In the last issue, we discussed patent marking basics and issues related to licensee marking. A recent district court summary judgment decision provides another reminder regarding licensee marking and whether marking product literature complies with statutory requirements.

As required by 35 U.S.C. § 287(a), patentees and their licensees must mark products covered by a particular patent in order to provide constructive notice to the public. In Acantha LLC v. DePuy Orthopaedics Inc., et al, Acantha accused DePuy of infringing one of its patents relating to an orthopedic implant.[1] In response, DePuy filed a motion for partial summary judgment, alleging that Acantha’s damages should be limited due to its failure to mark its products pursuant to § 287(a).[2]

Acantha licensed the products in question to Stryker Spine SA, which had agreed in a licensing agreement to mark all of the products covered by Acantha’s patent on the product packaging.[3] However, the court found that Stryker failed to mark as much as 95% of the licensed products.[4] Consequently, DePuy argued that, as a matter of law, damages should only accrue from when counsel for Acantha sent DePuy a claim chart asserting that DePuy’s products infringed Acantha’s patent, rather than from when the licensed products were available on the market.[5] The court agreed with DePuy for two reasons. First, Stryker marked neither the licensed products themselves nor the product packaging. Second, Acantha did not make reasonable efforts to ensure Stryker’s compliance with the marking requirement.[6]

Though Stryker did not mark the actual licensed products or the product packaging, it did provide marks on surgical technique guides associated with those products.[7] Acantha argued that it was entitled to “great discretion” when deciding how to mark its products, and accordingly, a jury should determine whether the marking satisfied § 287.[8] The court disagreed, however, explaining that “[w]hile some courts have found that placing the patent mark in the literature describing the patented article constitutes constructive notice, they have done so only when the literature is distributed with the product or placed in the box the product is contained.[9]” Because Stryker did not distribute the guides alongside the products, the court declined to find that marking of the guides satisfied § 287.

Acantha also argued that it did not need to establish substantial compliance with § 287 because it made reasonable efforts to ensure that Stryker complied with the marking requirements by maintaining consistent contact with Stryker about its obligation.[10] The court, however, found that Acantha’s communication with Stryker was simply “reasonable diligence,” which wasn’t enough absent actual substantial compliance.[11] The court cited Maxwell v. J. Baker Inc. to explain that “[w]hen the failure to mark is caused by someone other than the patentee, the court may consider whether the patentee made reasonable efforts to ensure compliance with the marking requirements.[12]” In the Maxwell case, the patentee had ensured that 95% of its products were marked, and only 5% of its products were unmarked due to non-compliance by a licensee.[13] Such evidence was sufficient to show that substantially all of the covered products were marked. In contrast, only about 5% of Acantha’s covered products were actually marked. Accordingly, it could not show that it made reasonable efforts to ensure Stryker’s compliance. Ultimately, the court granted partial summary judgment, thereby limiting Acantha’s damages.

This case is another important reminder for consumer product companies requiring licensees to mark products covered by their patents. Patent owners should ensure actual substantial compliance with patent marking provisions by their licensees to maximize damages and their return on investment.

[1] Acantha LLC v. DePuyOrthopaedics Inc., et al., 15-C-1257 at *1 (E.D. Wis. Apr.25, 2018).
[2] Id.
[3] Id. at *3.
[4] Id. at *7.
[5] Id. at *3.
[6] Id. at *7, *10.
[7] Id. at *7.
[8] Id.
[9] Id.
[10] Id. at *8.
[11] Id. at *9.
[12] Acantha LLC, 15-C-1257 at *9; See Maxwell v. J. Baker Inc., 86 F.3d 1096, 1111-12 (Fed. Cir. 1996).
[13] Acantha LLC, 15-C-1257 at *9.

This article appeared in the April 2018 issue of The Goods on IP® Newsletter.