How Patentees can use the recent Rosebud Decision to Secure Rights to Provisional Damages

How Patentees can use the recent Rosebud Decision to Secure Rights to Provisional Damages

A patent owner may have “provisional rights” to recover reasonable royalty damages accruing between the time its patent application published and the time the patent issued if the infringer received actual notice of the published patent application. The Federal Circuit clarified that actual notice may come from the patent owner, but also may arise separately if the patent owner can show that there was actual notice.

Rosebud LMS, Inc. sued Adobe Systems, Inc., alleging that Adobe’s Collaborative Live feature in Adobe Acrobat infringed a Rosebud’s patent teaching techniques for enabling collaborative work over a network of computers. Adobe moved for summary judgment of no remedies, claiming that Rosebud was not entitled to post-issuance damages because Adobe had discontinued use of the accused technology ten months before the issuance of the patent in dispute (the ’280 patent). Adobe also asserted that Rosebud was not entitled to preissuance damages under § 154(d) because Adobe did not receive notice of the published patent application that led to the ’280 patent directly from Rosebud. Rosebud claimed it had provisional rights under the Patent Act to recover a reasonable royalty for Adobe’s infringing activity during the period after the patent application published up until Adobe discontinued the Collaborative Live feature. Rosebud claimed that Adobe had actual knowledge of the grandparent application, and that Abode had an affirmative duty to search for the patent application which was related to a patent asserted by Rosebud against Adobe in a prior suit. Adobe countered that actual notice requires not just knowledge, but an affirmative act by Rosebud, or that the notice had to come directly from Rosebud to Adobe to be “actual notice” under the statute.

The Federal Circuit’s Decision
The Federal Circuit first noted that patent owners may only collect damages for patent infringement that takes place during the term of the patent, and that there is only a narrow exception to this rule for provisional rights. Provisional rights by statute are only granted when the infringer has “actual notice of the published patent application.” See 35 U.S.C. § 154(d).

The Federal Circuit agreed with neither Adobe, that the patentee must provide the notice to the alleged infringer, nor Rosebud, that constructive knowledge is sufficient to satisfy the actual notice requirement. While actual knowledge certainly includes a party affirmatively acting to provide notice, it is also broader and includes “knowledge obtained without an affirmative act of notification.” Thus, Rosebud’s position that constructive knowledge should be “actual notice” was found too broad, while Adobe’s position that actual notice required an affirmative act of the patent owner was found too narrow. The court acknowledged that the Patent Act does not go so far as requiring the patent applicant to provide actual notice by an affirmative act or to explain the nature of the allegedly infringing conduct.
The court, however, emphasized that none of the evidence that Rosebud presented regarding Adobe’s knowledge expressly identified the published patent application. Even though Adobe and Rosebud had extensive litigation history on similar subject matter, the court rejected Rosebud’s theory that Adobe had an affirmative duty to search for Rosebud’s published patent applications. The Federal Circuit found that Rosebud’s evidence could only amount to constructive notice of the published application, which precluded Rosebud from recovering damages for infringing acts that occurred before the patent issued.

Best Practices and Conclusion
Prior to issuance of a patent, applicants should be actively monitoring the marketplace for infringement and giving actual notice of a patent application when it publishes or as soon as possible after publication. The law requires actual notice of a published patent application to recover royalties before a patent issues, and the best practice is to show actual notice by sending the published application to the infringer. While the Federal Circuit has left open the possibility to show actual notice without notice sent by the patent applicant, it may be difficult to do so. This case shows how difficult it may be, as the parties were involved in previous litigation of a related patent, and the court did not believe there was a genuine issue of material fact to get past summary judgment of no actual notice. If you are a patent applicant or patent holder, contact your patent attorney to discuss best practices to secure your rights to damages for infringing activity before issuance of your patent.