The Patent Act provides in 35 U.S.C. 287(a) that an alleged infringer must have notice that there are patents covering a product before damages can begin to be assessed in an infringement action. Notice can occur one of two ways: through the patent owner providing an infringer with an actual notice of infringement of a patent or through the patent owner providing a constructive notice of infringement by adequately marking its products or packaging to indicate that the products have patent coverage. Marking products is ideal in that it permits a patent owner to begin assessing damages for infringement from the time its marked products are shipped, even if the patent owner is unaware of an infringement occurring.
On September 16, 2011, the America Invents Act was signed into law by President Obama and added a significant change to the marking statutes. The AIA expanded the scope of 35 U.S.C. §287(a) by giving patent owners the option to mark their products on websites. Constructive notice can now be provided by supplying the words “patent” or “pat.” and a URL address that directs the public to a free website listing the patents applicable to the marked product.
This new, virtual patent-marking option can be especially useful in markets where products contain far more patents than can be easily or legibly listed on the outside of the product or its packaging, when applicable. However, every patent owner taking advantage of this new marking opportunity should be aware that it comes with potential litigation pitfalls.
Virtual marking makes it easier for patent owners to mark products because they now will not have to change the actual product or packaging to update the list of applicable patents. See Corey McCaffrey’s “The Virtues of Virtual Marking in Patent Reform,” 105 Nw. U.L. Rev. 367, 369 (2011). Remolding the product’s casing or editing the packaging design can be expensive and impractical. It could take months for such changes to be implemented, creating a delay in providing constructive notice of infringement or the prospect of false marking penalties. In contrast, patent owners can more easily, quickly and inexpensively update their websites to disclose pending patent applications and newly issued patents and remove expired patents and patents that become invalidated in litigation.
Virtual marking also gives patent owners more flexibility when monitoring their licensees to make sure their markings accurately reflect the licensed patents. See Amsted Indus. v. Buckeye Steel Castings, 24 F.3d 178 (Fed. Cir. 1994). Now, patent owners can simply maintain a marking website that lists their licensed products and applicable patents for each product and need only make sure their licensees properly display the correct website addresses. Multiple products can be listed on a single website, saving time when patent owners monitor licensees.
However, with these positive developments in the Patent Act come other obligations for patent owners. Courts do not simply hand over damages to patent owners claiming infringement; at the very least, they must prove that proper notice was in fact given. The U.S. Court of Appeals for the Federal Circuit has put the burden of proof on the patent owner to show it is more likely than not that alleged infringers constructively received proper notice of patent infringement through patent marking, as expressed in Nike v. Wal-Mart Stores, 138 F.3d 1437, 1146 (Fed Cir. 1998). In short, a court will focus on the patent owner’s actions in providing constructive notice and determine whether these actions are sufficient in the eyes of the law, not what an infringer knew leading up to the infringement claim. Thus, there will likely be many cases where the court must determine whether or not a patent owner provided proper notice through the use of virtual patent marking.
One major issue that will need to be addressed and that a patent owner should be aware of is the potential effects on its efforts to provide constructive notice if its virtual marking site goes offline for a period of time. A patent owner will have to show that its site was substantially consistently and continuously online in order to claim damages back to the first date when its products were distributed to the public simultaneously with the marking website being online, according to the guidance set forth in American Medical Systems v. Medical Engineeringg, 6 F.3d 1523, 1537 (Fed. Cir. 1993). However, because that case was decided well before the AIA, the court did not provide guidance as to what constitutes substantially continuous access to a website. So the courts will someday have to decipher what constitutes a failure with the continuous element regarding these new marking websites.
Factors such as a hacked website or power outages at Web servers will likely be of little consideration against a patent owner’s constructive notice. However, if a site goes down and it can be shown that the patent owner unreasonably delayed bringing the site back online, a court is likely to be far less forgiving toward that patent owner. Courts are also more likely to be unforgiving to patent owners who knowingly upload their sites onto unreliable servers with spotty track records, even if a site goes down briefly during each failure. Courts may also have a poor perception of patent owners who intentionally take their virtual marking sites down for any reason.
If its marking site goes down, a patent owner will likely have to provide evidence of their corrective actions to prove the site was sufficiently continuous. Therefore, a patent owner should keep stringent records of its virtual marking website’s up-time and have proper information technology personnel routinely monitoring the sites. Business records showing a patent owner brought its out-of-service virtual marking site back to life or the testimony of an information technology employee who worked quickly to bring the site back to life should be helpful for a court to find the site considered online in a sufficiently continuous manner. On the other hand, if a patent owner’s site goes down out of its control and it cannot provide proper evidence that it was diligently working to bring the site back up, a court may actually find that owner to have caused an unreasonable delay in reviving the site. The court may then find that the attempted virtual marking was not sufficiently continuous to constitute constructive notice. A patent owner needs to make sure it properly documents all site maintenance and/or have specific personnel assigned to the virtual marking site, or a patent owner will risk losing a considerable amount of damages.
Along these same lines is the question of what will happen when the contents of the marking site are revised. To comply with the substantially consistent prong of the ruling established in American Medical Systems, a patent owner should keep proper records of all past revisions to a virtual marking website. Such records should adequately show all website content, be in accordance to specific industry standards and provide the dates of each revision of the marking site, leaving little room for the defense to argue over the record’s trustworthiness. It will be important to provide each revision dating back to the first product distribution, or the patent owner risks lowering the amount that can be collected in damages. It will also add a level of protection for a patent owner to have professional archive administrators keeping these detailed records along with any other applicable records.
A patent owner should also understand there may be an issue when it merges with another patent-owning entity and both parties decide to integrate the content of their respective virtual marking websites. If a virtual marking site is taken down and the patent owner does nothing, the old marking website will not be considered substantially consistent and continuous. If the public is directed to a dead site listed on a patent owner’s product or packaging, there is no way a patent owner has proof that an infringer received constructive notice.
In these instances, a patent owner should ensure that the original marking site redirects the public to the newly integrated marking site. If the automatic redirect cannot be instantaneous, then the site should contain a brief explanation of the new marking site and at least provide a link to the new site. A patent owner that can prove there is a URL on the original marking site listed on the product that clearly redirects the public to the integrated site will likely show that the public received notice on the contents of the site, because there would be minimal burden on the public to find this new site. However, during litigation, any defense an alleged infringer can provide may be enough to suspend the clock for damages. While this seems unlikely, it is possible that a court could determine it completely unreasonable that the public is left to link themselves over to a newly integrated marking website.
Another issue of importance that may have to be addressed and that a patent owner should be aware of is what could happen if it requires the public to provide personal information before it can access a marking site. For example, may a patent owner require a member of the public to create an account with personal information before allowing access to the marking site? It is certainly advantageous for a patent owner to gain information on who has been investigating its intellectual property rights. However, regardless of the benefits associated with knowing who’s been looking at these patents, it is very possible the courts will find these types of marking sites to be unreasonably burdensome to the public and keep a potential infringer from adequately receiving constructive notice. Such a requirement could give an alleged infringer a defense that it did not enter the site for concern that it would give up its anonymity, especially because giving up such privacy has not historically been a requirement. It could also be argued that such requirements hinder the public’s ability to identify whether a product is patented. Moreover, if an alleged infringer had in fact not entered the site, there will be evidence to help them argue that they did not have constructive notice whatsoever. The risk of losing damages probably outweighs the benefit of the knowledge of who may be trying to monitor a product’s patent protection.
In summary, patent owners should keep proper records of their virtual marking sites and employ information technology personnel to monitor their marking sites. If one patent owner merges with another, they should have their old sites automatically redirect the public to the new site. Additionally, patent owners should avoid requiring the public to provide personal information to enter their sites. The America Invents Act expanded 35 U.S.C. §287(a) to make patent marking easier and more flexible, but it will not be without cost to certain patent owners. It will be patent owners that do not take proper precautions that will face substantial risk in losing damages for infringement. •
David S. Willoughby is a registered patent attorney at MacDonald, Illig, Jones & Britton. He is a recent graduate of the Franklin Pierce Center for Intellectual Property at the University of New Hampshire School of Law. Contact him at firstname.lastname@example.org.