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Marking statute limits damages even after the sale of unmarked product ceases

Marking statute limits damages even after the sale of unmarked product ceases

Artic Cat v. Bombadier Recreational was decided on February 19, 2020 on appeal from the Southern District of Florida. Plaintiff Artic Cat entered into a license agreement with a third party, which “expressly stated that [the third party] had no marking obligations.” Thereafter, the third party began making and selling unmarked products. After Arctic Cat sued defendant Bombadier for infringement, Bombadier moved to limit Artic Cat’s potential damages because of the third party’s sales of unmarked products. At trial, the jury found the asserted patents not invalid, awarded Artic Cat a royalty to begin six years before the filing of the lawsuit, and found that Bombadier had willfully infringed. After trial, the district court denied Bombadier’s renewed motion for JMOL on marking, holding that Bombadier had failed to meet its burden of proving that the third party practiced the asserted claim.

The Federal Circuit affirmed as to willfulness but vacated and remanded as to marking, holding 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, the district court granted summary judgement in favor of Bombadier, finding that Artic Cat “failed to provide constructive or actual notice under § 287, and Arctic Cat therefore cannot receive any pre-complaint damages.” Arctic Cat appealed.

The Federal Circuit affirmed the denial of pre-complaint damages.

If a patentee “makes or sells a patented article and fails to mark in accordance with § 287, the patentee cannot collect damages until it either begins providing notice or sues the alleged infringer…—and then only for the period after notification or suit has occurred. Thus, a patentee who begins selling unmarked products can cure noncompliance with the notice requirement—and thus begin recovering damages—by beginning to mark its products.” “A patentee’s licensees must also comply with § 287.” A patentee “can satisfy the notice requirement of § 287 either by providing constructive notice—i.e., marking its products—or by providing actual notice to an alleged infringer.”

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Here, “unmarked products were sold, such that Arctic Cat could not receive damages before providing notice, but the sales of unmarked products allegedly stopped for a period of time prior to the filing of Arctic Cat’s complaint.” The Federal Circuit held that the cessation of sales of the unmarked products does not excuse noncompliance with the notice requirement of § 287. So Artic Cat may not recover damages for the period after sales of unmarked products ceased but before the filing of a suit for infringement.

The statute supports this holding. Section 287 provides that “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”(emphasis in opinion). “The statute thus prohibits a patentee from receiving any damages 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.” “Arctic Cat’s obligation to mark arose when its licensee began selling patented articles.” “The cessation of sales of unmarked products certainly did not fulfill Arctic Cat’s notice obligations under § 287, nor did it remove the notice requirement.” Section 287’s notice requirement “cannot be switched on and off as the patentee or licensee starts and stops making or selling its product.” “[O]nce a patentee begins making or selling a patented article, the notice requirement attaches, and the obligation imposed by § 287 is discharged only by providing actual or constructive notice.”

The jury finding of willfulness does not satisfy the notice requirement. “{T]he 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.” “Willfulness, as an indication that an infringer knew of a patent and of its infringement, does not serve as actual notice as contemplated by § 287.” “The marking statute imposes notice obligations on the patentee, and only the patentee is capable of discharging those obligations. It is not directed to the infringer and does not contemplate mere knowledge of the infringer as sufficient to discharge the notice requirements placed on the patentee.”