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Letter offering a nonexclusive license provided actual notice of infringement despite not threatening a lawsuit

Letter offering a nonexclusive license provided actual notice of infringement despite not threatening a lawsuit

SRI International v. Advanced Technology Laboratories was decided on October 23, 1997 on appeal from the Northern District of California. The case involved many issues but this post will only focus on actual notice under § 287(a). In May 1986, plaintiff SRI sent a letter to defendant Advanced Technology Laboratories (ATL) offering a non-exclusive license. Following trial, the district court found willful infringement and trebled damages. The district court also held that the 1986 letter met the notice requirement. ATL appealed.

The Federal Circuit affirmed the willfulness finding, the enhancement of damages, and the finding of actual notice.

Section 287(a) relates to informing the interested public of the patent status of an article in commerce, and permits either constructive notice by marking the article with the patent number, or actual notice to the infringer. SRI’s licensee at the time did not mark the device. Absent marking, damages may be recovered only after actual notice is given.”

The 1986 letter from SRI to ATL provided actual notice. “The letter included a copy of the [asserted] patent and the reexamination certificate, identified two ATL models that SRI stated may infringe the [asserted] patent, and offered a nonexclusive license.”
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ATL argued that the letter “did not satisfy the notice requirement of Section(s) 287(a) because it did not meet the requirements of creating an actual controversy under the Declaratory Judgment Act.” According to ATL, the letter “did not make an unqualified charge of infringement and did not threaten ATL with suit.” The Federal Circuit rejected this argument. “The criteria for actual notice under Section(s) 287(a) are not coextensive with the criteria for filing a declaratory judgment action.” “Actual notice may be achieved without creating a case of actual controversy in terms of [The Declaratory Judgment Act].”

“Although the SRI letter offered a license instead of demanding that ATL cease and desist, a patentee whose goal is licensing does not defeat actual notice by offering a license.” “It is not controlling whether the patentee threatens suit, demands cessation of infringement, or offers a license under the patent.” Rather, “the purpose of the actual notice requirement is met when the recipient is notified, with sufficient specificity, that the patent holder believes that the recipient of the notice may be an infringer.” The actual notice requirement of Section 287(a) “is satisfied when the recipient is informed of the identity of the patent and the activity that is believed to be an infringement, accompanied by a proposal to abate the infringement, whether by license or otherwise.”