Efforts to terminate infringement after notice of patent doesn’t avoid damagesAugust 21, 2008

In a decision Tuesday, the Federal Circuit vacated a district court's grant of summary judgment of non-infringement of a patent on the basis of claim construction. Specifically, the district court had improperly imported limitations from nonasserted claims into the asserted claims, resulting in an unduly narrow claim construction. The court also vacated the district court's grant of summary judgment of no liability for damages for infringement. The patentee had not marked articles with the patent number, and upon notice of the patent, the alleged infringer immediately took steps to redesign the accused products. However, the redesign took over six months to complete. The district court held that because the accused infringer took reasonable steps to cease infringement immediately upon notice, damages were unavailable. The Federal Circuit disagreed, and noted there is no exception for liability when an accused infringer is "expeditious" in its efforts to cease infringing after notice is given, so the court remanded for a determination of damages if the patents are determined to be valid. More detail of DSW, Inc. v. Shoe Pavilion, Inc. after the jump.DSW owns the patent at issue on appeal, which is directed to a method and system for displaying and storing footwear for customer self-service. Claims 1-3 of the patent require "track and roller mechanisms connecting display modules to a support base," while claims 4-6 require a "vertically disposed, horizontally movably positionable stack divider." In a letter, DSW asserted infringement of this patent and a design patent against Shoe Pavilion. Upon receipt of the letter, Shoe Pavilion redesigned its shoe displays in an effort to avoid infringement. DSW believed the redesign still infringed the utility patent and sought damages for the past infringement of both patents.The district court held the "track and roller" limitation needed to be read into claims 4-6 because the presence of that element was what rendered the claims patentable over the prior art, was necessary to make the claims definite, and was required by the specification's preferred embodiment. The Shoe Pavilion displays did not meet the track and roller limitation, and the district court therefore granted summary judgment of noninfringement of the utility patent. In addition, the district court held that the plaintiff could not recover damages for the past infringement, as the plaintiff did not mark its goods with the patent number, and once actual notice of the alleged infringement was given, the defendant took reasonable steps to cease infringement, and did cease within approximately six months. The Federal Circuit initially noted "absent contravening evidence from the specification or prosecution history, plain and unambiguous claim language controls the construction analysis." The court noted the unambiguous "horizontally movably positionable stack divider" element of claims 4-6 means, on its face, "that the vertically disposed stack dividers must be capable of being moved into different horizontal positions in the footwear display." In addition, the prosecution history did not include an express disclaimer of footwear displaying method which does not involve the "track and roller" limitation. The court cited the Examiner's reasons for allowance, noting that "the examiner allowed claims 4-6 without objection, concluding that the prior art does not teach or suggest a method of displaying at least two footwear styles using the particular stacking of containers and stack dividers." This is in contrast to issued claims 1-3, where the court noted the Examiner "explained that the prior art does not teach or suggest a footwear display and stack divider containing the Track and Roller Limitation." The Federal Circuit additionally noted that where the claim language is broader than the preferred embodiment, the claims should generally not be limited to the preferred embodiment. As a result, because the district court's claim construction was unduly narrow, the court vacated the finding of noninfringement.Regarding damages, the court noted that the district court had improperly applied the Supreme Court's Wine Railway case. In Wine Railway, the Court held when a patentee does not mark a patented article with the patent number, damages were only recoverable after actual notice of the patent had been provided to the infringer. Because Wine Railway states that damages are available after actual notice, the Federal Circuit concluded that the district court improperly concluded that "Shoe Pavilion's reasonable steps and good faith efforts to bring its infringing activity to a timely end equated to an immediate cessation." Essentially, there is no exception to post-notice damages on the basis that the infringer is attempting to cease the infringement. Accordingly, the court vacated the district court's decision on this issue as well.To read the full decision in DSW, Inc. v. Shoe Pavilion, Inc., click here.