Fitch, Even, Tabin & Flannery IP Alert: Federal Circuit Rejects “Marking Estoppel” Doctrine

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 marking.

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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