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License Payments “Irrelevant” to Marking Statute Provisions

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May a patentee escape the Section 287 marking requirement when only its non-exclusive, non-party licensee produced and sold the allegedly infringed product? A Delaware judge considered, and rejected, that contention in an opinion released last week. Magistrate Judge Thynge instead held that, where the licensee sold and failed to mark the invention, the patentee-licensor could recover damages only after the date it filed the underlying infringement action.

Plaintiff Inline Communication Corp. sued AOL and Earthlink, alleging infringment of its patented high-speed data transfer technology. AOL and Earthlink moved for summary judgment on the marking issue, claiming that Inline failed to mark certain wall jacks associated with its service and that they first received notice of the alleged infringment on the date Inline filed suit. Inline responded by arguing that it never actually sold any products under the patent, and therefore could not have a duty to mark. According to Inline, the company had also “abandoned” its relationship with the licensee by granting it a paid-up, perpetual nonexclusive license.

The Court rejected Inline’s assertions, drawing a distinction between payment and sales:

Whether, as a result of that agreement [granting the nonexclusive license], Inline received or continued to receive any payments, royalties or other compensation is irrelevant. It is the right to make, sell, offer for sale or publically use the patented article that triggers the obligation to mark.

The lesson? Licensors must keep track of the marking activities of their licensees – the duty to mark ultimately runs to the patentee, regardless of the presence or absence of a royalty.

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