Forum shopping among patent owners pursuing claims for patent infringement is widespread. One factor a plaintiff may consider in selecting a forum arises out of a split among district courts that the Federal Circuit has yet to address on the question of sufficient notice for claims of indirect infringement and enhanced damages for willful infringement. Specifically, can the filing of a complaint serve as notice to the alleged infringer for claims of indirect or willful infringement?
It’s an important question, as complaints alleging patent infringement often include claims for indirect infringement, contributory infringement and/or enhanced damages based on willful infringement. For such claims to survive a motion to dismiss, each must state that the accused infringer had notice both of the asserted patent and of the making, use or sale of infringing products or systems. See Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 104 (2016); Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766 (2011).
In some cases, the patent owner will satisfy the requirement of pleading notice by contending that sometime before filing the lawsuit it sent a letter to the accused infringer notifying it of the asserted patent and the products or systems that supposedly infringe that patent.
In cases where the patent owner has not sent the other party a letter in advance of the filing of the complaint, it attempts to meet the notice requirement for claims of indirect or willful infringement by alleging that the service of the complaint provides the necessary notice. Indisputably, a plaintiff asserting notice with the filing of the complaint would not be entitled to either pre-filing damages for indirect or pre-filing enhanced damages for willful infringement. But would it be entitled to those damages for indirect or willful infringement that occur after the filing of the complaint? District courts (and in some cases the judges within a district) are split, and neither the Federal Circuit nor the Supreme Court has addressed the issue.
The majority of judges who have considered the issue have concluded that a plaintiff cannot pursue claims of indirect infringement or enhanced damages for willful infringement based only on the filing of a complaint alleging such claims. Two recent cases can be added to the majority tally. First, in ZapFraud, Inc. v. Barracuda Networks, Inc., 528 F.Supp.3d 247 (D. Del. 2021), Judge Connelly granted Barracuda’s motion to dismiss ZapFraud’s claims for indirect infringement and willful infringement where knowledge of the claims was based solely on the filing of the complaint. Id., at 252.
In a thoughtful opinion, Judge Connelly noted the split between courts and included in his decision an extensive list of cases on both sides of the issue. He chose to follow courts that found post-suit claims untenable, reasoning that “[t]he purpose of a complaint is to obtain relief from an existing claim and not to create a claim” and that “[t]he policies that govern our patent system make the requirement of pre-suit knowledge of the asserted patents especially warranted for enhanced damages claim [because] [d]irect infringement is a strict liability tort.” Id., at 251 (internal quotation marks and citations omitted.)
Even more recently, Judge Klausner of the Central District of California dismissed claims of indirect infringement and enhanced damages based on willful infringement where the complaint alleged knowledge from the filing of the complaint. Ravgen, Inc. v. Quest Diagnostics Incorporated, slip opinion, case no. 2:21-cv-9011-RGK (C.D. Cal. Jan. 18, 2022). Tackling the matter of enhanced damages first, Judge Klausner also noted that different courts have come to different conclusions on the issue, but sided with those courts that held the filing of a complaint could not be the basis of willful infringement. Id., at 4. He then reasoned: “It seems beyond the pale to expect every patent defendant to cease all allegedly infringing conduct once a complaint is filed to force them to avoid enhanced damages for willful infringement.” Id. (internal quotation marks and citations omitted.) Finally, Judge Klausner said the same reasoning applied to Ravgen’s claims for induced infringement and, therefore, dismissed that claim. Id., at 5.
This is an important issue, and it is somewhat surprising that the Federal Circuit has not resolved the split among district courts. Until it does so, a particular district court’s position on post-filing claims of indirect and willful infringement may influence a patent owner’s choice of forum. A defendant in a patent case should early on become familiar with the position of the court in which it has been sued (or even the judge to which the case has been assigned) on the issue of post-filing liability. It could have a profound effect on the defendant’s exposure and, ultimately, the value of the case.