Timothy Maier

Federal Circuit Overturns Pre-Suit Damage Award Against NetScout

On July 22, the Federal Circuit ruled that marking requirements for pre-suit damages cannot be satisfied based on defendant’s infringement of a related method claim in Packet Intelligence LLC v. NetScout Systems, Inc.

In the case, Packet Intelligence sued NetScout Systems for patent infringement in the Eastern District of Texas. The Jury found in favor of Packet Intelligence on all issues and awarded both pre-suit and post-suit damages. Following the jury trial, the court also enhanced damages and awarded an ongoing royalty for post-verdict infringement.

NetScout appealed to the Federal Circuit, arguing that in order to be subject to pre-suit damages Packet intelligence’s licensees must have properly marked their patent-practicing products. NetScout concluded that because they failed to do so, the award of pre-suit damages was in error. The Federal Circuit agreed.

Judge Lourie explained in the written opinion. While the defendant has the primary burden to “articulate the products it believes are unmarked ‘patented articles”, this initial burden was met by NetScout. The low bar for this need only “put the patentee on notice that certain licensees sold specific unmarked products”. The Federal Circuit ruled that the District Court incorrectly placed a burden on them to prove these products practiced the patent, when the burden should rightly be on the plaintiff to demonstrate that they did not.

Finally, the Federal Circuit was not convinced that NetScout’s infringement of related patents could be used to satisfy the marking obligation in place of actual compliance. Per the decision, “Packet Intelligence is barred from recovering damages for pre-suit sales of the…products because it failed to comply with the marking requirement. It cannot circumvent § 287 and include those products in its royalty base simply by arguing that NetScout’s infringement of related method claims drove sales.”

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