The patent marking statute, codified at 35 U.S.C. § 287(a) appears straightforward:

Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word "patent" or the abbreviation "pat.", together with the number of the patent, or by fixing thereon the word "patent" or the abbreviation "pat." together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice.  In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.  Filing of an action for infringement shall constitute such notice.

Applying the statute to circumstances can be more complicated when the patented invention is a component of an article in commerce, which was the case in Arctic Cat Inc. v. Bombardier Recreational Products Inc., decided last week by the Federal Circuit, limiting the amount of damages due from an infringer based on this section of the Patent statute.

The case arose over infringement of Arctic Cat's U.S. Patent Nos. 6,793,545 and 6,568,969 by Bombardier, the patents directed to steering systems in personal watercraft (PWC) such as jet skis.  Arctic Cat ceased selling PWC in favor of a licensing agreement with Honda.  This licensing agreement had contained a provision requiring Honda to mark all licensed products sold with appropriate patent numbers, but this provision was not included in the final agreement between the parties.  It was undisputed that Arctic Cat failed to monitor whether Honda was properly marking but not when Honda stopped neglecting this responsibility and began to mark; Arctic Cat asserted September 6, 2013 as the latest date when Honda sold unmarked items while Bombardier alleged Honda sold unmarked PWCs as late as 2018.

A jury found the asserted patents to be infringed and not invalid, and awarded damages calculated from October 16, 2008 (a date 6 years before Arctic Cat filed suit and a little less than five years before Arctic Cat agreed Honda stopped selling unmarked items).  The jury also found that Bombardier's infringement was willful.  In an earlier appeal, Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d 1350 (Fed. Cir. 2017), the Federal Circuit affirmed the jury's willfulness determination by vacating and remanding on the marking issue for putting the burden on Bombardier to show that unmarked articles did not practice the claimed invention.  Rather, according to that panel, "once an alleged infringer identifies products that it believes are unmarked patented articles subject to the notice requirements of § 287, the patentee bears the burden of proving that the identified products do not practice the claimed invention."  On remand (the subject of this appeal), Arctic Cat moved for summary judgment that it was entitled to "pre-complaint" damages, and that § 287 "did not apply after the time that it alleges Honda stopped selling unmarked products." "More ambitiously," as characterized by the panel opinion, Arctic Cat asserted that the jury's willfulness determination constituted notice and hence it was entitled to the entire period when Bombardier was selling PWCs that infringed the patents in suit under § 286, which constituted a time period when Honda was undisputedly selling unmarked items.  The District Court disagreed and limited the damages awarded not to include damages for pre-complaint sales.

The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judges Moore and Stoll.  The opinion set forth the principles behind the restriction of damages embodied in § 287, that while a patentee who does not make or sell a patented article can obtain damages for any infringing article, even without notice, when a patentee makes or sells and fails to mark, she cannot collect damages until she either provides actual notice or sues the accused infringer.  This amounted to cure of the neglect of not marking, but it also provides definitive boundaries on when damages can be obtained for infringing activity and when the statute provides that damages cannot be so obtained -- all based on patent marking.  The circumstances in this case were somewhat of an anomaly ("a discontinuous situation") because "unmarked products were sold, such that Arctic Cat could not receive damages before providing notice, but the sales of unmarked products allegedly stopped for a period of time prior to the filing of Arctic Cat's complaint."  As a consequence, the question the Court perceived was presented is "whether the cessation of sales of unmarked products excuses noncompliance with the notice requirement of § 287 such that a patentee may recover damages for the period after sales of unmarked products ceased but before the filing of a suit for infringement," a question having an answer for this panel of "no."

The panel rejected Arctic Cat's statutory interpretation dependent on the statute being written in the present tense, so that ceasing sales of unmarked product would be sufficient to cure.  This comes from the language of the statute according to the opinion, which while casting a patentee's conduct in the present tense, the consequences of failing to mark are not limited in time.  The statutory language "prohibits a patentee from receiving any damages in a subsequent action for infringement after a failure to mark, rather than merely a reduced amount of damages in proportion to the amount of time the patentee was actually practicing the asserted patent" according to the opinion (emphasis added).  The statute imposes an obligation to mark when the patentee (or in this case, its licensee) begins to sell the patented article.  Succinctly, the opinion captures the equities of these responsibilities saying:

The notice requirement to which a patentee is subjected cannot be switched on and off as the patentee or licensee starts and stops making or selling its product.  After all, even after a patentee ceases sales of unmarked products, nothing precludes the patentee from resuming sales or authorizing a licensee to do so.  In the meantime, unmarked products remain on the market, incorrectly indicating to the public that there is no patent, while no corrective action has been taken by the patentee.  Confusion and uncertainty may result.  Thus, once a patentee begins making or selling a patented article, the notice requirement attaches, and the obligation imposed by § 287 is discharged only by providing actual or constructive notice.

The panel also found this interpretation to be consistent with the purpose of the statute:  "(1) helping to avoid innocent infringement; (2) encouraging patentees to give public notice that the article is patented; and (3) aiding the public to identify whether an article is patented," citing Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1443 (Fed. Cir. 1998), whereas Arctic Cat's interpretation "would undermine those objectives" because it would allow a patentee "to allow a patentee to mislead others that they are free to make and sell an article that is actually patented, but nonetheless allow the patentee to recover damages without undertaking any corrective action."

The Court also rejected Arctic Cat's argument that a finding of willfulness was enough to establish actual notice, not least because "Arctic Cat acknowledges, as it must, that this argument is foreclosed by our precedent" citing Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994), and relying on Am. Med. Sys., Inc. v. Med. Eng'g Corp., 6 F.3d 1523, 1537 n.18 (Fed. Cir. 1993).  The distinction drawn by the panel is that "willfulness turns on the knowledge of an infringer, [while] § 287 is directed to the conduct of the patentee" and "[k]nowledge by the infringer is not enough.  Actual notice under § 287 requires performance by the patentee."  Accordingly, the opinion affirmed the District Court's denial of pre-complaint damages.

Arctic Cat Inc. v. Bombardier Recreational Products Inc. (Fed. Cir. 2020)
Panel: Circuit Judges Lourie, Moore, and Stoll
Opinion by Circuit Judge Lourie