The Federal Circuit Reverses Damages Award For Sales Of Infringing Products Prior To Actual Notice Of Infringement
On September 1, 2021, the United States Court of Appeals for the Federal Circuit (CAFC) found that the District Court for the Central District of California erred in awarding damages for sales of infringing products prior to the date that the infringer received actual notice of infringement for failure to prove its compliance with the patent marking statute. Lubby Holdings LLC v. Henry Chung, __ F.3d __ (Fed. Cir. Sep. 1, 2021).
Pursuant to the patent marking statute, a patentee who makes or sells a patented article must mark his articles or notify infringers of his patent in order to recover damages. 35 U.S.C. § 287(a). While the patentee bears the burden of pleading and proving it complied with Section 287(a)’s marking requirement, an alleged infringer who challenges the patentee’s compliance with § 287 bears an initial burden of production to articulate the products it believes are unmarked “patented articles” subject to § 287.
In the district court, Lubby did not disclose its damage computation, in which it claimed damages for pre-notice sales for the first time, until the day before trial. That same day, Mr. Chung objected to the damages calculation and identified one of Lubby’s products that did not include a patent number. The CAFC found that Mr. Chung met his initial burden of production by objecting and pointing to Lubby’s unmarked product. Further, the CAFC found that because Lubby presented no evidence that the identified product did not practice the patent, or that it marked the products it actually sold, Lubby could recover damages only for the period that it provided actual notice to Mr. Chung.
Lubby also argued that Mr. Chung had actual notice prior to the filing of the lawsuit because Mr. Chung admitted in his answer that he had notice of the issuance of the asserted patent. The CAFC rejected the argument, finding that Mr. Chung’s admission that he had notice that the asserted patent had issued does not equate to notice required under § 287. The CAFC explained that, for purposes of section 287(a), notice must be of the infringement, not merely notice of the patent’s existence or ownership.