Federal Circuit Review - Issue 256

256-1. Petitioner Waived Right to Assert Time-Bar Argument on Appeal due to Not Raising the Argument Originally to the Board

The United States Court of Appeals for the Federal Circuit recently issued a ruling affirming the Patent Trial and Appeal Board’s holding that the challenged claim of Acoustic Technology’s patent was unpatentable, reasoning Acoustic waived its time-bar defense, and substantial evidence supported the Board’s unpatentability determination.See Acoustic Tech., Inc. v. Itron Networked Solutions, Inc., 2019-1061, 2020 U.S. App. LEXIS 4469 (Fed. Cir. Feb. 13, 2020) (Before Moore, Reyna, and Taranto,Circuit Judges) (Opinion for the Court, Reyna,Circuit Judge). A companion opinion was published on the same day.See Acoustic Tech., Inc. v. Itron Networked Solutions, Inc., 2019-1059, 2020 U.S. App. LEXIS 4468 (Fed. Cir. Feb. 13, 2020). (Before Moore, Reyna, and Taranto,Circuit Judges) (Opinion for the Court, Reyna,Circuit Judge).

Acoustic Technology, Inc. (“Acoustic”) is the owner of U.S. Patent No. 6,509,841 (“the ’841 patent”) directed to “communications systems for utility providers to remotely monitor groups of utility meters.” Related to this appeal, Claim 8 of the ’841 patent recites:

8. A system for remote two-way meter reading comprising:

a metering device comprising means for measuring usage and for transmitting data associated with said measured usage in response to receiving a read command;

a control for transmitting said read command to said metering device and for receiving said data associated with said measured usage transmitted from said metering device; and

a relay for code-division multiple access (CDMA) communication between said metering device and said control, wherein said data associated with said measured usage and said read command is relayed between said control and metering device by being passed through said relay.

In 2010, Acoustic sued Itron Inc. (“Itron”) alleging infringement of the ’841 patent. Subsequently, the parties settled the suit by agreeing that Acoustic would license the ’841 patent to Itron. Under 35 U.S.C. § 315(b), which prohibits instituting inter partes review when a petition requesting such review is filed more than 1 year after the date on which the real party in interest is served with a complaint alleging infringement, Itron became time-barred from instituting inter partes review on March 26, 2011.

Acoustic later sued Silver Spring Networks, Inc. (“Silver Spring”) alleging infringement of the ’841 patent. Silver Spring then filed a petition for inter partes review with the Patent Trial and Appeal Board (“the Board”). Prior to filing the petition, Silver Spring and Itron began confidential discussions regarding a potential merger. Before the merger could be completed, the Board instituted inter partes review. Only nine days after the Board instituted inter partes review, Silver Spring and Itron officially agreed to merge. While inter partes review was occurring, Silver Spring and Itron completed the merger. After completion of the merger, the Board issued its final written decision finding that Claim 8 of the ’841 patent was unpatentable. Subsequently, Acoustic appealed to the Federal Circuit.

On appeal, Acoustic asserted two arguments: (1) the Board’s final written decision is time-barred under 35 U.S.C. § 315(b) and thus the final written decision should be vacated and (2) the Board’s unpatentability determination is not supported by substantial evidence.

With regards to Acoustic’s first argument, the Federal Circuit held that Acoustic never raised the time-bar issue during the inter partes review proceeding, and thus, was unable to assert the issue on appeal. Under 35 U.S.C. § 315(b) “an inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner,real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” 35 U.S.C § 315(b) (emphasis added). To determine if a party is the “real party in interest” the Federal Circuit has held that the Board “must consider all relationships that arise before the date of institution, including relationships that arise after the petition filing date.Power Integrations, Inc. v. Semiconductor Components Indus., LLC, 926 F.3d 1306, 1314-1315 (Fed. Cir. 2019). Acoustic alleged Itron was the real party in interest before and after inter partes review was instituted, and thus was time-barred. In support for this argument, Acoustic explained that merger discussions with Silver Spring made Itron a real party in interest before the IPR was instituted and that Itron was indisputably a real party in interest after the IPR was instituted since “Silver Spring became a wholly-owned subsidiary of Itron.” In response, Itron asserted Acoustic waived the ability to argue on appeal the inter partes review proceeding was time-barred because Acoustic never raised this argument to the Board during the proceeding. The Federal Circuit agreed with Itron, explaining “[w]hen a party raises arguments on appeal that it did not raise to the Board they ‘deprive[] the court of the benefit of the [Board’s] informed judgment.’”In re NuVasive, Inc., 842 F.3d 1376, 1380 (Fed. Cir. 2016). Further, the Federal Circuit noted “allowing Acoustic to raise a time-bar challenge for the first time on appeal would afford it a significant and unfair advantage.” The Federal Circuit explained Acoustic was aware of the merger before the Board gave its final written decision and Acoustic did not provide any explanation for why it failed to raise the time-bar argument. Accordingly, without addressing the merits of Acoustic’s time-bar argument, the Federal Circuit held Acoustic was unable to assert the time-bar argument on appeal due to not raising the issue first during the inter partes review proceeding.

With regards to Acoustic’s second argument, the Federal Circuit held there was substantial evidence to support the Board’s unpatentability finding of the ’841 patent. On appeal, Acoustic asserted the Board erred with respect to finding the ’841 patent due to (1) anticipation by NetComm; (2) anticipation by Gastouniotis; and (3) obviousness in view of Nelson and Roach.

In arguing the Board erred in finding the ’841 patent unpatentable due to anticipation by NetComm, Acoustic alleged it was improper for the Board to rely “entirely on the testimony of Silver Spring’s expert.” In particular, Acoustic alleged that, since the expert stated during his testimony “a skilled artisan would ‘recognize’ NetComm as disclosing CDMA,” an “improper obviousness standard instead of the standard for anticipation” was applied. The Federal Circuit disagreed, explaining that when conducting an anticipation analysis, “the dispositive question is whether a skilled artisan would ‘reasonably understand or infer’ from a prior art reference that every claim limitation is disclosed in that single reference.”Akamai Techs., Inc. v. Cable & Wireless Internet Servs., Inc., 344 F.3d 1186, 1192 (Fed. Cir. 2003). Further, the Federal Circuit noted that expert testimony can be used to indicate what a skilled artisan would reasonably understand or infer. In this case, the expert testimony included a thorough analysis and clearly articulated why a skilled artisan would reasonably understand that NetComm disclosed every limitation of Claim 8 of the ’841 patent.

Additionally, Acoustic alleged it was improper for the Board to rely on “the same structures to satisfy separate claim limitations” when finding the ’841 patent was anticipated by Gastouniotis. In particular, Acoustic asserted the Board should not have relied on the remote station in Gastouniotis to disclose the control and relay limitation in Claim 8. The Federal Circuit disagreed, explaining that Gastouniotis disclosed a plurality of remote stations, and the Board properly relied on separate remote stations to disclose the control and relay limitations of Claim 8.

Lastly, Acoustic alleged it was improper for the Board to render the ’841 patent obvious in view of Nelson and Roach because the Board incorrectly “mapped Nelson onto the elements of Claim 8,” and the Board did not have substantial evidence to find a motivation-to-combine. The Federal Circuit rejected both arguments. The Federal Circuit explained that Nelson disclosed a plurality of electronic meter readers having different functionalities such that it was proper for the Board to rely on separate electronic meter readers to disclose the metering device and relay limitations of Claim 8. Additionally, the Federal Circuit explained the Board’s final written decision included a thorough analysis of Silver Spring’s arguments that a skilled artisan would have been motivated to combine Nelson and Roach, and these arguments were substantially supported by expert testimony that was not conclusory or defective.

Accordingly, the Federal Circuit affirmed the Board’s finding that Claim 8 of the ’841 patent was unpatentable.

A patent owner in an inter partes review must assert an argument that a petition is time-barred under 35 U.S.C. § 315 prior to the Board rendering a final written decision, or that argument is waived.

256-2. Challenges to IPR Decisions on Grounds of Time-bar and Obviousness Must be Raised Before the Board to Preserve Arguments On Appeal

The United States Court of Appeals for the Federal Circuit recently ruled on a Patent Trial and Appeal Board (“Board”) Inter Partes Review (“IPR”) Decision, affirming the Board’s holding that certain challenged claims of Acoustic Technology’s patent are not patentable because Acoustic waived defenses related to the IPR petition being time-barred and waived arguments of non-obviousness by not raising them with the Board.See Acoustic Tech., Inc. v. Itron Networked Solutions, Inc., 2019-1059, 2020 U.S. App. LEXIS 4468 (Fed. Cir. Feb. 13, 2020). (Before Moore, Reyna, and Taranto,Circuit Judges) (Opinion for the Court, Reyna,Circuit Judge).A companion opinion was published on the same day.See Acoustic Tech., Inc. v. Itron Networked Solutions, Inc., 2019-1061, 2020 U.S. App. LEXIS 4469 (Fed. Cir. Feb. 13, 2020) (Before Moore, Reyna, and Taranto,Circuit Judges) (Opinion for the Court, Reyna,Circuit Judge).

Acoustic Technology, Inc (“Acoustic”) owns U.S. Patent No. 5,986,574 (“the ’574 patent”) directed to “systems for utility providers to remotely monitor groups of utility meters.” Claim 16 is representative of the claims at issue on appeal:

16. A concentrator having means for relaying communication between a plurality of metering devices and at least one control station comprising:

concentrator comprising a meter and means for monitoring an amount of usage of a medium;

LAN means for receiving data from said plurality of metering devices over a local area network;

WAN means for transmitting data associated with both said plurality of metering devices and said monitoring means over a wide area network to said at least one control station; and

a housing comprising a meter receiving said monitoring means, said LAN means and said WAN means.

In 2010, Acoustic sued Itron Inc. (“Itron”) for infringement of the ’574 patent. The parties later settled the suit by agreeing that Itron would receive a license to the ’574 patent from Acoustic. Additionally, Itron became time-barred on March 26, 2011, from pursuing an IPR of the ’574 patent under 35 U.S. C. § 315(b), which prohibits institution of an IPR when a petition is filed more than 1 year after the date on which the real party in interest is served with a complaint.

Six years after suing Itron, Acoustic sued Silver Spring Networks, Inc. (“Silver Spring”) for infringement of the ’574 patent. In response, Silver Spring filed two IPR petitions with the Board to challenge the ’574 patent, giving rise to this appeal. Before filing these petitions, Silver Spring and Itron entered into confidential negotiations regarding a potential merger. Ultimately Silver Springs and Itron agreed to the merger 9 days after the Board instituted the IPR of the ’574 patent. The merger was completed while the IPR proceedings of the ’574 patent were well underway, and the Board issued its final written decision finding the challenged claims of the ’574 patent unpatentable almost a year after the merger had been completed. After the Board’s decision, Acoustic timely appealed to the Federal Circuit.

On appeal, Acoustic raises two main arguments: (1) the Board’s final written decision should be vacated because the underlying IPR proceedings are time-barred under 35 U.S.C. § 315(b), and (2) the Board’s obviousness findings rest on improper claim construction of “WAN means,” found in certain challenged claims of the ’574 patent.

With respect to Acoustic’s time-bar argument, the Federal Circuit held that Acoustic waived the time-bar argument by never raising the issue during the IPR proceeding. Without raising the issue during the IPR itself, Acoustic had “deprived the court of the benefit of the [Board’s] informed judgment.” In re NuVasive, Inc.,842. F.3d 1376, 1380 (Fed. Cir. 2016). Under 35 U.S.C. § 315(b) “an inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner,real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” 35 U.S.C. § 315(b) (emphasis added). Under § 315(b), to determine the “real party in interest” the factfinder “must consider all relationships that arise before the date of institution, including relationships that arise after the petition filing date.” Power Integrations Inc. v. Semiconductor Components Indus., LLC, 926 F.3d 1306, 1314–1315 (Fed. Cir. 2019). Acoustic alleged that Itron was the real party in interest both before and after the IPRs were instituted. According to Acoustic, the merger negotiations with Silver Spring made Itron a real party in interest before the IPR was instituted, and the completed merger made Itron the real party in interest after the IPR was instituted because Silver Spring became a “wholly owned subsidiary of Itron” and Itron “controlled [Silver Spring] and had a significant interest” in the IPR proceedings. Itron contended that Acoustic waived the time-bar argument because the issue was never raised to the Board during the IPR proceeding. The Federal Circuit ultimately found in favor of Itron because Acoustic became aware of the merger more than seven months before the Board issued its final written decision, yet Acoustic failed to challenge the proceeding as time-barred.

With respect to the Board’s improper claim construction of “WAN means,” the Federal Circuit held that Acoustic’s argument on appeal was new, and that because Acoustic raised arguments heard for the first time on appeal, those arguments were also waived. Specifically, Acoustic argued that the Federal Circuit should reverse the Board’s obviousness findings because the Board erred by defining the corresponding structure for “WAN means” as “any device.” Rather, Acoustic argued that the Board should have limited the corresponding structure to a “conventional WAN radio” because that was the only structure disclosed in the specification. Acoustic explained further that because the Board failed to properly construe “WAN means” it “never identified a conventional WAN radio in the prior art.” Itron contended that the obviousness arguments relied on a different construction of “WAN means” than what Acoustic argued in front of the Board, and therefore the Board had not yet addressed the non-obviousness arguments that Acoustic raised for the first time on appeal. Itron pointed out that before the Board, Acoustic argued non-obviousness by asserting that the prior art did not teach a conventional WAN radio capable of transmitting overpublicly availableWide Area Networks (WAN). However, on appeal, rather than arguing that the prior art fails to disclose a conventional radio capable of transmitting overpublicly availableWAN, Acoustic argued that the prior art fails to discloseanyconventional WAN radio. Because Acoustic never presented to the Board the non-obviousness arguments asserted in the appeal, the Federal Circuit held those arguments to be waived.

Accordingly, the Federal Circuit affirmed the Board’s finding with respect to the unpatentability of certain claims of the ’574 patent on both grounds at issue in the appeal.

To preserve an argument on an appeal from an inter partes review, a party must first raise the argument to the Board. Failure to raise such an argument may render it waived. Accordingly, IPR petitioners should preserve non-frivolous arguments for appeal by first presenting them to the Board.

256-3. Federal Circuit Holds Servers Operated by a Third Party are Not Sufficient to Establish Proper Venue in Patent Infringement Suit

The Federal Circuit recently granted a petition for a writ of mandamus to Google LLC (“Google”) finding that venue was improper for a case filed by Super Interconnected Technologies LLC (“SIT”) against Google in the Eastern District of Texas.See In re Google LLC, No. 2019-126, 2020 U.S. App. LEXIS 4588 (Fed. Cir. Feb. 13, 2020) (Before Dyk, Wallach, and Taranto,Circuit Judges) (Order for the Court, Dyk,Circuit Judge) (Concurring opinion, Wallach,Circuit Judge).

SIT brought suit against Google in the Eastern District of Texas arguing that venue was proper under the patent venue statute (28 U.S.C. § 1400(b)). SIT filed its suit after the Supreme Court’s decision inTC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514, 1517 (2017), which held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute,” and after the Federal Circuit’s decision inIn re Cray, Inc.,871 F.3d 1355, 1360 (Fed. Cir. 2017), which held that a “regular and established place of business” under the patent venue statute must be: (1) ‘a physical place in the district’; (2) ‘regular and established’; and (3) ‘the place of the defendant.’” SIT alleged venue was proper under the patent venue statute because Google allegedly committed acts of infringement in the Eastern District of Texas and has a regular and established place of business there.

SIT’s allegation of venue was based on Google’s use of several Google Global Cache (“GGC”) servers which were located in the Eastern District of Texas at the time of SIT first brought suit. The GGC servers were installed, maintained, and hosted by third party Internet Service Providers (“ISPs”). The ISPs would route Google’s traffic through the GGC servers within the District prior to sending the traffic to Google’s central data storage servers located outside of the District.

The petition for writ of mandamus arrived at the Federal Circuit after Google’s motion to dismiss was denied by the United States District Court for the Eastern District of Texas. The District Court concluded that the GGC servers qualified as Google’s “regular and established business” underCray’s venue test. Google subsequently petitioned the Federal Circuit for a writ of mandamus asking that the Federal Circuit direct the District Court to dismiss the case for lack of venue under the patent venue statute.

The Federal Circuit acknowledged that it had previously denied a writ of mandamus filed by Google for a case having similar facts stating at the time that “it would be appropriate to allow the issue to percolate in the district courts so as to more clearly define the importance, scope, and nature of the issue for us to review.”See In re Google LLC,No. 2018-152, 2018 U.S. App. LEXIS 31000, at 6 (Fed. Cir. Oct. 29, 2018). The Court believed the time was now appropriate to address this issue through a writ of mandamus noting that several similar cases had now been heard in various district courts with conflicting results. The Court identified two issues that should be addressed: (1) whether a server rack, a shelf, or analogous space can be a “place of business,” and (2) whether a “regular and established place of business” requires the regular presence of an employee or agent of the defendant conducting business.

Google first argued that the GGC servers did not constitute a place of business because the “place of business” requirementshould require a real property or leasehold interest and Google had neither a real property nor a leasehold interest in the GGC servers. The Court quickly dismissed this argument concluding thatCrayitself recognized that a “place of business” is not restricted to real property that the defendant must own or lease. The Court viewed Google’s use of the GGC servers to constitute a “place of business” in the same way that a merchant at a flea market would be considered to have a place of business at a table even though the merchant had neither a real property nor a leasehold interest.

Google next argued that a “regular and established place of business” under the second prong ofCrayrequires a place where an employee or agent of the defendant is conducting the defendant’s business. The Federal Circuit found this argument persuasive because it was supported by 28 U.S.C. § 1694, which was the second sentence of the original patent venue statute, and the related legislative history. §1694 assumes that the defendant will have a “regular and established place of business” within the meaning of the venue statute only if the defendant also has an “agent… engaged in conducting such business.” The Court concluded that a “regular and established place of business” requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business.”

Finding that a defendant must have regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business,” the Court concluded that the Eastern District of Texas was not a proper venue for this case because Google does not have an employee or agent regularly conducting its business within the District. The Court limited this holding by stating that it does not hold that a “regular and established place of business” will always require the regular presence of a human agent. That is, the Court did not address whether a machine could be an agent of a business. Nor did the Court decide what might be inferred from Congress’ amendment to the venue statute in the America Invents Act concerning automated teller machines.SeeAIA § 18(c).

In a concurring opinion, Circuit Judge Wallach agreed with the conclusion but encouraged district courts to further consider Google’s business model. Circuit Judge Wallach expressed frustration that Google’s business model was not clear and that it’s possible the end user could be considered an agent of Google “by entering searches and selecting results… providing data which Google monetizes as the core aspect of its business model.”

For venue to be proper based on a “regular and established placed of business” analysis, a regular, physical presence of an employee or other agent of the business must be present in the “place of business” and must be conducting the defendant’s business.

256-4. Federal Circuit Vacates Summary Judgment Order and Instructs the District Court to Enforce a Settlement Agreement

The Federal Circuit recently issued an opinion vacating the district court’s grant of summary judgment motions of non-infringement and remanding with instructions to enforce a settlement agreement between Serta Simmons Bedding, LLC and Dreamwell, Ltd. (collectively, “Serta Simmons”) and Casper Sleep Inc. (“Casper”).See Serta Simmons Bedding, LLC v. Casper Sleep Inc., No. 19-1098, 2020 U.S. App. LEXIS 4467 (Fed Cir. Feb. 13, 2020) (Before Dyk, Plager, and Stroll,Circuit Judges) (Opinion for the Court, Dyk,Circuit Judge).

Serta Simmons sued Casper for infringement of U.S. Patent Nos. 7,036,173, 7,424,763, and 8,918,935, each directed to mattresses that include a channel and methods for forming same. While Casper’s motions for summary judgment on the issue of non-infringement were pending, the parties executed a settlement agreement (“Settlement Agreement”), requiring Casper to pay $300,000 to Serta Simmons and cease the allegedly infringing activities, including manufacturing, selling, and marketing the accused products by set dates. The Settlement Agreement included language obligating the parties to release each other from all liabilities and to dismiss all claims and counterclaims upon Casper’s payment of the stipulated fee. As further mandated by the Settlement Agreement, the parties filed a Joint Notice of Settlement and Motion to Stay informing the district court of the Settlement Agreement and requesting stay until the dismissal papers had been filed.

Without mentioning the Settlement Agreement, the district court granted Casper’s motions of non-infringement against Serta Simmons. In light of this, Casper refused to make the payments required by the Settlement Agreement. Serta Simmons, in turn, filed motions to enforce the Settlement Agreement and vacate the non-infringement orders, which the district court denied. Serta Simmons appealed. The Federal Circuit agreed with Serta Simmons, vacated the district court’s orders, and instructed the district court to enforce the Settlement Agreement.

Relying on precedent, the Federal Circuit first held that a binding settlement agreement generally moots an action even if it requires future performance. Here, Casper admitted that the Settlement Agreement was binding, the Settlement Agreement was neither unlawful nor contrary to public policy, and it was undisputed that the Settlement Agreement was executed prior to the court’s issuing of the summary judgment order. Thus, the Settlement Agreement rendered the infringement case moot. As a result, the Court vacated the summary judgment orders.

Second, applying Federal Circuit law, the Court held that the district court did have jurisdiction to enforce the Settlement Agreement. Because the Court vacated the district court’s summary judgment orders, there will be no final judgment in the case until the remand proceedings are concluded. Because the motion to enforce the Settlement Agreement was filed before the case is dismissed, the district court has jurisdiction to enforce it.

Even though a settlement agreement may call for future performance, it generally renders the underlying action moot. The Federal Circuit may enforce a settlement agreement that resolves patent infringement claims as long as the proceedings are still ongoing.

256-5. Finding of Willful Infringement Insufficient to Show Actual Notice to Recover Pre-Complaint Damages Under Section 287 Where Patentee Failed to Mark Patented Product

The Federal Circuit recently affirmed a district court decision denying pre-complaint patent infringement damages to patentee Arctic Cat Inc. (“Arctic Cat”) because it did not comply with 35 U.S.C. § 287 to sufficiently notify Bombardier Recreational Products, Inc. (“Bombardier”) that the infringing articles at issue were patented prior to filing the Complaint.See Arctic Cat Inc. v. Bombardier Rec. Prods., No. 2019-1080, 2020 U.S. App. LEXIS 5023 (Fed. Cir. Feb. 19, 2020) (Before Lourie, Moore, and Stoll,Circuit Judges) (Opinion for the Court, Lourie,Circuit Judge).

Section 287(a) provides in relevant part:

Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented . . . by fixing thereon the word “patent” . . . .In the event of failure so to mark, 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. Filing of an action for infringement shall constitute such notice.

So, under Section 287, a patentee can satisfy the notice requirement by either providing constructive notice through marking its patented products, or by providing actual notice to an alleged infringer by affirmatively communicating a specific charge of infringement, be it by filing a lawsuit or otherwise. Licensees of a patent are also required to comply with Section 287’s notice requirement for recovering damages.

Arctic Cat owned U.S. Patent Nos. 6,793,545 (“the ’545 patent”) and 6,568,969 (“the ’969 patent”) directed to thrust steering systems for personal watercraft. By 2004, Arctic Cat was no longer manufacturing personal watercraft covered by the asserted patents; rather, Arctic Cat entered into a licensing agreement with Honda in 2002 for a group of patents that included the ’969 and ’545 patents after issuance. The licensing agreement expressly stated that Honda was not required to mark any licensed products with applicable patent numbers.

Honda subsequently manufactured and sold unmarked personal watercraft products, and Arctic Cat did not ensure that any products manufactured by Honda were labeled with the applicable patent numbers. Arctic Cat later sued Bombardier for patent infringement of the ’545 and ’969 patents in October 2014. Prior to trial, Bombardier moved to limit damages on the basis of Honda’s sales of unmarked licensed products. The district court held that Bombardier had not met its burden of proving that Honda’s products practiced the asserted claims and denied Bombardier’s motion.

At trial, a jury found that Arctic Cat’s patents were not invalid and awarded Arctic Cat a royalty dating from October 16, 2008, six years before Arctic Cat filed suit. The jury further found that Bombardier willfully infringed the asserted claims. After the district court denied Bombardier’s motion for judgment as a matter of law on both marking and willfulness, Bombardier appealed. The Federal Circuit affirmed as to willfulness but vacated and remanded with respect to Honda’s marking. The Court held that the district court had erred in placing the burden on Bombardier to prove that Honda’s licensed products practiced the claimed invention. Rather, the Federal Circuit held that “once an alleged infringer identifies products that it believes are unmarked patented articles subject to the notice requirements of § 287, the patentee bears the burden of proving that the identified products do not practice the claimed invention.”

On remand, Arctic Cat conceded that it could not show that Honda’s unmarked licensed products did not practice the asserted claims, but regardless Arctic Cat moved for summary judgment that it was entitled to pre-complaint damages. Bombardier cross-moved for summary judgment, arguing that Arctic Cat could not receive pre-complaint damages because Honda’s products were unmarked patented articles. The district court granted summary judgment in favor of Bombardier, and Arctic Cat appealed.

Arctic Cat contended that Honda stopped manufacturing relevant unmarked products in 2013, a year prior to filing suit against Bombardier. The Court evaluated whether Honda’s cessation of sales of unmarked products excused Arctic Cat’s noncompliance with the notice requirement of Section 287 such that Arctic Cat could recover damages for the period from when Honda’s sales of unmarked products ceased up to when Arctic Cat filed a suit for infringement. The Court held that Arctic Cat could not recover damages in this period.

Arctic Cat first argued that the text of the statute meant that Section 287 only applied to periods when a patentee was presently making, offering for sale, or selling products. The Federal Circuit found that the text of Section 287 “prohibits a patentee from receivinganydamages in a subsequent action for infringement after a failure to mark, rather than merely a reduced amount of damages in proportion to the amount of time the patentee was actually practicing the asserted patent.” The notice requirement of Section 287 attaches once a patentee begins making or selling a patented article, and the requirement is only discharged via providing actual or constructive notice. Ultimately, the Court felt that Arctic Cat’s approach undermined the policy goals of Section 287 by “allow[ing] a patentee to mislead others that they are free to make and sell an article” while also “allow[ing] the patentee to recover damages without undertaking any corrective action.” Therefore, the cessation of sales of unmarked products did not absolve Arctic Cat of its notice obligations under Section 287, and Arctic Cat could not recover damages for any period prior to filing its Complaint.

Arctic Cat also argued that it should be allowed to recover maximum pre-suit damages regardless of its failure to mark because the jury found that Bombardier willfully infringed the asserted patents, which should be sufficient to establish actual notice under Section 287. The Federal Circuit shut down this argument by citing to earlier precedent which held that “the determination whether a patentee provided actual notice under § 287 ‘must focus on the action of the patentee, not the knowledge or understanding of the infringer.’”

Failure to provide notice under Section 287 will bar recovery of pre-suit damages by a patentee, regardless of whether the patentee was not making or not selling the patented product for a portion of the pre-suit period, and regardless of whether the alleged infringer willfully infringed the patent.