patent is directed to an article per se or to a method.
Revisiting Bandag in light of Quanta reveals several problems with the Bandag decision, including that i) its application has led to inconsistent results, ii) it is not supported by the Supreme Court case it cites as authority, iii) it ascribes a meaning to "patented article" that may be unduly narrow, and iv) it undermines the notice function intended by Congress.
Under Bandag, the marking requirement does not apply when a patent is directed only to a method. This may be straightforward when a patent contains only method claims, but inconsistent results are possible when a patent contains both method claims and apparatus claims. According to Federal Circuit precedent, the marking requirement does not apply to the method claims when only the method claims are asserted (Crown Packaging Technology, Inc, et al v Rexam Beverage Can Co, 559 F3d 1308, 1316 (Fed Cir 2009); Hanson v Alpine Valley Ski Area, Inc, 718 F2d 1075, 1083 (Fed Cir 1983)), but the marking requirement does apply to the method claims when both method claims and apparatus claims are asserted (American Medical Systems, Inc v Medical Engineering Corp, 6 F3d 1523, ¬1539 (Fed Cir 1993)). Thus, particular method claims may be subject to the marking requirement in one litigation but not subject to it in a different litigation, depending solely on whether the patent owner asserts apparatus claims together with the method claims.
The situation becomes more confusing when multiple patents are asserted. When a patent containing only method claims is asserted together with both (i) a patent containing only apparatus claims and (ii) a patent containing both method and apparatus claims, the marking requirement applies to the patent that contains only method claims (Devices for Medicine, Inc v Boehl, 822 F2d 1062, 1066 (Fed Cir 1987)). In contrast, when a patent containing only method claims is asserted together with a patent containing only apparatus claims, but no patent containing both method and apparatus claims is asserted, the marking requirement does not apply to the patent that contains only method claims (State Contracting & Engineering Corp v Condotte America, Inc, 346 F3d 1057, 1073 (Fed Cir 2003)).
These results are logically inconsistent. For example, if a patent contains both method and apparatus claims, and both types of claims are asserted, under American Medical Systems the marking requirement would apply to the method claims. If the identical method claims and the identical apparatus claims appear in separate patents, and those patents are asserted together, under State Contracting the marking requirement would not apply to the method claims. Yet, if a third patent containing both method and apparatus claims is also asserted, under Devices for Medicine the marking requirement would apply to the patent that contains only method claims.
The Federal Circuit's comments in Crown Packaging, its most recent decision on this issue, suggest that the Court itself may not be pleased with the state of the law (see for example Crown Packaging, 559 F3d at 1310 where Judge Moore qualifies the analysis with the statement "because we are bound by our holding in Hanson").
The decision in Bandag was not supported by the Supreme Court case it cited
In Bandag, the Federal Circuit relied on two points in affirming the district court's holding that the marking requirement of Section 287 does not apply to method patents: 1) "the clear language of the statute" and 2) it is "settled in the case law that the notice requirement of [Section 287] does not apply where the patent is directed to a process or method," citing Wine Ry Appliance Co v Enterprise Ry Equipment Co., 297 US 387, 56 S Ct 528, 80 L Ed 736 (1936) as an example (Bandag, 704 F2d at 1581). As discussed below, the clarity of the statutory language is debatable, and certainly seems to be called into question by the Supreme Court's decision in Quanta. Moreover, the Supreme Court's decision in Wine does not support the holding in Bandag.
Wine involved a situation where "[n]either petitioner nor another with its consent has ever manufactured or vended an article under the infringed patent". The question before the Supreme Court, therefore, was whether 35 USC § 49 (the predecessor to Section 287) precluded a non-manufacturing patentee from recovering damages for the period before giving actual notice of the infringement. The Court analysed the language of the statute and concluded that the marking requirement does not apply to a patentee who neither makes nor sells any article. In rejecting the accused infringer's argument that the marking requirement applied to all patentees, the Court said: "If respondent's position is correct, process patents and patents under which nothing has been manufactured may be secretly infringed with impunity, notwithstanding injury to owners guilty of no neglect." The Court's reference to process patents was not relevant to its decision, since no process patent was at issue in Wine, and therefore the Court's comments are mere dictum in so far as they relate to process patents.
Accordingly, the Supreme Court's decision in Wine merely stands for the proposition that the marking requirement does not apply to a non-manufacturing patentee. It does not support a sweeping rule that the marking requirement is inapplicable to process patents.
Interpreting "patented article"
Turning to the term "patented article", in Bandag the Federal Circuit characterised the statutory language as "clear" and implicitly held that "patented article" necessarily excludes methods. The Court provided no explicit interpretation for "patented article", but it apparently construed the term to mean an article covered by a patent on the article per se. While at first blush the meaning of "patented article" may seem clear, further consideration reveals that is not the case. For example, one could argue that "patented article" excludes machines, which the Federal Circuit has recognised to be a category of patentable subject matter distinct from articles of manufacture (In re Nuijten, 500 F3d 1346, 1353 (Fed Cir 2007)). Yet the marking requirement is applied routinely to machines (American Medical Systems, 6 F3d at 1528). If the term "article" can be construed to include machines, perhaps the language is not as clear as the Court viewed it in Bandag.
A reasonable alternative interpretation is that "patented article" encompasses any article that necessarily embodies a patented invention, regardless of whether the patent is directed to an article per se or to a method. In this regard, the opinion of the Supreme Court in Quanta is informative. In Quanta, the Court addressed the issue of whether the patent exhaustion doctrine applies to method claims. Writing for a unanimous Supreme Court, Justice Thomas stated:
It is true that a patented method may not be sold in the same way as an article or device, but methods nonetheless may be "embodied" in a product, the sale of which exhausts patent rights. Our precedents do not differentiate transactions involving embodiments of patented methods or processes from those involving patented apparatuses or materials. To the contrary, this Court has repeatedly held that method patents were exhausted by the sale of an item that embodied the method.
Since the Supreme Court considers the sale of an item that embodies a patented process sufficient to trigger exhaustion, it might also consider the sale of an item that embodies a patented process sufficient to trigger the marking requirement. In other words, in view of Quanta, it is possible the Supreme Court would interpret "patented article" to encompass any article that embodies a patented invention, regardless of whether the patent claims are directed to an article per se or to a method.
The import of the Supreme Court's comment in Quanta is amplified by its prior statement in Bonito Boats, Inc v Thunder Craft Boats, Inc, 489 US 141 (1989). In Bonito Boats, the Court stated that the public is meant to rely on marking as "a ready means of discerning the status of intellectual property embodied in an article of manufacture or design" (emphasis added). If a patented method can be embodied in an item, according to Quanta, then the marking requirement should apply to that item to inform the public of the patented method, according to Bonito Boats.
Of course, the marking requirement is a statutory provision, not a judicially created doctrine such as patent exhaustion, and therefore implicates additional issues particular to statutes. For example, other statutory provisions provide a context in which terms must be construed. One commentator noted that use of the term "patented article" in Section 287(a) is distinguishable from use of the term "process patent" in 35 USC § 287(b) (David R Bennett, "When Do the Marking and Notice Requirements of 35 USC § 287 Apply to Patented Processes and Methods?", Bloomberg Law Reports, Vol 3, No 21 (2009)). Section 287(b), however, is specifically directed to process patents, and it was enacted subsequent to Section 287(a). In those circumstances, the use of the specific term "process patent", in a statutory provision dealing with that specific type of patent, should not impact the meaning of a term in an earlier-enacted provision.
Also of note is the fact that Congress modified the language of predecessor Section 49 when it enacted Section 287. In particular, Section 49 stated that when the patentee fails to mark a patented article "no damages shall be recovered by the plaintiff, except on proof that the defendant was duly notified of the infringement, and continued, after such notice, to make, use, or vend the article so patented" (35 USC § 49 (emphasis added)). In contrast, the corresponding language of Section 287 reads:
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 (35 USC § 287(a) (emphasis added)).
The change from specific language ("continued ... to make, use or vend the article so patented") to more general language ("continued ... to infringe") supports the position that the infringement referenced in Section 287 is meant to encompass more than making, using or selling an article, such as infringement by performing a patented process.
The doctrine of implied licence is also informative. When a patentee sells an item that has no use other than to practise a patented process of the patentee, an implied license to use the purchased item to practise the process is inferred (Met-Coil Systems Corp v Korners Unlimited, Inc, 803 F2d 684, 686 (Fed Cir 1986)). This doctrine again illustrates the inextricable link between a patented process and a product that has no reasonable use except in that process.
The Bandag decision undermines the notice function of Section 287
Exempting articles that embody a method claim from the marking requirement undermines the notice function of that requirement. In this regard, the reasons the Supreme Court gave in Quanta for applying patent exhaustion to method claims apply equally in the context of patent marking. Justice Thomas wrote that refusing to apply the patent exhaustion doctrine to method claims would "seriously undermine" that doctrine (Quanta, 128 S Ct at 2117). He further wrote: "Apparatus and method claims 'may approach each other so nearly that it will be difficult to distinguish the process from the function of the apparatus'" (citing United States ex rel Steinmetz v Allen, 192 US 543, 559, 24 S Ct 416, 48 L Ed 555, 1904 Dec Comm'r Pat 703 (1904)).
Therefore, a patentee could "shield practically any patented item from exhaustion" by characterising it as a method, which he referred to this as an "end-run around exhaustion". The same is true of refusing to apply the marking requirement to method claims. In cases where the product sold by the patentee "embodies" a patented method, the notice function of the marking requirement is seriously undermined if that requirement is not applied to the method claims. The public has no way of knowing that the product necessarily implicates a method patent, and the patentee can effectively shield itself from the consequences of failing to mark such products by selectively asserting only method claims.
A comment of the Supreme court in Wine is fitting. The Court noted that notice via marking "can only be given in connection with some fabricated article. Penalty for failure implies opportunity to perform" (Wine, 297 US at 395). In that case, the non-manufacturing patentee had no opportunity to give constructive notice. In contrast, when a fabricated article is encumbered by a patent on its use or manufacture, the patentee has an opportunity to inform the public of the patent by marking the article, and the patentee should be penalized for failing to mark. The patentee is in a far better position than the public to know that the article is encumbered by a method patent. The Federal Circuit's comment in Devices for Medicine is also of interest: "Having sold the product unmarked, [the patentee] could hardly maintain entitlement to damages for its use by a purchaser uninformed that such use would violate [patentee's] method patent" (Devices for Medicine, 822 F2d at 1066). This is not to say that a per se rule applying the marking requirement to all method claims is the correct interpretation of the statute. Clearly there are patented methods that are not embodied in a fabricated article, and there are articles that have non-infringing uses and do not necessarily implicate a method patent. When, however, an item is sold that has no reasonable non-infringing use or non-infringing method of manufacture, the marking requirement should be applied to the item to give the public notice of the patented method.
Clarification needed from Federal Circuit
In view of (i) the expanded meaning already given to "patented article" to include machines, (ii) the inextricable relationship between certain products and corresponding patented processes, as recognised by the Supreme Court in Quanta, (iii) the lack of Supreme Court authority supporting the Bandag decision, and (iv) the intended notice function of the marking requirement, an alternative interpretation of "patented article" to encompass any product that is necessarily encumbered by a patent, regardless of whether the patent is directed to an article per se or to a method, is reasonable.
Is legislative action required to effect such an interpretation of Section 287? Not necessarily. Although the courts do not have the power to change the law, they are charged with the task of construing it. A change in the application of Section 287 with respect to method patents could be viewed as correcting an unduly narrow interpretation of the statute. When the issue next comes before the Federal Circuit, the Court should consider an en banc ruling that the phrase "patented article" in Section 287 is properly construed to encompass all tangible items necessarily used to practice a patented process or necessarily produced by a patented process.
The views expressed are not necessarily those of Fitzpatrick Cella or its clients. The author wishes to thank Marie Weiskopf for her assistance in preparing the article.