DivX LLC v Hulu LLC – Patent marking can impact damages.

By: Mehdi Sheikerz, Partner

In the recent case of DivX LLC v. Hulu LLC, C.D. Cal., No. 21-cv-01615, June 11, 2021, a federal U.S. District Court in the Central District of California agreed with Hulu (Defendant) to dismiss the DivX’s (Plaintiff) claims for pre-suit damages on a patent. The Court found that DivX didn’t allege in DivX’s complaint that DivX had complied with marking requirements under patent law.

“Patent Marking” is a common term to describe the labeling of a commercial product, which is manufactured or sold in the United States, with a U.S. patent number that covers the product or its method of manufacture or assembly. Patent marking is addressed by U.S. patent statute 35 U.S.C. §287:

Patentees, and persons making and selling any patented article for or under them, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.” together with the number of the patent, or when, from the character of the article, this cannot be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice.

To collect damages for infringement, the statute requires patent holders to notify the public that the good or goods being sold are patented.

Patent marking is not mandatory, but is important to obtain damages for infringement by a competitor or other party. 35 U.S.C. §287 states in relevant part:

In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.

If a product is properly marked with the applicable U.S. patent number and there is infringement, the infringer would be liable for damages from the date the product was first marked. In many cases, this means the possibility of collecting damages from the first date of actual sales of the infringing product by the unauthorized party. Marking may also eliminate the legal burden of proving actual notice of the U.S. patent by the infringer.

The failure to mark a patented product will not invalidate the U.S. patent and will not render the patent unenforceable against an infringer for future infringing sales. However, failure to mark does prevent collection of damages for infringing sales prior to the time the infringer was put on actual notice of the patent. Actual notice of the U.S. patent may not occur until months or even years after actual infringing sales have started by the unauthorized party. Thus, failing to mark patented products may cause a loss of substantial revenue.

In the Hulu v. DivX case, DivX asserted ownership of several patents covering internet video streaming technologies. Hulu argued that while DivX contends that its patented technology has been licensed over 1.5 billion times, its February 2021 complaint was silent about DivX requiring licensees to mark products that incorporate the technology.

DivX did not argue compliance with the marking requirements and asserted that the notice requirement of 35 U.S.C. §287 would not apply to method claims being asserted in the compliant.

According to the Court’s rationale, DivX has asserted in its complaint the patent claims of three patents, where for one patent, the claims covering a system or apparatus were asserted, thereby triggering the marking requirements for pre-suit damages, and for the other two patents method claims were asserted.

According to the Court’s decision, “Each of those claims for relief asserts at least a system or apparatus claim and thus DivX is required to plead compliance with §287(a) to assert pre-suit damages. … DivX has not done so and does not attempt to claim otherwise.”

Therefore, the Court agreed with Hulu (Defendant) to dismiss the DivX’s (Plaintiff) claims for pre-suit damages on the one patent for which system or apparatus claims were asserted. Hulu’s motion to dismiss was denied regarding the two patents involving method claims, since the notice requirement of §287 would not apply. DivX was given a chance to amend its complaint.

Patent marking is an important matter. A program for establishing and monitoring patent marking should be instituted, because of the significant advantages discussed above and to take into consideration marking legal matters such as avoiding mismarking, false marking, patent misuse, and compliance with foreign country patent marking.