Federal Circuit - Arctic Cat v. Bombardier Recreational - Failure to Mark Eliminates Pre-Complaint Damage - $28M Subtracted from $46M Judgment

In Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., the Federal Circuit held that the patent owner Arctic Cat was not entitled to recover damage for Bombardier's watercraft steering control patent infringement occurring before the filing of the complaint, because Arctic Cat and its licensee failed to mark the patented product as required by 35 USC § 287.

Note this resulted in a $28 million reduction in Arctic Cat's $46 million judgment.

It should be noted marking is only required if the patent owner makes a product. It's also a patent owner rather than licensee obligation. Further, a non-practicing entity, or a patent owner asserting method claims, can be awarded damages up to six years prior to the filing of the complaint under 35 USC § 286. In this case, the Federal Circuit held no damages could be recovered for infringing products sold after the sale of unmarked products ceased and before filing of the patent infringement complaint.

Copyright © 2020 Robert Moll. All rights reserved.

USPTO - Request for Comments on Virtual Marking

On June 16, 2014, the USPTO published a notice seeking public comments on virtually marking.

The America Invents Act (AIA) provides for virtual marking as an alternative to physically marking to give notice to the public that a product is subject to patent protection.

As stated in the notice:

"United States patent law provides that marking a product with a patent number gives the public notice of a patent. Under 35 U.S.C. 287(a), if a patented product is not marked with the patent number by the patent owner, damages for infringement will be limited to the time period after the patent owner gives actual notice to an alleged infringer.

Section 16 of the AIA provides a new way to comply with the requirements for patent marking by allowing patentees to mark their products virtually rather than physically. Instead of printing the actual patent number on the product, businesses can display the term “patent” or “pat.” along with an accompanying URL address of a Web site where the actual patent number will be located.

Section 16 of the AIA also requires the Director of the USPTO to prepare a report for Congress analyzing:

(A) The effectiveness of “virtual marking” as an alternative to the physical marking of articles;

(B) whether such virtual marking has limited or improved the ability of the general public to access information about patents;

(C) the legal issues, if any, that arise from such virtual marking; and

(D) the deficiencies, if any, of such virtual marking.

The report is due to Congress not later than three years after the date of enactment of the AIA, which is September 16, 2014.

Interested members of the public are invited to submit written comments they deem relevant to the above-mentioned issues. The USPTO would particularly welcome observations and comments on any of the following topics:

1. Experiences with creating and maintaining adequate and effective virtual marking Web sites;

2. effectiveness of virtual marking, including experiences using virtual marking Web sites to locate relevant patent information;

3. challenges presented by virtual marking in providing sufficient notice to the public, including sufficiently associating patent numbers with the corresponding product within the virtual marking Web site;

4. economic impacts of virtual marking, including costs differences between physical marking and virtual marking;

5. advantages and disadvantages of virtual marking in comparison with physical marking;

6. identification of other practical or legal concerns with virtual marking; and

7. any other issues or experiences regarding virtual marking.

Commenters are requested to include information identifying how they are impacted by virtual marking, e.g., whether they are patent owners, licensees, or any other type of user, business, or manufacturer."

Copyright © 2014 Robert Moll. All rights reserved.

Patent Planet's Most Popular Posts - December 2011 - 2012

Almost midnight in Los Altos, California. I am struggling with the task of writing up a summary of the most important patent news in 2012. Hmm lots of material to consider (212 published posts plus 11 draft posts). Finally, I decided to take the easier route: let Blogger Stats do the work. Yes, that's my ticket out of here!

Based on total pageviews - the top ten posts on Patent Planet from December 2011 - 2012:

1. WildTangent v. Ultramercial - Supreme Court Rejects Federal Circuit Decision on 35 USC 101

2. Failure to Patent Mark - Losing Easy Money

3. Third Party Preissuance Submissions of Prior Art

4. The Banana Grab - Market Share Can Change

5. Patent Reexamination Has Arrived for Both Parties - Oracle v. Google

6. America Invents Act - Ex Parte Reexamination Fees Increase & Inter Partes Review Replaces Inter Partes Reexamination on September 16, 2012

7. Board of Patent Appeals Backlog Enormous and Growing

8. USPTO Satellite Office in San Jose Delayed

9. Richard Stallman and Professor Duffy Clash - Solutions to the Software Patent Problem - Santa Clara University - November 16, 2012

10. America Invents Act - Final Rules for Third Party Preissuance Submissions

Happy New Year!

Copyright © 2012 Robert Moll. All rights reserved.

A Guide to the Legislative History of the America Invents Act (AIA)

If you are interested in the legislative history of the America Invents Act (AIA), I recommend reading Joe Matal's A Guide to the Legislative History of the America Invents Act: Part I of II and Part II of II. Here are links to download Part I and Part II of the Guide. This article should be helpful to applicants for US patents and parties seeking to challenge issued US patents in the PTO.

As a brief summary, Part I describes the legislative history and origins of the first-to-file system and the modifications to 35 USC 102 (novelty and statutory bars), 35 USC 103 (obviousness), 35 USC 115 (inventor's declaration), 35 USC 122 (confidential status and publication of applications), and 35 USC 135 (derivation).

Part II describes the legislative history and origins of the new laws that apply to US patents. Thus, it describes the post-grant procedures, inter partes proceedings, supplemental examination, business method patent review, the new defense of prior commercial use, partial repeal of the best mode, virtual and false marking, advice of counsel, court jurisdiction, PTO funding, and rules for patent term extensions.

Although the article should prove useful, legislative history can be misleading. Indeed, the Supreme Court  has warned against relying on legislative statements not anchored in the text of the statute. First, the statements may not pertain to a law that passed. It is also difficult to identify who drafted the law. Given we don't know who drafts the laws, how do we assign weight to the statements of various members of Congress? Also the legislative history of the AIA is lengthy as it stretches from 2005 to 2011. Nonetheless, organizing the legislative history of the AIA is a major undertaking so the article is a welcome start.

Copyright © 2012 Robert Moll. All rights reserved.

Oracle v. Google - Joint Statement Reveals A Weakened Patent Case

In August 2010, Oracle sued Google for infringement of Java patents and copyrights obtained from the Sun acquisition. Judge Alsup has set the matter for trial on April 16. Because the trial is scheduled for eight weeks, Judge Alsup has ordered Oracle and Google submit proposals to streamline the trial. In response, Oracle and Google filed the following joint statement of trial streamlining proposals in court yesterday.

I think the consensus is Google's primary risk is it may be required to pay major damages (e.g., hundreds of millions) for copyright infringement. The risk of paying major damages for patent infringement is less likely for the following reasons:

Google is faced with only two patents at trial. It used to be faced with seven US patents, but Google aggressively filed for reexamination of the patents. Only two Oracle patents survived for the trial: U.S. Reissue No. 38,104 (the '104 reissue patent) and U.S. Patent No. 6,061,520 (the '520 patent). My previous post: Patent Reexamination Has Arrived - Oracle v. Google gives details.

Google has limited past damages. Google was able to prove that Oracle and Sun had not marked any practice products so limited damage to those after Oracle gave Google notice under 35 USC 287. My previous post: Failure to Patent Mark - Losing Easy Money gives additional details.

Google is negotiating for a low ball amount for future damages. Google proposes to pay Oracle $2.7 million and 0.5% of Android revenues for the '104 reissue patent expiring in December 2012 and $80,000 and 0.015% for the '520 patent expiring in 2018. Since Google gives away Android free to handset manufacturers, revenue for this proposal may be based on Google ads and third party applications. I am not certain from the joint statement how Google intends the revenue be established, and why Oracle should accept the independent damages expert's royalty (0.015%) and unadjusted damages of a mere $80,000 for the '520 patent.

Google may win the judge's favor in agreeing to drop its invalidity defense to the '520 patent. Google had to prove invalidity by clear and convincing evidence so giving it up may not mean much: "Judge Alsup I am giving up this (difficult) defense and streamlining my case for trial, so please side with me...."

Google has preserved the defense of non-infringement. Oracle has to prove infringement by a preponderance of the evidence and this is often a potent defense for defendants.

Google is not engaging Oracle with its damage proposals. In my opinion, Oracle may be right to rebuff Google's "low ball" and go to trial. The proposed damages appear to be too low. I think everybody knows it, but this is positional bargaining 101.

Copyright © 2012 Robert Moll. All rights reserved.

Stanford Professor Mark Lemley's Things You Should Care About in the New Patent Statute

I had the pleasure of speaking with Professor Mark Lemley at the Advanced Patent Law Institute, Palo Alto on December 8-9, 2011. 

Professor Lemley has authored and co-authored many papers with penetrating insights into the US patent system. He may be even the most prolific patent scholar of our time given he ranks third in total downloads among all law professors. He mostly writes about intellectual property and patent law, presumably niche topics with a small audience, so this is quite a feat. 

I commented we have been around this for years, but it must be difficult for people getting into US patent law now given all these changes. He replied you can imagine the challenge I have teaching two bodies of US patent law (past law and the America Invents Act law (AIA)) to my class at Stanford. 

How do we address the changes and complexity in US patent law today? An important part of understanding the AIA is identifying the effective dates. To help you avoid being buried in all the details, I point to Professor Lemley's Things You Should Care About in the New Patent Statute which outlines twenty significant AIA changes by their effective dates.  

If you are interested here's a link to Professor Lemley's other papers. 


Copyright © 2012 Robert Moll. All rights reserved. 

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:

Soverain Software LLC v. Amazon.com, Inc.

Copyright © 2011 Robert Moll. All rights reserved.