Defeating Patent Trolls with Failure to Mark

By Damian R LaPlaca
May 19, 2016

pawn-king-punchPatent infringement suits brought by patent trolls can bring the heartiest of defendants to the settle negotiation table to avoid the expense of a patent infringement action, known by all to be among the most expensive of all civil litigation actions.

Serial patent suits by a patent troll can be equally vexing.  The plaintiff patent troll uses the identical complaint copied from the previous suits, changes the name of the defendant without changing any of the facts, does not identify any facts of infringement and instead provides only cursory general allegations, and escapes a motion to dismiss for failure to state a claim by contending all will be disclosed in the infringement contentions.  While in recent years defendants have been able to use the Supreme Court decision in Alice v. CLS Bank to prevail on motions to dismiss when the patent deals with abstract software related patent claims, for other technology areas district court judges are loathe to terminate a case on a motion to dismiss.

Once the patent troll has survived a motion to dismiss the defendant is caught in the troll’s snare.  The troll has the defendant where he wants him, in a settlement discussion.  The troll demands untold thousands for past indiscretions and a license with royalty obligations for any future sale of the defendant’s products.  You represent the defendant.  What do you do?

This is where the patent marking statute can be your friend.  First, patent marking refers to the notices on products such as “Pat. 8,000,000,” “Pat. Pending,” and similar marks that notify the public and competitors that the products are patented.  Under 35 U.S.C. § 287, a patent owner can patent mark in one of two ways.  It can mark a physical product or its packaging with the patent number.  Alternatively, in the absence of physical marking, it can give notice to the targeted infringer by making a specific charge of infringement.  Compliance with the marking statute preserves the patent owner’s right to claim damages for past infringement.  Since a patent owner can sue for up to 6 years of prior infringement, whether it has complied with its notice obligation plays an important role in how much a troll can expect to collect from the defendant.  Failure to mark can bar a hefty damage claim by eliminating any damages prior to notice of infringement.

Many defendants to patent troll suits have never heard of the patent owner or its patent(s), and will have never received notice of infringement until service of the lawsuit.  Typically patent trolls have no product to mark, since they are non-manufacturing entities.  In that situation, the patent troll must take reasonable steps to ensure that its licensees mark their licensed products – if it has licensees.  If a patent troll plaintiff has not required its licensees to mark, the defendant may be able to defeat past damage claims without spending thousands in legal fees mounting a defense on the merits to an infringement claim.  This, at the very least, minimizes potential exposure to a patent infringement defendant.

In an infringement action the patent troll has the burden to show that it complied with the patent marking statute.  But consider a scenario where the patent troll who has taken numerous other suits enters into settlement agreements that include license arrangements that do not require its licensee to mark, or where the troll fails to ensure that the licensee does mark its products.  The patent troll defendant has a right to know of prior licenses, and has the right to challenge the troll’s compliance with the marking statute.  Defeating up to six years of patent damages on a marking defense is less expensive than defeating the infringement claim on the merits, and it may free the defendant from entering into a license agreement and to give up a percentage of its revenue on to the troll.  A win win.

The defendant should demand the production of all license agreements from the troll.  The license agreements ought to be as discoverable as a defendant’s insurance policies.  The troll will resist, claiming they are confidential, but past license agreements are relevant for a variety of reasons.  In addition to possibly containing information about patent marking, the royalty rate agreed to will have at least some relevance.  Even if there is reluctance on the part of the court to order production of license agreements this can be resolved initially with a confidentiality agreement between the defendant and the troll, which can always be revisited later with the judge should the agreements provide relevant information that deserve to be introduced during trial.  With access to the license agreements you can determine whether there are any marking provisions and locate products of the licensee.  The next step is to determine whether the licensed products are marked with the patent troll’s patent number.

While it may be more satisfying to prevail against a patent troll on the merits, that will generally be a very expensive proposition.  The job of defense counsel is not only to win on the merits, but also to minimize exposure for the defendant through a variety of parallel strategies.  If the troll has failed to mark, the defendant to a troll suit will be in a great position to move to bar any pre-suit damages on the failure to comply with the marking statute, save thousands in legal fees, and save thousands in dollars that the troll would otherwise demand for itself.

The Author

Damian R LaPlaca

Damian R LaPlaca is a patent and intellectual property litigator at Devine Millimet & Branch in Boston, Massachusetts with over 25 years of experience.  He has served as lead counsel in a variety of patent and trade secret disputes in different state and federal courts, including Massachusetts, Virginia, and Puerto Rico.  He has twice argued and succeeded in convincing the Court of Appeals for the Federal Circuit to reverse two decisions in the district courts on matters that generated national interest.  Mr. LaPlaca has written before on beating patent trolls.  He is the Chairman of the Intellectual Property Litigation Committee within the Complex Commercial Litigation Committee of the Massachusetts Bar Association.  For more information and to contact Damian please visit his profile page at the Devine Millimet website.

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Discuss this

There are currently 14 Comments comments.

  1. angry dude May 19, 2016 10:43 am

    “Many defendants to patent troll suits have never heard of the patent owner or its patent(s), and will have never received notice of infringement until service of the lawsuit.”

    No kidding, dude

    Although all issued patents are published at the USPTO website and the important ones are also published and discussed in technical literature, you will never ever meet an infringer who will admit that they went to USPTO website and printed a copy of a patent they intentionally and shamelessly used in their products without compensating patent owner

    As for the notice of infringement, look up Hewlett-Packard Company v. Acceleron LLC case:

    this is all by legal design, and that design came from SV corporate boardrooms (with $$$ attached), not from some poor “patent trolls”

  2. Paul Morinville May 19, 2016 1:23 pm

    Damian, You seem to be an educated and successful lawyer well versed in the definition of terms and how their use may sway an argument. Can you please define what your definition of a patent troll is a little bit more specifically?

    It seems you mean small independent inventors, companies who were wiped out by large multinational infringers whose deep pockets and market dominance ran them out of business, and the investors who are attempting to recover their losses from the theft.

    If that is your definition, I don’t understand your article. If you have a different definition that will bring the proper context, I’d love to hear it.

  3. Anon May 19, 2016 2:54 pm

    Curious that the article does not address the marking changes that passed with the America Invents Act.

    These changes, on their face, were advanced to combat a different type of “troll,” but may have actually inoculated this author’s use of the term (for example, marking by reference to web page, or in mere collateral material).

  4. Benny May 22, 2016 4:44 am

    Paul at 2, Damian actually does define the patent troll as someone who ” does not identify any facts of infringement and instead provides only cursory general allegations”.
    If you had a could present a valid case for infringement, you wouldn’t behave likes Damians’ troll, would you?

  5. Anon May 22, 2016 7:29 am

    Benny,

    Your question presumes (incorrectly) an answer that has only recently been changed with the evisceration of Notice Pleading.

    Prior to that change, it was accepted – and thus acceptable practice under Notice Pleading to provide “only cursory general allegations” and this was a practice not limited to patent cases.

    You engage in a ideological backwards hindsight action by inserting the “malice” of “trolls” here.

  6. Benny May 22, 2016 7:39 am

    Anon,
    why the quotation marks surrounding the word malice? If you accuse an operator of infringing a patent but have no evidence that there is any infringement, then malice is involved. Also, Anon, prior to the change of Notice Pleading, my question may have been deserving of criticism, but since April 2015 it is perfectly in order.

  7. Anon May 22, 2016 8:47 am

    Your own answer provides the basis: you are simply NOT correct to ASSume malice if the form of notice pleading that was acceptable was being followed.

    Your insertion is false.

    Your attempt now to say that your insertion is “perfectly in order” is also not correct. I have deliberately placed the change in pleading standards in context, drawing to the actions prior to that change. And it is those actions prior to the change that you are attempting to insert an attribute (assumed) that is not necessary – nor “in order.”

    If there is NOW a charge of infringement filed AFTER the rules change, even then you do NOT prove malice – nor can you ASSUme malice. The most you can ASSume is an improper filing.

    You strike me as the very type of person to whom the Big Corp propaganda machine aimed their “Tr011” campaign at: far too eager to assume “evil” and far too mindless to note just whose benefit the “Tr011” campaign serves.

  8. Benny May 22, 2016 9:08 am

    Anon,
    You are not looking at the wider context. In a world in which certain (even a minority) individuals file complaints of infringement with no factual basis, then if you have a genuine cause for complaint you would do well to state it up front to differentiate yourself from the patent system abusers. Otherwise you may well find yourself lumped with the evil players.
    What alternative motive can you come up with for “improper filing”, if not malice? Stupidity ? Surely not a common vice in your profession.

  9. Paul Morinville May 22, 2016 9:38 am

    Benny @4. I assume that Damian is a bright attorney experienced in the art of using words to sway argument. After all, he is a presumably successful litigator in highly complex cases. This tactic cannot escape him.

    The use of the term patent troll is well known term of art intended to be pejorative and demeaning towards small inventors. It was an invention of the anti-inventor lobby. These are the companies who steal from small powerless inventors so they can maintain their position of wealth and power. Damian repeatedly and incessantly uses the pejorative term patent troll, which shows his intent is to expand and perpetuate a false narrative that inventors are patent trolls.

    Damian says “Many defendants to patent troll suits have never heard of the patent owner or its patent(s), and will have never received notice of infringement until service of the lawsuit. Typically patent trolls have no product to mark, since they are non-manufacturing entities. ” Since Damian’s description much more accurately describes small independent inventors, Damian is equating inventors to patent trolls with purpose, and that purpose is to disparage small inventors for the benefit of large multinational corporations.

    The large multinational corporations Damian is supporting are the same large multinationals that steal patented inventions from inventors, massively commercialize them and then get away with it. His non-description of a patent troll combined with the public’s general understanding of that term is intended to cast a dark light on the imaginary plaintiff he describes, but his very definition describes just about any inventor. He knows this and just doesn’t care. After all, he is trolling for new business in this article.

    Damian then uses his position and personal power as credibility in his argument to disparage inventors as the bad guys by his incessant use of the word patent troll. The truth here is that inventors are commonly the victims of theft by the huge rich multinational corporations he represents or desires to represent. These are the same multinationals who keep their money offshore to avoid paying taxes and move jobs to China.

    Damian appears to be an Inventor Troll.

  10. Benny May 22, 2016 9:49 am

    Paul,
    Regarding Damien’s purpose in the article of promoting his own legal services, I must admit that escaped me completely.
    “the public’s general understanding of that term is intended to cast a dark light on the imaginary plaintiff…” I think this is the crux of the argument. The public’s understanding of the term “troll” does, I suppose, extend beyond those who deliberately attempt to abuse the system, but the converse, pretending that trolls do not exist, doesn’t help either.

  11. Anon May 22, 2016 10:01 am

    Benny,

    I AM looking at the wider context – and I am merely NOT subscribing to the pejorative offered (the propaganda) of the “Tr011” scare tactics.

    Are there “bad players” in the patent world? Certainly – just as there are bad players in every walk of life. You let the propaganda get the best of you though – and that is clearly obvious in your ASSumptions and predilections.

    The very clear point here is that a propaganda “game” is afoot and you are oblivious to it.

    It does not do you well to lecture anyone when you are so oblivious.

  12. Paul Morinville May 22, 2016 10:17 am

    Benny @10. This cartoon character called a patent troll was created by large multinationals to disparage inventors and the secondary market of capital that funds their companies or otherwise returns their investment of the hard work, intelligence and money that went into their disclosure of their inventions to the public. The very disclosures that propel new technologies.

    A patent troll is a lie and it cannot be disputed that anyone who uses this term perpetuates a lie… not just any lie, but a very damaging lie. A lie that is a key reason we have more companies going out of business than starting up for the first time since at least the Great Depression. A lie that perpetuates the corruption and power of the likes of Google, Facebook, Amazon and others. Its use is cynical and deviant. It is anti-American swill.

  13. Benny May 22, 2016 2:06 pm

    Paul, OK, I’ll use the term “patent system abuser” from now on.

  14. Anon May 23, 2016 5:56 am

    Benny,

    I was hoping for a higher level of awareness instead of just a label change.

    …that “wider context” and all…