Federal Circuit Rejects Use of Statutory Disclaimer to Avoid the Patent Marking Statute’s Damages Limitations

Two weeks ago, on Monday, April 17, 2017, the Federal Circuit issued a precedential decision in Rembrandt Wireless Techs., LP v. Samsung Elecs. Co., Ltd., No. 2016-1729, slip op. (Fed. Cir. Apr. 17, 2017), addressing a slew of legal and evidentiary challenges following a $15.7 million jury verdict.

Among other things, the Federal Circuit in Rembrandt upheld a claim construction based on the definitional use of “i.e.” in the prosecution history.  Id. at 7-9.  It rejected an  attempt to couch a factual dispute regarding claim application as one regarding claim construction, emphasizing that “a sound claim construction need not always purge every shred of ambiguity,” including potential ambiguity arising from the words a court uses to construe a claim.”  Id. at 11-12.  It rejected an attempt to conflate the concepts of “teaching away” and “motivation to combine,” noting that “the absence of a formal teaching away in one reference does not automatically establish a motivation to combine it with another reference in the same field.”  Id. at 12-14.  And it found no reversible error in the district court’s refusal to exclude the patentee’s damages experts, finding his testimony to have been plausibly “based on the incremental value that the patented invention adds to the end product” and his reliance on a settlement agreement containing a license to the same patents found to be infringed to be permissible.  Id. at 15-18.

Most notably, however, the Federal Circuit remanded the damages award due to errors in the district court’s application of the marking statute.  Id. at 18-23.  The patentee had licensed the patent-at-issue to a third party without any requirement that the third party mark its products sold under the license.  Id. at 19.  In general, the marking statute operates to limit a patentee’s damages in such circumstances. Id. at 20.  But in Rembrandt, the patentee withdrew the only claim alleged to be embodied by the licensee’s unmarked products from its infringement contentions and further filed a statutory disclaimer with the U.S. Patent and Trademark Office.  Id. at 19.  Based on past Federal Circuit precedent indicating that a disclaimed patent claim is treated as if it had never existed in the patent, the district court concluded that any prior obligation to mark licensee’s products vanished once the claim that those products embodied was disclaimed.  Id.

The Federal Circuit disagreed.  Reasoning that the district court’s conclusion “undermines the marking statute’s public notice function” and noting that “courts have not readily extended the effects of disclaimer to situations where others besides the patentee have an interest that relates to the relinquished claims,” the Federal Circuit held that “disclaimer cannot serve to retroactively dissolve the § 287(a) marking requirement for a patentee to collect pre-notice damages.”  Id. at 21-22.  Nevertheless, the Federal Circuit left open the question of whether the marking statute should attach on a claim-by-claim or patent-by-patent basis—a question the Federal Circuit characterized as “a novel legal issue not squarely addressed by [its] past decisions”—and remanded the case for the district court to address the issue in the first instance.  Id. at 23.

It will be interesting to see how the claim-by-claim v. patent-by-patent issue is resolved, as some past Federal Circuit cases have seemed to apply the patent marking statute’s damages limitations on a claim-by-claim basis.  See, e.g., Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., 559 F.3d 1308, 1317 (Fed. Cir. 2009) (holding that the marking statute does not apply where a patentee only asserts method claims of a patent that also includes apparatus claims).

Other Notable Decisions – Week of April 21, 2017

IPR Licensing, Inc. v. ZTE Corp., Nos. 2016-1374, 2016-1443 (Fed. Cir. Apr. 20, 2017) (non-precedential): In IPR Licensing, the Federal Circuit largely affirmed the Patent Trial and Appeal Board’s obviousness determinations in two related inter partes review proceedings.  With respect to one claim, however, the Federal Circuit reversed and remanded, finding the Board erred in emphasizing that the patentee had “advanced no evidence” that combining the teachings of the prior art as claimed “would have been beyond the level of ordinary skill at the relevant time.”  [I]n addition to seeming to shift the burden of proof,” the Federal Circuit noted, “that is a statement about what skilled artisans would have done if motivated, not what they would have been motivated to do.”  “Proof of the latter,” the Federal Circuit concluded, “is needed.”

Intellectual Ventures II LLC v. Ericsson Inc., No. 2016-1803 (Fed. Cir. Apr. 18, 2017) (non-precedential): In Intellectual Ventures, the Federal Circuit affirmed the Patent Trial and Appeal Board’s obviousness determinations in another inter partes review proceeding.  In doing so, the Federal Circuit rejected a number of substantive and procedural arguments and emphasized, among other things, the following: (1) “references used to establish that a claim would have been obvious need not be directed to the same problem that the inventor was trying to solve”; (2) “a determination of obvious based on teachings from multiple references does not require an actual, physical substitution of elements”; (3) “there was nothing improper about the Board’s relying on arguments . . . incorporated by reference” from a petitioner’s discussion of other claims, where the petitioner “used the same references, in the same way, to argue that the combination disclosed or suggested nearly identical limitations”; and (4) “it was not improper for the Board” to consider reply arguments combining references with respect to a particular limitation for the first time, where the petitioner “did not introduce new references, and instead continued to argue, just as it had in its petition, that [the claims] would have been obvious over the combination.”

Phil-Insul Corp. v. Airlite Plastics Co., No. 2016-1982 (Fed. Cir. Apr. 17, 2017) (precedential): In Phil-Insul, the Federal Circuit affirmed a district court judgment giving preclusive effect to a prior Rule 36 judgment, reasoning that the claim construction issues presented were the same as those presented in the prior case and were necessarily decided in the prior case.  The Federal Circuit concluded that there was no other independent basis for the affirmance of the prior district court decision, and given the patentee’s concession that the accused products were substantially the same as those in the prior case, the Federal Circuit found no error in the judgment of non-infringement.

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