Pre-Issuance Damages under Section 154(d)

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”[1], 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.

= = = = =

[1] 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.

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

50 thoughts on “Pre-Issuance Damages under Section 154(d)

  1. o promote (and note that the legal meaning of that word is NOT just a type of linear “get better,” but also includes the advertisement notion of “to spread the word”).

    LOL again. Says who?

    More to the point at hand, how does the legal fiction of “constructive notice,” which says that it doesn’t matter whether anyone reads the publications or not, do a better job of “spreading the word” than a requirement that an applicant actually point out out the publication to a potential infringer? The latter sounds more like “spreading the word” to me. Or perhaps you’re OK with a “constructive” promotion of the progress?

    That was “bad” in my opinion because it necessarily tainted the traditional Quid Pro Quo deal and gave a mere “potential” Quid while taking the FULL Quo.
    Let me know if you want to have a serious and inte11ectually honest discussion on that aspect.

    Meh, I’ve seen your argument on this “aspect” before, and I don’t find it very interesting. Nothing personal, I just don’t care – that ship sailed a long, long time ago. So, you probably should find another serious and inte11ectually honest discussion partner for that.

    1. Yes – someone who have the bat simply does not care is most definitely NOT someone willing to have an inte11ctually honest conversation.

      Of course, you probably should not have initiated a reply if that is your mental state.

      1. eeks – that’s some bad autocorrect…

        “someone who have the bat simply does not care”

        should read

        “someone who hasn’t a care, or simply just does not car”

    2. By the way, your added point of “”More to the point at hand, how does the legal fiction of “constructive notice,” is notthe doctrine that I am discussing directly. It is at the same time deeper than that, and directed to the mandate of the Office (as opposed to any action of a patent holder).

      You are in fact merely assuming the status quo is what should be in place. I am directly challenging that. Whether or not you “feel” that you “don’t find it very interesting” is a bland conclusory response that adds nothing to the conversation. I really doubt that “that ship sailed a long long time ago” EXPRESSLY because it hasn’t. Taking a critical look at a long assumed (and as I point out, assumed poorly) assumption and part of a deal that does NOT advance the Quid Pro Quo is most definitely NOT something that should be so carelessly dismissed without a critical thought.

      And yes (again), if you are unwilling (or unable) to partake in a discussion, you should not drive-by and diss the topic out of hand and without being willing to engage. That type of response is nothing but meaningless clutter.

  2. CAFC today in Driessen vs. A Bunch of Deep Pocketed Companies Tr0lled by Driessen, discussing the indefiniteness of a claim term reciting “means for storing and retrieving a record on or in a physical medium”:

    The Driessens argue further that the necessary structures for performing a “means for storing and retrieving a record on or in physical medium,” ’500 patent col. 10 ll. 30–31, were known in the art, and therefore the claims are not indefinite.

    The district court properly rejected this argument. We have explained that “[t]he inquiry is whether one of skill in the art would understand the specification itself to disclose a structure, not simply whether that person would be capable of implementing a structure. Accordingly, a bare statement that known techniques or methods can be used does not disclose structure.” Biomedino, LLC v. Waters Tech. Corp., 490 F.3d 946, 953 (Fed. Cir. 2007) (citations omitted). Nothing in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), is to the contrary.

    Read it and weep, folks. Now all the CAFC has to do is take a tiny baby step and put an end to the bizarre legal fiction that a data-massaging process implemented by a computer is “a structure”.

    1. That’s pretty old news, MM, so I’m not sure why you’re so excited by this case. All the court said is that if you use “means for” language, under 35 USC 112(f), then you have to explicitly disclose a structure. This patentee didn’t, so his claim falls. We’ve known that this is how it works for quite a while.

      1. DanH hat’s pretty old news, MM

        I don’t doubt that it’s old new for you, DanH. But there is an endless debate here over what structures need to be disclosed when “everybody knows what the structure is”. I guarantee you this case will be seen as an incredibly “harsh” application of the rule and held up as an example of “boneheadedness” on the part of the judiciary. But the real point, of course, is that the rule that structure must be expressly disclosed is not only a simple rule, but also a non-onerous and incredibly important rule for a sane and healthy patent system.

        Fyi, I intended to post this summary in the “bits and bytes” thread and I must have hit the wrong button. I apologize for that.

  3. “even when the infringer buries its head in the sand to avoid knowledge”

    Good grief, there is no other area of law, even criminal law, where willful blindness is tolerated…it really just shows how far the anti patent movement has jumped the proverbial shark.

    1. the anti patent movement

      It’s getting stronger every day, Ken! And they’re coming for your guns next.

      Maybe you should grow a beard and move to backwoods Oregon with the True Patriots (TM). I hear they’ve got tons of tinfoil stashed away in their caves.

      1. …and yet another lovely AccuseOthersOfThatWhichMalcolmDoes….

        (anyone up for an OhNoes OnepercenterTr011s software consp1racy?)

        What a chump.

      2. Interesting that MM associates pro-patent sentiment with the general far-right, when a lot of today’s “anti” voices are in fact from the right (including the respective chairmen of the house and senate judiciary committees).

        Though I don’t deny I’m generally on the “pro” side, I’ve nevertheless always shown an effort to be fair minded around here and open to others’ ideas – hardly deserving of such an uncivil response, in any event.

        Call me a wimp (or worse, if you will…), but it’s gratuitous invective like that which causes me to take breaks from this blog. I find myself in agreement with anon’s frequent calls for Professor Crouch to enforce some modicum of standards.

        1. That is just his limits script.

          In truth, it is widely known that the patent system is under attack from BOTH the Left AND the Right.

          This does not “fit” Malcolm’s short script, so he just pretends otherwise.

        2. Ken: a lot of today’s “anti” voices are in fact from the right (including the respective chairmen of the house and senate judiciary committees).

          There’s also a lot people from the center who believe that the US patent system has been abused by gameplayers and is in need of systemic reform. People from the left believe that, too. Basically there’s a fairly broad spectrum of reasonable and articulate people who think that many elements of the system are broken and farcical.

          These people aren’t “anti patent”, however. They are “anti patent tr0ll” and “anti junk patent.” Calling them “anti patent” betrays a fair degree of willful deafness as to what these people are actually saying, not to mention laziness (and, yes, Dennis does it, too, occasionally …. [shrugs]).

          MM associates pro-patent sentiment with the general far-right

          Right, that’s because most of the folks on the Internets who scurry around crying about the “anti-patent movement” are quintessential rightwingers: you know, the paranoid, Constitution-clutching, anti-government types who think the world revolves around their precious patent rights and anyone who disagrees is a “copyist” or a commie. The evidence for that characterization is so plain and transparent that it’s barely worth mentioning but I’m happy to go into detail if you are confused. I’ve got a file, after all. Someone has to keep track of the ridiculous crxp these people are constantly saying.

      3. More insulting nonsense from MM. The anti-patent people are from the left and the right and actually inhibit real reform and the proper functioning of the patent system.

        But, the two biggest anti-patent groups are some left-wing academics like Lemley (who has a start-up that he protects apparently through draconian employment agreements) and big international corporations like Google that spent more than any other corporation than Goldman Sachs lobbying Congress and met with Obama and Lee to approve her appointment, and who selected, vetted, and approved the appointment of the Fed. Cir. judges after O’Malley except for the last one who we could have done a lot better than her.

        So, reality: the anti-patent group is funded by the big monopolies like Google with the “intellectual” arm being a few academics like Lemley and Stern. And we know that the academics have no constraints on their ethics.

        1. To my mind, there were a few problems with the patent system. It costs too much to defend a lawsuit upfront from a P filing multiple complaints. Would have been easy to fix probably. Maybe just allowing the D to select by right infringement or invalidity first. But, the IPR system has undoubtably fixed the system for the D’s, but the anti-patent money marches on…

          1. Note too that you would be very hard pressed to find a anti-patent person/group that actually had been involved in innovation first hand. The more experience someone has the less likely they are to be against patents and to be against information processing patents.

            Plus, we all know that MM’s paid blog job will be replaced by an information processing machine soon. Probably within 10 years, but he would have put in his 20 years by then so he can retire.

            1. With his (very) limited script and his inability to actually engage on any counter point presented for discussion, perhaps “MM” has already been replaced by an information processing machine….

              Some AI already can pass the Turing test…

  4. 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.

    That seems a bit unfair, Dennis. To my knowledge, there has not previously been any settled understanding that simply being aware of a patent application’s existence was sufficient to trigger liability under 154(d). Indeed, the legislative history includes an explicit statement that the published applicant give notice. Statements on Introduced Bills and Joint Resolutions, Senate, S. 1948, CONG. REC. S14716 (Nov. 17, 1999), available at http://thomas.loc.gov.

    Because of this uncertainty, the conventional wisdom has been that patentees should follow the rules applicable to 287(a) – that’s certainly what I’ve advised patentees in the infrequent cases where this issue has come up. It seems to me that it would be just as appropriate to fault Rosebud’s counsel for failing to take those pretty simple steps as to suggest at Adobe “got away with” something. After all, Rosebud was certainly aware of Adobe’s activities, given the prior litigation.

  5. THIS is the type of statement that is self-fulfilling (causing the very confusion it notes):

    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.

    What does “borrowing the name” mean in this context?

    1. What does “borrowing the name” mean in this context?

      It means that the term “provisional” appears in the title of section 154(d) but 154(d) has nothing to do with “provisional” patent applications.

      1. You “kinda” missed the point of that rhetorical question.

        Instead, the better answer would have been that therm “provisional” is used in more than one manner, with pre-grant publication of a nonprovisional patent application creating one meaning of “provisonal,” separate from a “provisional application,” which cannot apply since provisional applications are not published** themselves.

        **and for a bonus, we could talk about the exception of provisionals being deemed published (and electronically made available) when a related nonprovisional application is published and that nonprovisional claims priority to the provisional application.

        1. You “kinda” missed the point of that rhetorical question.

          You “kinda” should work on your rhetorical questions because they “kinda” s uck.

    2. I agree with you. It’s immediately obvious that “provisional rights” in 35 USC 154(d) has nothing to do with provisional patent applications.

  6. Interesting decision Dennis, in that the opinion is adverse but the bulk of the “legal” analysis is really quite favorable from a patent holder perspective. It speaks to an interesting strategy of making sure your “publications” are made known to competitors, including thru 3P submissions when you can make a reasonble case for such. I did this recently in a a few cases early on in the proceedings and the Examiners frequently adopted the suggestions; if you file later (after a 1st OA) they are less inclined to look at new materials and apply them substantively.

    PS: the title needs to be corrected (154(d))

  7. So if you use the PaaS system to review applications to assist the office in finding prior art, you are basically drilling yourself if/when any of the applications issue ?

    Very, very nice.

    1. What does that have to do with provisional rights? I think finding references and provisional rights are completely different concepts.

      1. PB: I think finding references and provisional rights are completely different concepts.

        The concepts are related when the “reference” in question is a published patent application.

      2. Mr. Snyder is only f1uff1ng the pillows of his H0liday 1nn hotel room by celebrating his Ends regardless of his not understanding the means to those ends.

        1. Classic contribution anon. Really helpful.

          Why don’t you instead explain how using the PaaS system, upon the request of the USPTO, does not expose you to damages that you would otherwise be safe from?

          Are you capable of any actual contribution ?

          Signal to Noise if we are going to just start belching slogans every thread.

          1. Your “contribution” was even more classic Mr. Snyder.

            But please, keep on celebrating the Ends reached and remain c1ueless on the means to get there.

            I do think that you recognizing this adverse behavior of yours would be a substantial contribution.

            (You still do not know the difference between signal and noise because you are still aiming for your desired ends)

          2. MS Why don’t you instead explain how using the PaaS system, upon the request of the USPTO, does not expose you to damages that you would otherwise be safe from?

            That might require “anon” to write a coherent paragraph with logically linked sentences. Why would he bother doing that when he just spin his insult rolodex and prance around in his superhero underpants?

            1. That might require “anon” to write a coherent paragraph with logically linked sentences.

              LOL – as if you have anything close to that capability when you wander off of your short script….

              Yet another wonderful Malcolm moment of AcccuseOthersOfThatWhichMalcolmDoes.

              Yay Ecosystem!

          3. I think you are right, in that if I was a litigator, I would ask to see all the automated query constructs used by a patent department to see what cases got included that week. But it would be a bit harder/stretch to show that any human perhaps actually clicked a link and got “notice” of the publication absent keeping a log of their surfing history. And we all know how those get … erased regularly. But, still, your bigger point is correct, it is a backdoor to liability.

            1. The PaaS email arrives every Thursday AM. Your email client will show the date/time it was opened. Each patent application is a separate link, so depending on the discovery situation, each link could show as a separate visited URL. Your ISP or internal network records would show the visit if they were produced- large corps esp. record every visited URL from browsers on their networks. That’s not to mention if you do create documents based on actually, you know, using the system as intended for pertinent applications.

              Could be real time bombs because there could be years between the PaaS publication and eventual grant- so the day the patent issues someone could go back for up to 6 years of damages.

              Very uncool.

              1. You are right to be concerned, but usually the “notice” too must be to someone who occupies some role of importance in the organization, and has some understanding of the company business. Typically “notice” is not imbued to the entire company absent some significant responsibility associated with the position. This has come up a lot in the past in connection with wilfullness charges, and is harder than it sounds.

                1. Everyone is important in a 10 or 20 person startup. Anyone reading PaaS emails (selected by pertinent keyword) is probably doing so for good reason…. but it’s good to know there is at least one more layer for a plaintiff to get thru.

                  Does the office enjoy sovereign immunity when inducing infringement * ?

                  *that’s a funny anon, don’t want to upset your programming….

                2. You comment is unclear Mr. Snyder.

                  If you are referring to the simple notion of what is “deemed publication,” I am afraid that your “beef” is NOT with me.

                  Personally, I think it better – and more in line with the mandate and purpose of the Office – that all published applications were to be deemed sufficient for notice in and of themselves. The very purpose of publication is so that the publications will be looked at. The current manner actually breeds the opposite of the desired effect with a “Don’t you dare look at these things” type of penalizing behavior.

                  Make it the other way around, and you will align with the mission of the Office.

                3. No – the US government has not reserved its sovereign immunity under patent law (but you don’t get the same damages available to you, see 28 USC § 1498). Not sure if the PaaS system emails are pursuant to statute (if so, someone could argue that it provides a limited scrape back on liability (I have no idea if this is proper)).

                  Does showing some a patent induce them to practice the steps? Not sure on that either (but it seems like a stretch). The intent is to provide general information about current technology – not for the third party (that receives the email) to practice the patent.

              2. The current manner actually breeds the opposite of the desired effect with a “Don’t you dare look at these things” type of penalizing behavior.

                You could also fix that problem by, say, requiring that the patentee provide actual notice.

                1. You could also

                  Sure.

                  Much more simpler – and direct – with my suggestion though. That way, you don’t have to depend on a third party for the Office to fulfill its mandate.

                2. That way, you don’t have to depend on a third party for the Office to fulfill its mandate.

                  LOL. Which mandate on the Office is it, exactly, that’s fulfilled by having the publication of pending applications serve as constructive notice, for the purposes of awarding damages for pre-issuance infringement?

                3. Which mandate?

                  To promote (and note that the legal meaning of that word is NOT just a type of linear “get better,” but also includes the advertisement notion of “to spread the word”).

                  As to the second part of you sentence, meh, the whole pre-issuance damage award was a (in my opinion, bad) deal that Congress brokered when they decided to take the Quid before giving any Quo and moved to publication before grant.

                  That was “bad” in my opinion because it necessarily tainted the traditional Quid Pro Quo deal and gave a mere “potential” Quid while taking the FULL Quo.

                  Let me know if you want to have a serious and inte11ectually honest discussion on that aspect.

                  :-)

                4. To promote (and note that the legal meaning of that word is NOT just a type of linear “get better,” but also includes the advertisement notion of “to spread the word”).

                  LOL again. Says who?

                  More to the point at hand, how does the legal fiction of “constructive notice,” which says that it doesn’t matter whether anyone reads the publications or not, do a better job of “spreading the word” than a requirement that an applicant actually point out out the publication to a potential infringer? The latter sounds more like “spreading the word” to me. Or perhaps you’re OK with a “constructive” promotion of the progress?

                  That was “bad” in my opinion because it necessarily tainted the traditional Quid Pro Quo deal and gave a mere “potential” Quid while taking the FULL Quo.
                  Let me know if you want to have a serious and inte11ectually honest discussion on that aspect.

                  Meh, I’ve seen your argument on this “aspect” before, and I don’t find it very interesting. Nothing personal, I just don’t care – that ship sailed a long, long time ago. So, you probably should find another serious and inte11ectually honest discussion partner for that.

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