Federal Circuit cancels NPE’s $3.5m damages award
Network management provider NetScout has escaped pre-suit damages, worth $3.5 million, for infringing a non-practising entity’s (NPE) patents.
In a precedential ruling, issued yesterday, July 14, the US Court of Appeals for the Federal Circuit upheld the rest of a Texas judge’s ruling, which said that three patents owned by Packet Intelligence patents were valid, and wilfully infringed by NetScout.
A jury at the US District Court for the District of Eastern Texas awarded damages of $3.5 million to the NPE for NetScout’s pre-suit infringement of three patents.
A judge at the court then denied NetScout’s motions for summary judgment challenging the verdict.
NetScout argued that it wasn’t liable for pre-suit damages because products practicing the patents, sold by Packet Intelligence’s licensees including Cisco and Huawei, were unmarked.
Under US law, failure to “mark” a patented product can limit the damages a patent owner is entitled to in the case of infringement.
The Federal Circuit has upheld the Texas court’s findings on the validity of the patents, and NetScout’s wilful infringement of them, but cancelled the pre-suit damages because of recently updated case law on the marking of patented products.
The Federal Circuit ruled in 2017 that an alleged infringer bears an “initial burden” of notifying a patent owner of products which are not marked as “patent articles”.
In that judgment, in Arctic Cat v Bombardier, the court also said that the burden is then on the patent owner to prove that these unmarked goods do not practice the patent and do not need to be marked.
The district court’s ruling on pre-suit damages in favour of Packet Intelligence was out of step with this rule, the Federal Circuit ruled yesterday, as it appeared to place that burden on NetScout.
In its original decision, the Texas court said: “If NetScout does not show the existence of a patented article, Packet Intelligence is permitted to collect damages going six years before the filing of the complaint in this case for the ’789 patent.”
The Federal Circuit has clarified that this is not correct, and that as Packet Intelligence failed to provide “substantial evidence” that the unmarked products did not practice the patent, NetScout was not liable for pre-suit damages.
