Friday, December 4, 2015

A Cautionary Tale: How Not Marking a Product Can Cost a Design Patent Owner

A recent grant of summary judgment to defendants proved just how important it is to clearly mark products and communicate design patent rights to the public. On November 4, Judge Paul Barbadoro of the District of New Hampshire granted the defendants’ motion for summary judgment as to the plaintiffs' claims of patent infringement in a two-year case regarding funeral equipment. See Gallagher et al. v. Funeral Source One Supply and Equipment Co., Inc., et al., 14-cv-115-PB (D.N.H 2015). The case stands as a reminder of what can happen when design patent owners fail to properly mark their products with the patent number. 

Plaintiff Robert Gallagher owns and operates Instrument Design and Manufacturing Co. (“IDM”). IDM sells a funeral industry product known as an injector needle driver, for which Gallagher holds design patent D460,174. At all relevant times, however, neither Gallagher nor IDM marked the driver with its patent number. Defendant Affordable Funeral Supply, LLC (“AFS”) sold 48 allegedly infringing drivers through its own website and on third-party websites. Defendant Funeral Source Ones Supply ("FS1") bought 25 allegedly infringing drivers from AFS and resold them.

However, as a result of summary judgment, Gallagher's claim for damages was limited by 35 U.S.C. § 287(a)’s marking requirements.   When a patentee inadequately marks a covered product, § 287(a) restricts damages to infringement occurring after the defendant received actual notice of the alleged infringement.  Actual notice requires the patentee to “provide sufficient specificity regarding its belief that the recipient may be an infringer.” Gart v. Logitech, Inc., 254 F. 3d 1334, 1346 (Fed. Cir. 2001). On January 17, 2014, Gallagher told the president of FS1 that his driver was patented, but did not identify the patent, and did not communicate that FS1 might be infringing, let alone ask them to abate their infringement. Judge Barbadoro ruled that this conversation did not amount to actual notice because it was a mere admonishment not to infringe and did not identify the patent or any allegedly infringing product.

Gallagher did, however, provide the patent number to third-party websites Amazon and eCrater on March 1, 2014 in emails notifying them that their injector needles were copies of his design. eCrater forwarded Gallagher’s complaint to AFS on March 3, 2014, and deactivated the driver’s product page on its website. Judge Barbadoro determined that eCrater's email to AFS was not sufficient to convey actual notice because the patentee himself must notify the infringer of the alleged infringement. See Lans v. Digital Equipment Corp., 252 F.3d 1320, 1328 (Fed. Circ. 2001). 

Finally, on March 6, 2014, Gallagher emailed both AFS and FS1 identifying the patent, notifying them of the counterfeit copies, and demanding that they remove the driver from commerce. Gallagher and IDM brought this action on March 20, 2014, and AFS removed the image of the allegedly counterfeit driver from its website on April 10, 2014. Judge Barbadoro ruled that actual notice was therefore conveyed on March 6, 2014, when Gallagher emailed both AFS and FS1. 

Judge Barbadoro then considered whether Gallagher suffered compensable infringement damages after this date, as dictated by 35 U.S.C. § 287(a).  Even construing the evidence the light most favorable to Gallagher, it proves at most that AFS completed its last sale of an allegedly infringing driver on January 21, 2014, and that FS1 completed its last sale on March 4, 2014. Therefore, there was no basis in the record to award Gallagher lost profits for any infringing sales after March 6, 2014. Further, Gallagher presented insufficient evidence of likely future infringement, and the claim for injunctive relief was denied. Defendants were therefore entitled to summary judgment on the claim of patent infringement. 

The moral of the story is that, whenever possible, design patent owners should seek to meet the marking requirements of § 287(a) in order to preserve the right to later seek damages, including the infringers' profits. 

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