Following up on What VDPP v. Volkswagen Could Mean for Patent Settlements and Marking and aspects of No Spectacle Worth Watching: How a Non-Practicing Entity’s Failure to Mind Its Licensees Cost It the Case, the Federal Circuit’s decision in VDPP v. Volkswagen makes clear that marking compliance is not a formality patentees can afford to view as optional, and settlement licenses do not get a pass. Patent owners with licensing programs should revisit their agreements now, and accused infringers should treat a patentee’s licensing history as a first-order diligence item.
Link to The Case at a Quick Glance The Case at a Quick Glance
VDPP argued that licenses granted to settle litigation — especially where the licensee denies infringement — should not trigger the marking obligation under § 287(a). The Federal Circuit disagreed, holding that there is no substantive difference between a settlement-based license and any other patent license, particularly where, as here, each agreement was written as a standard license granting rights to make, use, and sell licensed products.
The court further explained that a licensee’s denial of infringement does not matter because the marking inquiry focuses on the patentee’s own marking conduct. In other words, a settlement license is a license for marking purposes, and a patentee that grants a license (including a settlement license) bears the burden of ensuring compliance with the marking statute for products made or sold under that license.
Failure to mark, or to ensure that licensees mark, limits the patentee’s ability to recover pre-notice damages.
Link to Keeping Your Eye on the Mark: Steps for a Patent Owner Keeping Your Eye on the Mark: Steps for a Patent Owner
To obtain a more complete checklist, please contact Stephanie Scruggs and Jessica Zurlo. Below are some highlights:
- Audit existing license and settlement agreements. Review agreements for marking obligations (or their absence) particularly where licensees continue to sell covered products.
- Add express marking obligations to future agreements, even where the licensee denies infringement. The court left open whether “reasonable efforts” short of a contractual marking clause can ever suffice, but offered no guidance on what those efforts might look like. Documentation of those efforts will therefore be important.
- Verify licensing history against records and expect to disclose it if you file suit. Nondisclosure of relevant settlement agreements was among the factors that made this case “exceptional” for fee-shifting purposes.
Link to What Accused Infringers Shouldn’t Overlook What Accused Infringers Shouldn’t Overlook
- Investigate the patentee’s licensing history early. A patentee’s prior settlement licenses — especially those lacking an express marking clause — can support a motion to dismiss a claim for pre-suit damages.
- An NPE’s “nothing to mark” defense is not a complete answer. The obligation extends to any licensee selling a covered product. Look beyond the patentee’s own nonpracticing status to the conduct of its licensees.
- Use the patentee’s own infringement position against it. Because a licensee’s denial of infringement does not defeat the marking obligation, a patentee’s continued assertion that licensed products practice the patent is itself evidence that marking should have occurred.
- A successful marking defense can eliminate damages entirely, not just reduce them — particularly where the patent has expired and no post-notice infringement period remains.