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ACTUAL NOTICE REQUIRED FOR PRE-ISSUANCE DAMAGES

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In general, patent owners must possess a valid patent before they are able to sue for damages from infringers. Under certain circumstances, however, the patent owner may be able to recover damages for the interim period between the publication of a patent application and the issuance of the patent – provided that the patent holder shows that the infringer had actual notice of the published patent application. This issue was raised in the case of Rosebud LMS, Inc. v. Adobe Systems, Inc. (2016), where Rosebud LMS sued Adobe Systems, Inc. claiming that their Collaborative Live feature infringed on one of Rosebud’s patents. However, Adobe stopped using the disputed feature by the time Rosebud was issued the patent. Thus, Rosebud had to show that Adobe had actual notice to recover damages for the alleged infringement.

Rosebud’s Argument

Rosebud argued that Adobe knew or should have known about their published patent application, thus constituting actual notice. Rosebud’s claim is based on several key pieces of evidence. First, in a separate lawsuit between the two parties, a different patent application contained the same information as the published patent application. Second, Adobe’s own source code referenced a “Rosebud” sample. Furthermore, Adobe’s emails referenced a Rosebud product as well as the patent from the previous lawsuit between the two parties. Finally, Rosebud argued that in the earlier lawsuit, Adobe conducted a patent search that would have produced patents and applications related to the patent at issue.

Court’s Decision

The Court of Appeals for the Federal Circuit decided in favor of Adobe, claiming that Rosebud’s accusations were not enough to substantiate “actual notice.” Due to the fact that Adobe discontinued the use of the disputed features before Rosebud’s patent was issued, the more stringent requirement of “actual notice” must be shown in order to claim monetary compensation for the alleged infringement period.

The court defined “actual notice” as notice that “expressly and actually given” and differentiated it with “constructive notice” where a party is charged with the knowledge of a fact because it should have realized the fact through proper diligence. The court claims that, at best, Rosebud’s claims merely constitute constructive notice. Had the court sided with Rosebud, it would have meant Adobe would have the affirmative duty to search for potential infringements in published patent applications. However, the court stated that the Patent Act does not require the patent applicant to achieve “actual notice” through an affirmative act or to explain the nature of the conduct by all edged infringers. Ultimately, “actual notice” constitutes something beyond “constructive notice”, but falls short of an affirmative act and as such, Rosebud failed to demonstrate that Adobe had “actual notice” regarding the alleged infringement in their Collaborative Live feature.

Lesson for Patent Applicants

As demonstrated in this case, it is difficult for patent applicants to prove “actual notice” in order to recover damages prior to the issuance of their patent. Patent applicants should take proactive measures to ensure that potential infringers receive actual notice. In the case of Rosebud LMS, Inc. v. Adobe Systems, Inc. the court ruled against Rosebud in spite of the evidence against Adobe. Out of an abundance of caution, patent applicants may want to consider providing actual notice through an affirmative act towards infringing companies or run the risk of coming up short in court.

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