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The necessity of patent marking, as required by 35 USC � 287(a) for pre-filing damages, has been heavily debated in recent years. However, the statute remains in effect and causes a difficult dilemma for any patent holder whose patent covers a product manufactured or sold by it on whether or not to mark. This decision is usually based on many factors, including the value of the patent, the value of the product protected, the industry and the aggressiveness of the patent holder. The decision about the use of marking is even more difficult when patents are cross-licensed between two parties. For example, if one or both of the parties wishes to mark, that party must examine the size of its patent portfolio, determine which patents within the portfolio require marking, and then attempt to impose on the other party to the cross-license marking of products with appropriate patent numbers. Under 35 USC � 287(a), a patent owner must mark any products covered by his or her patent or provide actual notice to a potential infringer in order to collect damages prior to the date an infringement suit is filed. [FOOTNOTE 1]If the patent owner does not manufacture or sell any product covered by the patent (i.e., a “paper patent”), then that patent owner is under no obligation to provide any notice and can still collect pre-filing damages. [FOOTNOTE 2]For patent owners who do mark their products, the marking must be “substantially consistent and continuous.” [FOOTNOTE 3]Further, if a patent owner licenses the patent, all licensees must mark their products covered by that patent as well, for the patent owner to collect pre-filing damages. [FOOTNOTE 4]The patent owner has a duty to make sure that marking is continuous among all licensees. [FOOTNOTE 5] On the issue of cross-licensing, if a first party enters into a patent cross-license with a second party, and the first party wishes to or already marks certain of its own products, the first party must also determine which products manufactured or sold by the second party are covered by its patents. The first party must then induce the second party to mark those products, and make sure that the second party marks those products in a continuous manner. Before going any further, it is definitely fair to say that marking within a cross-license sounds like a difficult proposition. However, simply refusing to mark can be a tremendous financial detriment to an aggressive patent owner with valuable patents, as well as potentially diminish the value of the patent portfolio. SIZE OF PORTFOLIOS For the sake of simplicity, consider a cross-license between two parties with similar market power and comparably sized patent portfolios. Parties with large patent portfolios (e.g., greater than 100 patents) will probably not even consider the use of marking within a cross-license because of the difficulty and expense. For example, a company with a large patent portfolio that is cross-licensed with another company with many products would probably have to evaluate each of its own patents in comparison with the other company’s products to determine which ones to mark. Also, once the first company determined which of the second company’s products it believed were covered by its patents, it would then have to convince the second company of such coverage. Further, the first company’s decision about which of the second company’s products are covered by its patents may create an issue regarding the breadth of the patent if it is later attacked on validity grounds. [FOOTNOTE 6] The second company, assuming it agreed to mark under the cross-license in the first place, faces multiple problems as well. Concerns about marking estoppel, false marking and the feasibility of marking extremely small products (e.g., computer chips) with additional patent numbers other than its own are just a few of the issues. [FOOTNOTE 7] The bottom line is that marking within a cross-license when the patent portfolios of each party are large is time-consuming, expensive and difficult to implement. Most parties are probably better off devoting resources to market intelligence and competitive analysis in order to be aware of new or existing products that potentially infringe their patents. Those parties can then provide actual notice to potential infringers instead of worrying about marking their products. PATENTS OF VALUE For parties considering a cross-license of patents where each party has a relatively small patent portfolio (e.g., fewer than 10 patents), the decision whether to impose marking on the other party’s products is somewhat easier. First, determining which patents are of value and cover the other party’s products is generally more manageable. However, convincing the other party to mark its products with the first party’s patent numbers is still a tall order. But there are ways to make this an easier sell. For example, the parties might consider implementing language in the cross-license that allows any disagreement regarding the coverage of a patent to be referred to a neutral third party. Also, each party may be willing to make concessions if both parties wish to mark each other’s products. Finally, the parties could agree not to mark, but instead to share information about others in the marketplace and assist each other with identifying potential infringers. However, this decision may affect products that are owned and marked by the parties, because the failure to mark all products, including those covered within a cross-license, suggests that the marking practice is not “substantially consistent and continuous.” Thus, a party could potentially lose the benefit of its own marking due to the failure of a licensee to properly mark. Parties with patent portfolios greater than about 10 patents may consider marking within a cross-license if they can easily narrow to a small number the patents that are of the highest value and might require marking. Anything beyond this small number can become unmanageable. Marking products is extremely difficult within a cross-license, but not impossible. If one is able to identify a short list of valuable patents within the portfolio, determine convincingly that they cover products manufactured or sold within the cross-license, and somehow make it beneficial to the other party, then marking can be accomplished. Considering the potential damages and value of the patent portfolio at issue, it may be worth the time. Richard W. Erwine is a senior associate at Morgan & Finnegan, www.morganfinnegan.com. ::::FOOTNOTES:::: FN135 U.S.C. � 287(a). FN2 Wine Ry. Appliance Co. v. Enterprise Ry. Equip. Co., 297 U.S. 387, 394-98 (1936). FN3 Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1111 (Fed. Cir. 1996). FN4 Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 185 (Fed. Cir. 1994); Maxwell, 86 F.3d at 1111. FN5 Maxwell, 86 F.3d at 1111-12. FN6 SeePreston Moore & Jackie Nakamura, “The United States Patent Marking And Notice Statute,” 22 AIPLA Q.J. 85, 95 (1994). FN7 Id.at 90, 98-99.

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