Court Opinion

ID: 3175796
Source: CourtListenerOpinion
Date Created: 2016-02-09 16:04:32.397486+00
Date Added: 2024-06-11T14:03:10.291528
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                 ______________________

    ROSEBUD LMS INC., DBA ROSEBUD PLM,
             Plaintiff-Appellant

                            v.

        ADOBE SYSTEMS INCORPORATED,
               Defendant-Appellee
             ______________________

                       2015-1428
                 ______________________

    Appeal from the United States District Court for the
District of Delaware in No. 1:14-cv-00194-SLR-SRF,
Judge Sue L. Robinson.
                ______________________

               Decided: February 9, 2016
                ______________________

    JUSTIN CHEN, Ahmad, Zavitsanos, Anaipakos, Alavi &
Mensing P.C., Houston, TX, argued for plaintiff-appellant.
Also represented by JANE LANGDELL ROBINSON; ANDREW
W. SPANGLER, Spangler Law PC, Longview, TX.

   MICHAEL BERTA, Arnold & Porter LLP, San Francisco,
CA, argued for defendant-appellee. Also represented by
MAULIK GIRISH SHAH.
               ______________________

   Before MOORE, HUGHES, and STOLL, Circuit Judges.
2         ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED

MOORE, Circuit Judge.
    Rosebud LMS Inc. appeals from the district court’s
grant of summary judgment that Adobe Systems Inc. was
not liable for pre-issuance damages under 35 U.S.C.
§ 154(d) because it had no actual notice of the published
patent application that led to asserted U.S. Patent No.
8,578,280. For the reasons discussed below, we affirm.
                       BACKGROUND
     Rosebud has filed three suits against Adobe for patent
infringement. Rosebud first sued Adobe for infringing
U.S. Patent No. 7,454,760 in 2010, in a suit that was
dismissed more than three years before this case was
filed. Rosebud LMS Inc. v. Adobe Sys. Inc., No. 1:10-cv-
00404-GMS (D. Del., filed May 14, 2010, dismissed
Nov. 29, 2010) (“Rosebud I”). Rosebud next sued Adobe
for infringing U.S. Patent No. 8,046,699 in 2012, in a suit
that was dismissed with prejudice a few weeks after this
case was filed. Rosebud LMS Inc. v. Adobe Sys. Inc., No.
1:12-cv-01141-SLR (D. Del., filed Sept. 17, 2012, dis-
missed Feb. 28, 2014) (“Rosebud II”). And on Febru-
ary 13, 2014, Rosebud brought suit against Adobe for the
third time, alleging that it infringed the ’280 patent. The
’280 patent is a continuation of the ’699 patent, which is a
continuation of the ’760 patent. The patents teach tech-
niques for enabling collaborative work over a network of
computers.
    In the instant suit, Adobe moved for summary judg-
ment of no remedies, claiming that Rosebud was not
entitled to post-issuance damages because Adobe had
discontinued use of the accused technology in January
2013, ten months before the issuance of the ’280 patent.
Adobe also asserted that Rosebud was not entitled to pre-
issuance damages under § 154(d) because Adobe had no
actual notice of the published patent application that led
to the ’280 patent. Rosebud did not oppose Adobe’s mo-
ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED           3

tion for summary judgment with respect to post-issuance
damages. Instead, Rosebud argued that there remained a
genuine dispute of material fact as to whether Adobe had
actual knowledge of the published ’280 patent application.
Specifically, Rosebud argued that Adobe had actual
knowledge of the grandparent patent to the ’280 patent
application; that Adobe followed Rosebud and its product
and sought to emulate some of its product’s features; and
that it would have been standard practice in the industry
for Adobe’s outside counsel in Rosebud II to search for the
’280 patent application, which was published before
Rosebud II was filed and related to the patent asserted in
that suit. Rosebud also argued that any decision on the
issue would be premature because it had not yet complet-
ed fact discovery.
     One month before the close of fact discovery, the dis-
trict court granted Adobe’s motion for summary judgment.
The court reasoned that Rosebud had not met § 154(d)’s
requirement of actual notice because Rosebud’s evidence
did not identify the ’280 patent application by number,
and was, at best, evidence of constructive notice. It
rejected the idea that the parties’ litigation history creat-
ed an affirmative duty for Adobe to search for Rosebud’s
published patent applications. Rosebud appeals. We
have jurisdiction under 28 U.S.C. § 1295(a)(1).
                        DISCUSSION
    We review a district court’s grant of summary judg-
ment under the law of the regional circuit; here, the Third
Circuit. Frolow v. Wilson Sporting Goods Co., 710 F.3d
1303, 1308 (Fed. Cir. 2013). The Third Circuit reviews a
grant of summary judgment de novo. Nicini v. Morra, 212
F.3d 798, 805 (3d Cir. 2000) (en banc). Summary judg-
ment is appropriate if “the movant shows that there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
4         ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED

56(a). “The evidence of the non-movant is to be believed,
and all justifiable inferences are to be drawn in his favor.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
The Third Circuit reviews a district court’s denial of a
request for time to conduct additional discovery under
Federal Rule of Civil Procedure 56(d) for abuse of discre-
tion. Shelton v. Bledsoe, 775 F.3d 554, 559 (3d Cir. 2015).
     I.     Section 154(d)’s “Actual Notice” Requirement
    Generally, patent owners may only collect damages
for patent infringement that takes place during the term
of the patent. See 35 U.S.C. § 271. Section 154(d) is a
narrow exception to that rule:
    (1) In general.--In addition to other rights provid-
    ed by this section, a patent shall include the right
    to obtain a reasonable royalty from any person
    who, during the period beginning on the date of
    publication of the application for such patent un-
    der section 122(b), . . . and ending on the date the
    patent is issued--
    (A)(i) makes, uses, offers for sale, or sells in the
    United States the invention as claimed in the pub-
    lished patent application . . . ; and
    (B) had actual notice of the published patent ap-
    plication . . . .
35 U.S.C. § 154(d). Relevant to this appeal, § 154(d)
provides for damages that take place before a patent
issues if the infringer “had actual notice of the published
patent application.” Id. § 154(d)(1)(B).
    The nature of § 154(d)’s “actual notice” requirement is
an issue of first impression for this court. Adobe argues
that actual notice under § 154(d) requires an affirmative
act by the applicant. Without conceding knowledge,
Adobe argues that knowledge of the patent would not
have been enough—notice had to come directly from the
ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED          5

patentee for the “actual notice” requirement to be met.
Because it is undisputed that Rosebud did not affirma-
tively give Adobe notice of the published ’280 patent
application, Adobe argues that we should affirm the
district court’s summary judgment.
    We agree with Adobe and the district court that con-
structive knowledge would not satisfy the actual notice
requirement. We do not, however, agree with Adobe that
§ 154(d)’s requirement of actual notice requires an affirm-
ative act by the applicant giving notice of the published
patent application to the infringer. Certainly, “actual
notice” includes a party affirmatively acting to provide
notice. See, e.g., 58 Am. Jur. 2d Notice § 4 (2015) (defin-
ing actual notice as “notice expressly and actually given”);
Black’s Law Dictionary 1227 (10th ed. 2014) (defining
actual notice as “[n]otice given directly to, or received
personally by, a party”). But the ordinary meaning of
“actual notice” also includes knowledge obtained without
an affirmative act of notification. “Indeed, ‘actual notice’
is synonymous with knowledge.” 58 Am. Jur. 2d Notice
§ 4 (2015) (also explaining that “[a]ctual notice rests upon
personal information or knowledge while constructive
notice is notice that the law imputes to a person not
having personal information or knowledge”).
    Adobe argues that the legislative history of § 154(d)
confirms that the patent applicant must affirmatively
provide notice to the alleged infringer. The House Report
discussing the proposed § 154(d) stated:
   The requirement of actual notice is critical. The
   mere fact that the published application is includ-
   ed in a commercial database where it might be
   found is insufficient. The published applicant
   must give actual notice of the published applica-
   tion to the accused infringer and explain what
   acts are regarded as giving rise to provisional
   rights.
6         ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED

H.R. Rep. No. 106-287, pt. 1, at 54 (1999). However, the
legislative history states that the applicant must not only
affirmatively give notice of the published application to
the accused infringer, but must also “explain what acts
are regarded as giving rise to provisional rights”—an
additional requirement not even hinted at in the text of
§ 154(d). Id. The language enacted by Congress is not
consistent with Adobe’s interpretation.
     Nor does our construction of 35 U.S.C. § 287(a) apply
to § 154(d). Section 287(a), the marking provision, prohib-
its the collection of post-issuance damages if a patentee
sells a product that falls within its own patent claims
without (1) marking the patented articles with the patent
number or (2) “proof that the infringer was notified of the
infringement and continued to infringe thereafter.” We
have interpreted this latter provision to require “the
affirmative communication of a specific charge of in-
fringement.” Amsted Indus. Inc. v. Buckeye Steel Castings
Co., 24 F.3d 178, 187 (Fed. Cir. 1994) (citing Dunlap v.
Schofield, 152 U.S. 244 (1894)). But we will not read this
requirement into § 154(d), where the statute itself does
not recite the condition. If § 154(d) contained § 287(a)’s
“proof that the infringer was notified” language, our
interpretation of § 287(a) would be relevant, and likely
dispositive. But that is not the case. Section 287(a)
explicitly requires an act of notification, unlike § 154(d),
which merely requires “actual notice.” If anything, these
differences suggest that we should interpret the two
statutes differently. Section 287(a) shows that Congress
knows how to use language requiring an affirmative act of
notification when it wishes. It could have used that
language in § 154(d) and did not.
    Perhaps there are, as Adobe argues, policy reasons for
requiring an affirmative act of notification by the patent-
ee. Requiring the applicant to affirmatively provide
notice to potential infringers is in line with the extraordi-
ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED           7

nary nature of statutory pre-issuance damages. Moreo-
ver, a strict rule requiring notification by the applicant is
simpler to implement and does not leave the accused
infringer in the difficult situation of having to rebut
allegations that it knew of the published application. If
Congress wishes, it can amend the statute to require an
affirmative act by the patentee. We cannot. In the ab-
sence of such action, we interpret the actual notice re-
quirement of § 154(d) as it is clearly written to have its
ordinary meaning.
     II.    Summary Judgment on § 154(d)’s “Actual No-
                       tice” Requirement
    Having interpreted § 154(d)’s “actual notice” require-
ment to include actual knowledge of the published patent
application, we next consider if there is a genuine dispute
of material fact as to whether Adobe actually knew of the
published ’280 patent application. Adobe asserted in its
verified interrogatory response that it first received notice
of the published ’280 patent application when Rosebud’s
counsel threatened this lawsuit on February 4, 2014—
after it had discontinued use of the patented technology.
Rosebud disputes Adobe’s assertion and claims that it
presented sufficient circumstantial evidence of Adobe’s
knowledge that a reasonable jury could find in its favor.
We do not agree and conclude, as the district court did,
that there is no genuine dispute of material fact on the
record before us.
     Rosebud’s evidence falls into three main categories.
First, there is evidence that Adobe knew of the grandpar-
ent patent to the ’280 patent (namely, the ’760 patent).
Second, Rosebud argues that it presented evidence that
Adobe followed Rosebud and its product and sought to
emulate the product’s features. Finally, Rosebud argues
it is standard practice when defending against a charge of
patent infringement to search for patents and applica-
8         ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED

tions related to the asserted patent, such that Adobe’s
outside counsel would have discovered the published ’280
patent application during Rosebud II. We address each of
these categories of evidence in turn.
    First, the fact that Adobe knew of the related ’760 pa-
tent does not show it had actual notice of the published
’280 patent application. The ’760 patent and the ’280
patent share a specification. But the notice requirement
is not limited to the specification. The alleged infringer
must also have notice of the claims of the published
patent application and the fact that the applicant is
seeking a patent covering those claims.             Indeed,
§ 154(d)(2) provides that pre-issuance damages are not
available unless the invention claimed in the published
patent application is “substantially identical” to the
patented invention. Otherwise, the infringer cannot know
the scope of the claimed invention. Knowledge of related
patents does not serve this function, and is therefore
legally insufficient to establish actual notice of the pub-
lished patent application.
    Second, Rosebud argues that it put forth evidence
showing that Adobe followed Rosebud and its product and
sought to emulate the product’s features. But Rosebud’s
proffered evidence does nothing of the sort. Rosebud
offers seven exhibits of emails from Adobe employees and
a single reference to “Rosebud” in one line of Adobe’s
source code. But all the emails cited by Rosebud were
sent more than two years before the publication of the
’280 patent application. Five of the seven email chains
originate from unsolicited emails Rosebud sent to Adobe
employees about its product. And Rosebud’s argument
that Adobe’s source code references “Rosebud” borders on
the frivolous, as this reference is to a Microsoft product
from before 2004, not the plaintiff in this lawsuit. Noth-
ing in the evidence suggests that Adobe or its employees
were monitoring Rosebud and its products, let alone to
ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED          9

such an extent that they would have actively sought out
Rosebud’s published patent applications more than two
years after the emails were sent.
     Finally, Rosebud argues that a reasonable jury could
conclude that Adobe’s outside counsel would have discov-
ered the published ’280 patent application while prepar-
ing for the Rosebud II litigation. We disagree. Rosebud
argues that it is standard practice during litigation to
review related patents, applications, and prosecution
history to evaluate possible claim constructions. Howev-
er, Rosebud II never reached the claim construction stage
because Rosebud missed all of its court-ordered deadlines.
Even when all of the evidence is taken into account and
all reasonable inferences are made in Rosebud’s favor, we
agree with the district court that no reasonable jury could
find that Adobe had actual knowledge of the published
’280 patent application.
                        III.   Discovery
     Rosebud alternatively argues that the district court
abused its discretion when it granted summary judgment
before completion of fact discovery relating to Adobe’s
knowledge of the published ’280 patent application. It
argues that it served a Federal Rule of Civil Procedure
30(b)(6) deposition notice on Adobe that included topics
related to the published ’280 patent application; that it
served subpoenas on Adobe’s outside counsel for the
earlier Rosebud litigations regarding their knowledge of
the published ’280 patent application; and that it request-
ed depositions of Adobe employees. It asserts that it
diligently scheduled this discovery to be completed before
fact discovery closed.
   The district court did not abuse its discretion in grant-
ing summary judgment before the close of discovery.
Rosebud had notice of Adobe’s intent to file an early
motion for summary judgment, and did not oppose this
10        ROSEBUD LMS INC.   v. ADOBE SYSTEMS INCORPORATED

request or indicate at the time that it needed further
discovery on issues relevant to the motion. Moreover,
Rosebud did not serve its Rule 30(b)(6) deposition notice
or its subpoenas on Adobe’s outside counsel until several
weeks after it received Adobe’s motion for summary
judgment. It appears that Rosebud delayed filing much of
its discovery until after it received Adobe’s motion for
summary judgment, without informing Adobe or the court
that such discovery might be necessary. Given this tim-
ing, we see no abuse of discretion in the district court’s
action.
                      CONCLUSION
    We affirm the district court’s grant of summary judg-
ment on Rosebud’s claim for damages under 35 U.S.C.
§ 154(d).
                      AFFIRMED