Rosebud LMS v. Adobe Systems (Fed. Cir. 2015)
In one of its first interpretation of the pre-issuances damages statute, 35 U.S.C. § 154(d), the Federal Circuit has affirmed that “actual notice of the published patent application” is a necessary element of infringement, even when the infringer buries its head in the sand to avoid knowledge of the application.
Section 154(d) defines the poorly-named concept of “provisional rights”, which I refer to as “pre-issuance damages.” Under the statute,
a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application . . . and ending on the date the patent is issued–(A)(i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States . . . and (B) had actual notice of the published patent application.
The statute further requires that the patented invention be “substantially identical to the invention as claimed in the published patent application.” Although actual notice is required, the statute does not appear to require any affirmative act by the patentee to provide that notice.
The action here involves Rosebud’s allegations against Adobe for infringing its U.S. Patent No. 8,578,280. Prior to the present lawsuit, Rosebud had previously sued Adobe for infringing the two additional applications – the ‘parent’ and ‘grandparent’ of the ‘280 patent. At the time of the prior lawsuit, the application leading to the ‘280 patent had already published. However, Rosebud did not introduce any evidence showing that Adobe had particular knowledge of the published application. Instead, Rosebud presented circumstantial evidence that: (1) Adobe had actual notice of the predecessor patent that shared an identical specification (Adobe was sued for infringing the parent/grandparent and it was cited by an examiner as prior art against Adobe) (2) Adobe followed Rosebud products, based upon confidential internal Adobe emails; and (3) standard practice in the industry” suggest that Adobe’s counsel knew of the published application that resulted in the ‘280 patent.
Although the Federal Circuit agreed that circumstantial evidence could prove actual notice, the evidence presented here was insufficient to lead to that conclusion. Further, the court reiterated that proof of “constructive notice” is insufficient to prove actual notice.
Rosebud attempted to the SynQor decision regarding pre-suit damages for inducement that require “actual knowledge” of the asserted patent. In that case, the court approved of jury instructions that asked whether “Defendants knew or should have known” that its actions would induce actual infringement and had “reason to be aware of the existence of the patent.” In the case, the holding of actual knowledge (affirmed on appeal) was based upon (1) marking of products with the parent’s patent number; (2) defendant’s effort’s to imitate SynQor’s products; and some evidence of patent monitoring by the defendant. In Rosebud, the Federal Circuit did not cite or refer to this SynQor analysis.
I’ll pause here to suggest that Adobe got away with something here – It is unbelievable to me that Adobe’s counsel did not know of the published application – the sole child application of the patent that was the subject of an infringement lawsuit.
One reason why Adobe won on this issue seems to be that Rosebud delayed its push for discovery and the district court decided the summary-judgment motion before the close of discovery. Rosebud hade provided a R. 30(b)(6) deposition notice to Adobe on the topic of knowledge of the application, but the deposition had not yet taken place. On those points, the Federal Circuit found no abuse of discretion:
The district court did not abuse its discretion in granting summary judgment before the close of discovery. Rosebud had notice of Adobe’s intent to file an early motion for summary judgment, and did not oppose this request or indicate at the time that it needed further discovery on issues relevant to the motion. Moreover, Rosebud did not serve its Rule 30(b)(6) deposition notice or its subpoenas on Adobe’s outside counsel until several weeks after it received Adobe’s motion for summary judgment. It appears that Rosebud delayed filing much of its discovery until after it received Adobe’s motion for summary judgment, without informing Adobe or the court that such discovery might be necessary. Given this timing, we see no abuse of discretion in the district court’s action.
No pre-issuance damages for Rosebud.
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 There is already a substantial amount of confusion regarding the filing of provisional patent applications, and Section 154(d) has nothing to do with provisional applications other than borrowing the name.