By Adam J. Smith, Assoc. Atty, Standley Law Group LLP

Understanding Pre-Issuance Damages Under 35 U.S.C. §154(d) in View of Rosebud LMS Inc. v. Adobe Systems, Inc.

The Federal Circuit recently ruled on the relatively little-used provision of pre-issuance damages under 35 U.S.C. §154(d). This rarely asserted and rarely granted "extraordinary remedy" gives patent applicants the right to collect a reasonably royalty based on infringement that occurred following the publication of a patent application where the accused infringer is provided "actual notice" of the published patent application, and the asserted claims remain "substantially identical" between publication and issuance.1

35 U.S.C. §154(d) was passed as part of the Domestic Publication of Foreign Filed Patent Applications Act of 1999. As it generally takes several years for claims to accrue under a new law and several more years for those claims to progress through the court system, the Federal Circuit has had few opportunities to opine on §154(d) until recently.

Reprinted from the Spring 2016 issue of Intellectual Property News originally published by the Ohio State Bar Association Intellectual Property Section.

In Rosebud LMS Inc. v Adobe Sys. Inc.2 the Federal Circuit took up the actual notice requirement in a case of first impression. The Federal Circuit affirmed the District Court’s grant of summary judgement that the defendant (Adobe) was not liable for pre-issuance damages under 35 U.S.C. §154(d) as it had no actual notice of the plaintiff’s (Rosebud) published patent application despite the defendant having previously been accused of infringing, and thus having actual knowledge of, the "parent" and "grandparent" patents.3

Understanding the importance of pre-issuance damages

Maximizing damage recovery is at the forefront of a prudent attorney’s mind. Litigators understand that no infringement action may be started until the patent issues. However, it is important to remember that the publication of a patent application brings about certain rights – including pre-issuance damages under 35 U.S.C §154(d).

In most cases a patent application publishes 18 months from its earliest effective filing date.4 The USPTO dashboard reveals that traditional total pendency for patent applications is over 26 months.5 For applications including Requests for Continued Examination (RCE), the average total pendency is over 34 months.6 In applications requiring a decision by the Board of Patent Appeals and Interferences (BPAI), that average total pendency leaps to over 85 months.7 Therefore, if a pre-issuance damages notice is given shortly after publication of a patent application, this could mean an additional eight months’ worth of damages in the first case, 16 months’ worth when including RCEs and 67 months’ worth following a BPAI decision. Therefore, proper use of §154(d) can equate to significant additional damages for a client.

Background and procedural history of Rosebud

Plaintiff Rosebud filed three lawsuits against Adobe.8 Two of these were dismissed before the present lawsuit was commenced.9 The dismissed lawsuits involved the grandparent and parent patents of the patent at issue in this case.10 In the present lawsuit, Adobe sought summary judgment that Rosebud was not entitled to pre-issuance damages under 35 U.S.C §154(d) as Adobe had no actual notice of the published patent application that led to the patent at issue in this case.11

The District Court for Delaware granted summary judgement in favor of the defendant, Adobe.12 Rosebud appealed and the Federal Circuit was presented with the question of whether the defendant had actual knowledge of the published patent application where it had actual knowledge of the grandparent application, it generally followed the plaintiff’s work and attempted to emulate its features,; and it would have been standard practice in the industry for counsel to search and review related patents, applications and prosecution history to evaluate possible claim construction during the prior litigation.13

The Federal Circuit’s Decision

The Federal Circuit found that the defendant did not have actual knowledge of the patent application at issue and affirmed summary judgement in favor of defendant, thereby finding no liability for pre-issuance damages.14

The Federal Circuit held that "actual notice" should be given its ordinary meaning.15 The Federal Circuit explained that applying the ordinary meaning of actual notice necessarily requires that constructive knowledge is insufficient, but also that an affirmative act by the patent owner, while typically sufficient to establish actual notice, is not required.16 To support this finding the Federal Circuit favorably cited the House Report discussing the proposed statute17 and distinguished the actual notice requirement of §154(d) from the construction of 35 U.S.C. §287(a) (marking and notice) as the two statutes use different language.18 Specifically, the Federal Circuit refused to read in a requirement that the asserting party accuse the alleged infringer of infringement, as has been done for §287(a).19 The Federal Circuit went on to dismiss Adobe’s policy arguments for why the actual notice provision should require an affirmative action by the patent applicant as inconsistent with the clear statutory language of §154(d).20

The statement may be as simple as informing the client that the publication entitles them to certain rights and they should immediately inform their attorney if they believe a competitor is practicing their invention.

Applying this law to the facts of the case, the Federal Circuit found that each of the plaintiff’s arguments attempting to establish actual notice failed.21 The plaintiff first argued that the Defendant had actual knowledge because it knew of the grandparent patent from the prior litigation.22 This argument failed because the actual notice required is of the claims and not of the specification.23 In fact, §154(d) specifically requires that claims in the published patent application must be "substantially identical" to the issued patent. The plaintiff next argued that the defendant generally followed the plaintiff’s work and tried to emulate its features.24 This argument failed because the evidence given was insufficient.25 The plaintiff presented several emails and lines of source code produced by the defendant that mentioned the plaintiff, but the emails were sent two years before the publication of the patent application and the references in the source code were to a different product.26 The plaintiff finally argued that was that it is standard practice to search for and review related patents and patent applications to evaluate possible claim construction during the prior litigation and thus the defendant must have become aware of the published patent application at that time.27 This argument failed because the prior litigation never reached the claim construction phase.28

Best Practices in Light of the Decision in Rosebud

First and foremost, it is important for practitioners to make their clients aware of their pre-issuance rights. This may be accomplished by, for example, utilizing a standard "report out" email or letter when the client is notified that their patent application has been published. The statement may be as simple as informing the client that the publication entitles them to certain rights and they should immediately inform their attorney if they believe a competitor is practicing their invention.

Pre-issuance damages remain an extraordinary remedy that requires relatively special circumstances to be awarded. While the Federal Circuit held that an affirmative act is not necessarily required, as a matter of practicality sending a notice letter to the would-be-defendant is generally a best practice as otherwise proving actual knowledge is often difficult, if not impossible. As Federal Circuit specifically refused to read in the requirement from 35 U.S.C. §287(a) that a would-be-plaintiff specifically accuse a would-be-defendant of infringement into the actual notice requirement of §154(d), the notice letter needs to simply make the alleged infringer aware of the published patent application.

If a notice letter has not been sent, it is notable that the Federal Circuit entertained arguments attempting to establish actual notice by circumstantial evidence; even the arguments did not succeed. It is clear from Rosebud that knowledge of a related patent is insufficient. However, the Federal Circuit left open the possibility that circumstantial evidence may be sufficient to establish actual notice satisfying §154(d). Therefore, discovery requests should be directed at obtaining circumstantial evidence of pre-issuance knowledge of the patent-at-issue.

Additionally, it is important for patent practitioners to keep the "substantially identical" requirement in mind when amending claims after publication of the patent application. Any amendments made after publication that changes the scope of the claims would likely preclude pre-issuance damages under §154(d). Under the current statutory scheme there is no known mechanism by which would-be-plaintiffs may update their original notice to include amended claims. It is possible that such a mechanism was within Congress’ intent and policy makers may wish to consider including such a mechanism in an update to §154(d).

As a still relatively unexplored method of recovery, practitioners should in the meantime "keep a weather eye" out for new cases further expounding upon these pre-issuance rights.


  • 1 35 U.S.C. §154(d), it is notable that these are the major requirements. Please see the statute for a full list of requirements.
  • 2 Rosebud LMS Inc. v Adobe Sys. Inc., No 2015-1428, (Fed. Cir. Feb. 9, 2016).
  • 3 Patents that claim priority to other patents or patent applications are considered "related" and are typically referred to by familial terms in order to denote their relationship (e.g., a parent is a patent application that was filed after, and claims the benefit of, the grandparent application); Id. at 2.
  • 4 Manual of Patent Examining Procedure (MPEP) §1120, USPTO, available at www.uspto.gov/web/offices/pac/mpep/s1120.html.
  • 5 USPTO, January 2016 Patents Data at a Glance, Data Visualization Center, USPTO Dashboard (Feb. 22, 2016, 11:04 PM), www.uspto.gov/dashboards/patents/main.dashxml (information current as of access date).
  • 6 Id.
  • 7 Id.
  • 8 Rosebud, No 2015-1428 at 4.
  • 9 Id.
  • 10 Id.
  • 11 Id. at 2-3.
  • 12 Id. at 3.
  • 13 See id.
  • 14 Id. at 2.
  • 15 Id. at 5.
  • 16 Id.
  • 17 Id. at 5-6 (citing H.R. Rep. No. 106-287, pt. 1, at 54 (1999)).
  • 18 Id. at 6 (§287(a) requires "proof that the infringer was notified of the infringement and continued to infringe thereafter").
  • 19 Id. at 6 (distinguishing Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994)).
  • 20 Id. at 6-7.
  • 21 Id. at 7.
  • 22 Id. at 7-8.
  • 23 Id.
  • 24 Id. at 8.
  • 25 Id. at 8-9.
  • 26 Id.
  • 27 Id. at 9.
  • 28 Id.
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Are you maximizing damages for your client? by Adam J. Smith is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.