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IP Alert
IP Alert: Federal Circuit Addresses Pre-Issuance Damages in Rosebud v. Adobe

February 9, 2016

Generally, patent owners may only collect damages for patent infringement that occurs during the term of the patent. Under 35 U.S.C. 154(d), the patentee may also recover a reasonable royalty for an infringer’s conduct taking place between the publication date of a patent application and the issue date of the patent and if the invention as claimed in the patent is substantially identical to the invention as claimed in the publication. But the patentee may only collect such damages if the accused infringer had “actual notice” of the published patent application.

In Rosebud LMS Inc. v. Adobe Systems Inc., a case of first impression decided earlier today, the U.S. Court of Appeals for the Federal Circuit considered the circumstances that may constitute “notice” under this statute. The court concluded that the “actual notice” requirement of the statute requires that the defendant have had actual notice of a published patent application for damages to accrue, but that the statute does not require an affirmative act by the patentee to provide such notice to the accused infringer.

After Rosebud sued Adobe for patent infringement, Adobe moved for summary judgment that there was no remedy available to the plaintiff. Adobe asserted that Rosebud was not entitled to post-issuance damages because Adobe had discontinued use of the accused technology before the issuance of the patent in suit. Adobe further asserted that Rosebud was not entitled to pre-issuance damages because Adobe had not had actual pre-issuance notice of the published patent application. In response to Adobe’s motion, Rosebud did not dispute Adobe’s arguments with respect to post-issuance damages, but argued that there was a genuine issue of fact as to whether Adobe had actual knowledge of the published patent application. The district court disagreed, and granted Adobe summary judgment. Also, in light of certain procedural failings, the district court denied Rosebud’s motion for additional discovery.

On appeal, the Federal Circuit first considered the “actual notice” requirement of the statute. After considering the legislative history of section 154(d), the court reached its conclusion that no affirmative act is required. The court differentiated the “notice” provision of this statute from the “notice” provision of 35 U.S.C. 287, the marking statute, which the court has earlier interpreted to require an affirmative communication by the patentee in the absence of marking.

Turning to the record before the court, the court concluded that Rosebud had failed to introduce sufficient facts to rebut Adobe’s assertions that Adobe did not have knowledge of the published application that led to the patent in suit. The court also concluded that the district court had not abused its discretion in refusing Rosebud additional discovery.

Even though the patentee lost in this case, the Rosebud case demonstrates that there are some teeth to the remedy of pre-issuance damages, in that no affirmative act by the patentee is required. Interestingly, the court seemed to want to clarify the law in this area. Given the procedural failings of the patentee and the high “abuse of discretion” standard required to reverse the district court’s discovery order, the Federal Circuit could have affirmed without taking the time to analyze section 154 in the detail provided.

For more information in this case, please contact Fitch Even partner Jeffrey A. Chelstrom, the author of this alert.

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