Wednesday, December 28, 2011

Failure to Patent Mark - Losing Easy Money

Marking has become an important issue in cases like the Oracle v. Google patent suit. Search on "marking" in the Groklaw articles. The issue boils down to this: If a patent owner or its licensee fails to mark its products, damages cannot be recovered for infringement occurring before actual notice (i.e., a specific charge of the infringement or filing a patent infringement complaint).

35 USC 287 suggests marking is simple. Fix the word "patent" or "pat." together with the patent number on the product, or if this cannot be done on the product packaging. Analyst and blogger Florian Mueller notes how difficult it has been for patent owners in the ITC in recent times. The details are described here: The ITC is tough terrain for mobile patent plaintiffs.

The computer industry continues to lose money due to a failure to mark patented products. Compared to winning in the ITC, marking should be easy, but companies don't appear to do a good job of marking when it involves software patents. Here's some possible reasons marking is not implemented that well: 

1. Software may be viewed as incapable of being marked. Stating software is a intangible set of instructions and not patentable per se obscures that software is often contained in specific device or installed in a general purpose computer on storage media (e.g., DVD, CD, or solid state device). If the patent has device or computer-readable medium claims, it should suffice to mark "substantially consistently and consistently" on the device, media, or if necessary, the associated packaging.

Another approach is to virtual mark the device or storage media as permitted under the America Invents Act (AIA). Virtual marking is a mark (e.g., URL) that directs the public to a freely-accessible Internet address where a patented product is associated with its patent number to give notice that a product is patented. This should become the preferred way to mark in the future.

2.  The PTO is so backlogged that US patent issue and the ability to mark happens well after product is released. Apple's whopping (yes 358 pages) iPhone patent issued in 2009, which was well after the iPhone release in 2007. Apple sold tens of millions of iPhones with no related patent markings because it sold the iPhones before this patent issued.

I don't see this problem going away. Despite progress under Director Kappos, the PTO continues to have lengthy pendencies (the PTO Visualization Center says pendency is 34 months) and the PTO art units that examine software inventions are even more backlogged.  Plus current law permits a one year grace period to file a US patent application after the first offer for sale or public use of the invention so companies may choose to patent after product release today.

3.  Some have concerns of the risk of false marking. This is understandable since US law gave anyone standing to sue a patent owner  for false marking for a fine of up to $500 for every offense. Then the Federal Circuit in its wisdom held an "offense" relates to each article that has been falsely-marked. Thus, a fine for 10,000 software programs falsely marked could rise to $5,000,000. No wonder a cottage industry (opportunistic patent attorneys) arose to sue any patent owner with a large number of improperly marked products. Never mind some products simply bore expired patents, the plaintiffs were too busy working in the "public" interest. Fortunately, the risk of false marking is reduced because the AIA requires only one who has suffered a competitive injury has the right to sue.

4.   The value of the software patent may be found in method claims, and a method cannot be marked like a patented article. Decades of law say 35 USC 287 does not impose a duty to mark on the owner of a method patent or even on a patent owner who is not manufacturing a patented product. Although virtual marking doesn't expressly resolve the problem of how to mark a method, it seems it should be extended by amendment to methods since the argument that a method patent cannot be marked is no longer accurate given the ease of marking on the Web.

Caveat 1 Virtual marking appears to require free access. Presenting patent marking on a client computer to a paying user, does not appear to satisfy the freely-accessible Internet requirement of 35 USC 287. Thus, it may be best to present the information on a web site, which is freely accessible to the public as well.

Caveat 2 If a company has lots of products and lots of patents, listing all of the patents on a company web site without stating how they relate to the products may not satisfy the requirement to "mark" the product.  RIM's effort to virtually mark before the AIA probably failed in two ways: (1) listing thousands of patents on a web site provided no notice which product contains certain patented inventions, and (2) listing thousands of patent raised the concern of false marking or suggested to the layperson that all or some unspecified large subset of the patents were related to the products.

Caveat 3 Software upgrades and patches may "remove" the patented invention from the application and raise the spectre of false marking. So like most of the stuff in life you can't just set it up and walk away. You need a team who understands the software and monitors the company software products to remove a patent from the list that is no longer pertinent to a given product in a timely manner.

Caveat 4 It is unclear whether presenting patent numbers at the client computer of a distributed system will suffice for marking for an invention that resides on the server side. On the other hand, since only an administrator routinely may view server-side software, perhaps you display the patent and number at the client, but state the invention is on the server.

In the future, virtual marking should be the preferred way to mark since it provides a flexible and efficient way to notify the public of the existence of a patent. Virtual marking should also open the door for more patent owners to avoid false marking charges and obtain more than a reasonable royalty for patent infringement occurring prior to actual notice.

These are just preliminary thoughts and I expect the Federal Circuit will ultimately weigh in on these issues. In the meantime you may want to read the following pre-AIA district court decision on patent marking related to web sites:

Copyright © 2011 Robert Moll. All rights reserved.