Affirmative Act of Notification Not Necessary for Section 154(d) Actual Notice: Fed. Cir. | Practical Law

Affirmative Act of Notification Not Necessary for Section 154(d) Actual Notice: Fed. Cir. | Practical Law

In Rosebud LMS Inc., v. Adobe Systems Inc., the US Court of Appeals for the Federal Circuit affirmed the district court's grant of summary judgment, finding that Adobe Systems Inc. was not liable for pre-issuance damages under Section 154(d) of the Patent Act because Adobe lacked actual notice of the published patent application that led to the patent-in-suit.

Affirmative Act of Notification Not Necessary for Section 154(d) Actual Notice: Fed. Cir.

by Practical Law Intellectual Property & Technology
Published on 10 Feb 2016 • USA (National/Federal)
In Rosebud LMS Inc., v. Adobe Systems Inc., the US Court of Appeals for the Federal Circuit affirmed the district court's grant of summary judgment, finding that Adobe Systems Inc. was not liable for pre-issuance damages under Section 154(d) of the Patent Act because Adobe lacked actual notice of the published patent application that led to the patent-in-suit.
On February 9, 2016, in Rosebud LMS Inc., v. Adobe Systems Inc., the US Court of Appeals for the Federal Circuit affirmed the US District Court for the District of Delaware's grant of summary judgment, finding that Adobe Systems Inc. was not liable for pre-issuance damages under Section 154(d) of the Patent Act ( (Fed. Cir. Feb. 9, 2016); 35 U.S.C. § 154(d)). On an issue of first impression, the Federal Circuit affirmed the district court's holding that Adobe did not have actual notice of the published patent application that led to the patent-in-suit.
This case involved US Patent No. 8,578,280 ('280 patent), owned by Rosebud LMS Inc. and directed to techniques enabling collaborative work over computer networks. In February 2014, Rosebud sued Adobe for infringement of the '280 patent. Adobe moved for summary judgment of no remedies, arguing, among other things, that:
  • Abode discontinued use of the accused technology ten months before the '280 patent issued.
  • Rosebud was not entitled to pre-issuance damages under Section 154(d) because Adobe lacked actual notice of the published patent application that led to the '280 patent. It was undisputed that Rosebud did not affirmatively give Adobe notice of the published '280 patent application.
Rosebud opposed Abode's summary judgment motion, arguing that:
  • Adobe had constructive notice of the published '280 patent application because:
    • Adobe had actual knowledge of the grandparent patent to the '280 patent application;
    • Adobe allegedly followed Rosebud and its product and sought to emulate some of its product's features; and
    • it would have been standard practice in the industry for Adobe's outside counsel in an earlier patent infringement case—involving a parent patent of the '280 patent—to search for the related '280 patent application, which was published before that infringement case was filed.
  • A decision on the issue was premature because Rosebud had not yet completed fact discovery.
One month before the close of fact discovery, the district court granted Adobe's motion for summary judgment, finding that:
  • Rosebud had not met Section 154(d)'s requirement of actual notice because Rosebud's evidence did not identify the '280 patent application by number and was, at best, evidence of constructive notice.
  • There was no affirmative duty for Adobe to search for Rosebud's published patent applications based on the parties' litigation history.
On appeal, the Federal Circuit affirmed the district court, holding that:
  • While constructive notice does not satisfy the actual notice requirement of Section 154(d), it is not necessary for the patentee to affirmatively provide notice to the accused infringer because:
    • the ordinary meaning of "actual notice" includes notice obtained without an affirmative act of notification;
    • Section 154(d)'s language and legislative history do not require that the patentee provide actual notice; and
    • although there may be policy reasons for a strict rule requiring an affirmative act of notification, such a rule cannot be read into Section 154(d) as it stands, and it is up to Congress to create such a rule.
  • There is no genuine issue of material fact as to whether Adobe actually knew of the published '280 patent application at the relevant time because:
    • evidence that Adobe knew of a related patent through a previous litigation does not show it had actual notice of the published '280 patent application;
    • although the '280 patent application and the related patent shared a specification, the notice requirement is not limited to the specification, and a shared specification does not allow the accused infringer to know whether the two claimed inventions were substantially similar;
    • the record does not support a finding that Adobe or its employees were monitoring Rosebud and its products or that they actively sought out Rosebud's published patent applications at the relevant time; and
    • no reasonable jury could find that Adobe had actual knowledge of the published '280 patent application.
The Federal Circuit further held that the district court had not abused its discretion in granting summary judgment before close of discovery because Rosebud had delayed filing much of its discovery until after it received Adobe’s summary judgment motion, without informing Adobe or the court that such discovery might be necessary.