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America Invents Act: Arising Virtual Marking Issues

35 U.S.C. 287(a) of the Patent Act provides 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 is occurring.

On September 16, 2011, the America Invents Act ("AIA") that was signed into law by President Obama 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, 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 Co., 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 the patent owners. Courts do not simply hand over damages to patent owners claiming infringement, at the very least they must prove that a proper notice was in fact given. The 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 the Nike, Inc. case. Nike, Inc v. Wal-Mart Stores, Inc. 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.

This article was first published in the intellectual property supplement found in the Legal Intelligencer on October 9, 2012. To read this article in its entirety, click here.