By Mark Engstrom, J.D.
A federal district court did not err in granting summary judgment to Adobe Systems—on a claim by Rosebud LMS for pre-issuance damages under 35 U.S.C. §154(d)—because Adobe lacked actual notice of the published patent application that led to the patent in suit, the U.S. Court of Appeals for the Federal Circuit has ruled (Rosebud LMS Inc. v. Adobe Systems Inc., February 9, 2016, Moore, K.). Addressing an issue of first impression, the court ruled that the “actual notice” requirement of 35 U.S.C. §154(d) did not require an “affirmative act” of notification by the applicant; knowledge of the published application by a potential infringer was sufficient. Because no reasonable jury could find that Adobe had actual knowledge of the published application for the patent in suit, the court affirmed the grant of summary judgment to Adobe.
Background. Rosebud sued Adobe for the infringement of U.S. Patent No. 8,578,280. The ’280 patent was a continuation of U.S. Patent No. 8,046,699, and the ’699 patent was a continuation of U.S. Patent No. 7,454,760. All three patents were titled “Method and software for enabling N-way collaborative work over a network of computers.” The patents taught techniques for enabling collaborative work over a network of computers.
Adobe sought summary judgment. According to Adobe, Rosebud was not entitled to pre-issuance damages under §154(d) because Adobe lacked actual notice of the published patent application that led to the ’280 patent.
Rosebud argued that: (1) Adobe had actual knowledge of the grandparent patent (U.S. Patent No. 7,454,760); (2) Adobe had followed Rosebud and its product and had sought to emulate some of its product’s features; and (3) Adobe’s outside counsel in Rosebud II, which involved the alleged infringement of the parent patent (U.S. Patent No. 8,046,699), should have searched for the ’280 patent application, which was published before Rosebud II was filed. Finally, Rosebud argued that any decision regarding pre-issuance damages would be premature because fact discovery was not yet complete.
The district court granted Adobe’s motion for summary judgment. According to the district court, Rosebud had not met the actual notice requirement of §154(d) because Rosebud’s evidence did not identify the ’280 patent application by number. At best, Rosebud’s evidence was evidence of constructive notice. The district court rejected the notion that the parties’ litigation history created an affirmative duty for Adobe to search for Rosebud’s published patent applications. Rosebud appealed.
Actual notice requirement. The circuit court noted that 35 U.S.C. §154(d) provided for damages that accrued before a patent was issued only if the infringer had “actual notice” of the published patent application. The nature of the “actual notice” requirement of §154(d) was an issue of first impression for the Federal Circuit.
Adobe argued that actual notice under §154(d) required an “affirmative act” by the applicant. Without conceding knowledge, Adobe argued that knowledge of the patent would not have been sufficient. In Adobe’s view, notice had to come directly from the patentee for the “actual notice” requirement to be satisfied. Because Rosebud did not affirmatively give notice of the published ’280 patent application to Adobe, Adobe argued that the court should affirm the district court’s ruling on summary judgment.
The circuit court agreed with the district court that constructive knowledge would not satisfy the actual notice requirement. It did not, however, agree with Adobe that “actual notice” required an affirmative act—by the applicant—giving notice of the published patent application to the infringer. According to the court, the ordinary meaning of “actual notice” included knowledge that was obtained without an affirmative act of notification. Actual notice was, in the court’s view, synonymous with knowledge.
Summary judgment finding. Having interpreted the “actual notice” requirement of §154(d) to include actual knowledge of the published patent application, the court had to decide if a genuine dispute of material fact was present regarding the Adobe’s actual knowledge about the published ’280 patent application.
Adobe asserted in its verified interrogatory response that it had first received notice of the published ’280 patent application when Rosebud’s counsel threatened a lawsuit on February 4, 2014, after Adobe had discontinued its use of the patented technology. Rosebud disputed Adobe’s assertion.
Rosebud’s evidence fell into three main categories: (1) evidence that Adobe knew about the grandparent patent; (2) evidence that Adobe had followed Rosebud and its product and had sought to emulate the product’s features; and (3) evidence that it was standard practice, when defending against a charge of patent infringement, to search for patents and applications that were related to the asserted patent, such that Adobe’s outside counsel would have discovered the published ’280 patent application during Rosebud II.
First, the fact that Adobe knew about the related grandparent patent did not show that Adobe had actual notice of the published application for the patent in suit. The grandparent patent and the patent in suit shared a specification, the court explained, but the notice requirement was not limited to the specification. The alleged infringer had to have notice of the claims of the published patent application and the fact that the applicant was seeking a patent that covered those claims. Because knowledge of related patents did not serve that function, knowledge of related patents was legally insufficient to establish actual notice of the published patent application.
Second, Rosebud argued that the evidence showed that Adobe had followed Rosebud and its product and had sought to emulate the product’s features. The court disagreed. Nothing in the evidence suggested that Adobe or its employees were monitoring Rosebud and its products, the court concluded.
Third, Rosebud argued that a reasonable jury could conclude that Adobe’s outside counsel would have discovered the published ’280 patent application while it was preparing for the Rosebud II litigation. Again, the court disagreed. According to Rosebud, it was standard practice to evaluate possible claim constructions by reviewing related patents, applications, and prosecution history. However, Rosebud II never reached the claim construction stage because Rosebud had missed all of its court-ordered deadlines.
Even when all of the evidence was taken into account and all reasonable inferences were made in Rosebud’s favor, the court agreed with the district court that no reasonable jury could find that Adobe had actual knowledge of the published ’280 patent application.
Discovery. Rosebud argued in the alternative that the district court had abused its discretion when it granted summary judgment to Adobe before fact discovery involving Adobe’s knowledge of the published ’280 patent application was completed.
According to the court, Rosebud had notice of Adobe’s intent to file an early motion for summary judgment but failed to oppose that request or indicate at the time that it needed further discovery on issues that were relevant to the motion. Further, Rosebud did not serve its Rule 30(b)(6) deposition notice, or its subpoenas on Adobe’s outside counsel, until several weeks after Rosebud had received Adobe’s motion for summary judgment.
Rosebud appeared to delay the filing of much of its discovery until after it had received Adobe’s motion for summary judgment, the court observed, without informing Adobe or the court that discovery might be necessary. Given that timing, the circuit court could not find that the district court had abused its discretion by awarding summary judgment to Adobe before fact discovery was completed.
The case is No. 2015-1428.
Attorneys: Justin Chen (Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C.) for Rosebud LMS Inc., d/b/a Rosebud PLM. Michael Berta (Arnold & Porter LLP) for Adobe Systems Inc.
Companies: Rosebud LMS Inc., d/b/a Rosebud PLM; Adobe Systems Inc.
MainStory: TopStory Patent FedCirNews
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