The Court of Appeals for the Federal Circuit issued a
recent decision rejecting the doctrine of "marking estoppel." The decision, Frolow
v. Wilson Sporting Goods Co. [an enhanced version of this opinion is available to lexis.com
subscribers], clarifies certain issues under the law of patent
Frolow, an individual, sued Wilson and alleged breach of
a license agreement. The agreement required Wilson to pay Frolow royalties for
tennis racket models "covered by one or more unexpired or otherwise valid
claims" of Frolow's patent. Frolow alleged that Wilson failed to pay royalties
on numerous different racket models. On Wilson's motion for summary judgment,
Frolow introduced evidence, inter alia, that Wilson had marked several
of the racket models with Frolow's patent number. The district court granted
summary judgment in part, concluding that Wilson's marking had "no bearing" on
infringement. The court further held that Wilson's marking did not estop Wilson
from contesting whether the accused racket models were covered by the patent.
For the remaining five racket models, the court held that Frolow did raise a genuine
issue of material fact.
Frolow then asserted that royalties were due on numerous
additional racket models. When Wilson again moved for summary judgment, Frolow
countered with evidence, inter alia, that Wilson had been paying
royalties on these additional models. Wilson responded that these payments had
been made inadvertently. The court concluded that Frolow's attempt to add the
additional models was untimely. At trial, the court held against Frolow on the
remaining five racket models. Frolow appealed, arguing that Wilson, by marking
the patent number on certain racket models, should be estopped from asserting
that these racket models were not covered by the patent.
On appeal, the Federal Circuit disagreed, and refused to
recognize a doctrine of marking estoppel. The court observed that Congress had
already addressed false marking via statutory provisions that provide remedies
to aggrieved parties. In light of the existence of these statutory provisions,
the court specifically declined "to create a separate, equitable doctrine
unique to patent law, where Congress has spoken and standard evidentiary
practices provide adequate remedy."
But the court agreed with Frolow that Wilson's marking
did create a genuine issue of material fact as to whether the tennis rackets
fall within the patent claims. The court held that evidence of marking is an
"extrajudicial admission," and can be used against a party that made the
admission. Given that extrajudicial admissions are not "binding" and "may be
controverted or explained by the party," held the court, the adoption of a
patent marking doctrine would conflict with the normal evidentiary treatment of
extrajudicial admissions. The court further held that the marking evidence
constituted circumstantial evidence of infringement, and that such evidence
conceivably could be used to establish that the racket models in question were
covered by the patent. Accordingly, the court reversed the grant of summary
judgment and remanded for trial.
With regard to the additional racket models, the court
held that Wilson's payment of royalties again constituted circumstantial
evidence that these racket models were covered by the license. While observing
that the payment of royalties might not raise a genuine issue of material fact
sufficient to avoid summary judgment in every case, the court concluded that in
this case the evidence was sufficient to avoid summary judgment. The court
further held that, under applicable state law, Frolow had the burden of proof
on remand, and affirmed the judgment as to the five racket models.
The decision was unusual in that the three-judge Federal
Circuit panel generated a main opinion and separate concurring opinions from
each judge. The first concurring opinion suggested that Frolow's marking
evidence might warrant exclusion under Fed. R. Evid. 403, given the lack of
other evidence adduced; the second concurring opinion specifically disagreed
with the first concurring opinion; and the third concurring opinion asserted
that the evidence of Wilson's marking and royalty payments was strong, direct
evidence of liability.
The Frolow decision provides guidance on how
district courts will treat claims for "marking estoppel." Given the diverging
opinions of the Federal Circuit judges on the Frolow panel, however, it
remains to be seen how strongly courts will regard "circumstantial admissions"
via marking and royalty payments.
For more information on this decision, please contact
Fitch Even partner Eric
L. Broxterman, the author of this alert.
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