Patent Holders Beware: Notice of Infringement of Unmarked Products Must Come from You
December 19, 2001
Daniel K. "Dan" Hampton- Boston
The Federal Circuit recently determined that notice to an accused patent
infringer, which fixes the date from which damages are measured in cases where
the patented product has not been marked, must come from the patent holder
itself. On June 4, 2001, the Federal Circuit issued its opinion in Lans v.
Digital Equipment Corp., 252 F.3d 1320 (Fed. Cir. 2001). In Lans, the
inventor of a patented product lost his infringement case because he had
personally sent the letter claiming infringement to the accused infringers. The
problem was that the inventor had previously transferred ownership of the patent
to a corporate entity of which he was the managing director and sole
shareholder. The court determined that, because the inventor was not the patent
owner when he sent the letter and instituted the infringement action, he could
not make the infringement claim. Furthermore, because he lacked standing to make
the claim of infringement himself, he could not later amend his claims to add
the corporate entity as a party.
By the time the corporate entity filed its own action, the patent had
expired. As a result, both infringement actions failed. The court was not swayed
by the inventor’s argument that he had made an "honest and understandable
mistake." It disregarded evidence that the inventor tried to offer to
suggest that there was a legitimate question as to whether the assignment of the
patent to the corporate entity was valid. The patent holder also unsuccessfully
argued that notice from someone closely associated with the patentee should
satisfy the statutory notice requirements. The Federal Circuit rejected this
contention, reasoning that to loosen the statutory notice requirement would not
only run contrary to the statutory language, but also would undesirably require
courts to engage in difficult determinations of what degree of association
between the patent holder and the party sending the notice is sufficient.
The Lans opinion underscores two important points. First, where
possible, patent owners should mark their patented inventions. Marking removes
the requirement of sending notice of infringement in order to collect damages,
and thereby maximizes the period for which damages can be recovered. It also
clears away what this case demonstrates can be a significant obstacle in
establishing entitlement to damages at all. Under current law, notice of
infringement absent marking must come from the patent owner, presenting specific
charges of infringement of specific patents by specific products. Patent holders
who have marked their patented products will still likely send notice letters,
so that they can later claim that the infringement was willful, but they do not
need to depend upon such letters to establish entitlement to damages and a
failure in the letter will not torpedo their entire action.
Second, patent owners should look critically at how they are holding and
using their patents in light of their overall corporate structure. In some
cases, closely related entities share patent rights in a way that may make
ownership difficult to ascertain or prove. Lans underscores the
importance of having formal written licenses that clearly delineate the rights
and obligations of the parties in case ownership of the patent becomes an issue,
which it almost certainly will if litigation commences.
For more information, contact Daniel Hampton at 1-888-688-8500 or via e-mail
at dhampton@hklaw.com