Can Notice of Infringement be Inferred Under Sec. 287(a)?

The Federal Circuit in Lubby Holdings v. Chung overturned a jury verdict finding that Lubby satisfied Sec. 287(a)’s requirement to notify Chung of his infringement.[i]  Was this reversible error, or has the court determined that an affirmative act(s) of notice by the patentee is required to establish notice under Sec. 287(a) as a matter of law?

Lubby Holdings hired consultant Henry Chung to assist it in manufacturing a vaping device invented by Lubby’s owner, Christian Rado.[ii]  Rado received United States patent no. 9,750,284 (the ‘284 patent) for his invention.  Mr. Chung reviewed Rado’s invention under a non-disclosure agreement, and entered into a manufacturing agreement with Lubby whereby his contacts in China would manufacture the vaping device.[iii]  Eventually Chung and Lubby parted ways, but prior to the breakup Chung signed another non-disclosure agreement pertaining to the subject matter of the ‘284 patent, and Lubby instructed “Chung that he could not use the technology in the ‘284 patent”.[iv]  Chung also later testified that he was aware of the ‘284 patent.

Following the breakup, Chung started selling a competing product, which Chung says he designed.  Lubby accused Chung of infringing its ‘284 patent, but never sent a formal cease and desist letter squarely accusing Chung of patent infringement and naming a specific product that infringes its ‘284 patent.[v]  Instead, Lubby sued Chung in the Central District of California for patent infringement in a case that was tried to a jury.  The jury found that Chung infringed the ‘284 patent and awarded reasonable royalty damages totaling $863,936.10 despite also finding that Lubby failed to mark its products with a proper patent notice and despite Lubby never serving Chung with a formal cease and desist letter.  The jury nonetheless concluded that the circumstances surrounding the consulting relationship between Lubby and Chung satisfied Sec. 287’s notice requirement.

The lack of a formal cease and desist letter came back to haunt Lubby when the Federal Circuit overturned the jury’s finding that Sec. 287’s notice requirement was satisfied prior to filing suit.  Instead, the Federal Circuit held that the notice requirement was not satisfied until the defendant was served with the complaint, which will drastically reduce the damages award on remand.  But, was the Federal Circuit right to overturn the jury’s verdict?

Section 287 provides that in the event of a failure to mark, “no damages shall be recovered… except on proof that the infringer was notified of the infringement”, and further provides that “damages may be recovered only for infringement occurring after notice.”[vi]  So the question becomes, when was Chung “notified” per Sec. 287?  The statute does not prescribe a form of notice.  It only requires that the plaintiff must submit evidence proving “that the infringer was notified of the infringement” and it names “filing an action for infringement” as one form of notice.  Whether or not notice occurred is a fact question.  In the district court, the jury considered the evidence concerning the prior collaborative relationship between the parties and Mr. Chung’s admission that he was aware of the ‘284 patent, and the jury found that Mr. Chung was notified as required by Sec. 287.  The verdict even survived a Rule 50(b) motion.  A jury’s verdict can only be disturbed by an appellate court if it is clearly erroneous.[vii]  The appellee must make a clear showing that there is either no evidence to support the verdict, or the evidence is such that the only reasonable conclusion is contrary to the verdict.[viii]

However, the Federal Circuit ignored the consulting relationship and Chung’s admission and decided that notice was not effected until the complaint was filed.  The court stated that “Lubby established only that Mr. Chung was actually notified… as required by § 287 as of the filing date of the lawsuit”.[ix]  In making this statement the court is either reweighing the sufficiency of the evidence as a fact finder, or the court is deciding as a matter of law that the circumstances of the parties relationship do not serve as § 287 notice.  Judge Newman’s dissent suggests that the court was acting as fact finder, which would certainly be reversible error.[x]

Perhaps Lubby is better understood to mean that an affirmative act(s) of notification by the patentee is required as a matter of law.  Restating its own precedent in SRI and Amsted, the court made clear that it interprets notice under § 287 to mean notice that informs the infringer of the “identity of the patent and the activity that is believed to be an infringement, accompanied by a proposal to abate the infringement”, and that “the correct approach to determining notice under section 287 must focus on the action of the patentee, not the knowledge or understanding of the infringer”.[xi]  Through the lens of the Federal Circuit’s interpretation of “notice”, Lubby’s pre-suit activities fail as a matter of law because Chung was left to infer notice from the fact that the patent issued, that Lubby instructed him not to infringe, and from Chung’s personal knowledge of his own activity.  In the absence of evidence in the record showing an affirmative act of notice by Lubby, the jury’s verdict was clearly erroneous for lacking any factual basis.

Despite the Federal Circuit’s precedent, the plain language of § 287 itself does not require notice to be an affirmative act of the patentee.  It only requires that “the infringer was notified of the infringement”.  The statute does not say who must notify, and it does not prescribe a specific form of notice.  Thus, it seems that the Federal Circuit’s precedent is in tension with the plain language of the statute.

Mr. Frisina is a partner in the intellectual property practice at Buckingham Doolittle & Burroughs LLC.  Attorney Frisina is a specialist in patent and trademark law, having prosecuted hundreds of chemical, electrical, and mechanical cases.  His practice encompasses preparation and prosecution, licensing, and litigation matters.

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[i] Lubby Holdings LLC v. Chung, 2021 WL 3889816, 2019-2286 (Fed. Circ. 2021); 35 U.S.C. § 287(a).

[ii] Lubby, at 5 (dissent).

[iii] Id.

[iv] Lubby, at 4.

[v] Personal Vaporizer, U.S. Pat. No. 9,750,284 (issued May 9, 2017).

[vi] 35 U.S.C. § 287(a).

[vii] Lubby, at 6 (dissent).

[viii] Lubby, at 6 (dissent).

[ix] Lubby, at 3.

[x] Lubby, at 6 (dissent).

[xi] Lubby, at 4 (quoting SRI Intern., Inc. v. Advanced Technology Laboratories, Inc., 127 F.3d 1462, (Fed. Circ. 1997) and Amsted Industries Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Circ. 1994).