United States District Court, District of Columbia
August 31, 2000
UNIBOARD AKTIEBOLAG, PLAINTIFF,
ACER AMERICA CORP., ET AL., DEFENDANTS.
The opinion of the court was delivered by: John Garrett Penn, District Judge.
Currently pending before the Court are defendants' Motions to Dismiss,
or in the Alternative, for Summary Judgment.*fn1 For the reasons set
forth in this memorandum, the motions to dismiss are granted.
The pertinent background of this case is largely uncontested. Hakan
Lans ("Lans") filed United States Patent No. 4,303,986 ("'986 patent"),
entitled "Data Processing System and Apparatus for Color Graphics
Display," on January 9, 1979. The '986 patent was issued on December 1,
1981, by the United States Patent and Trademark Office. Among other
things, the inventions covered by this patent optimize and accelerate the
color graphics subsystems in contemporary computers. According to
Uniboard's complaint, the '986 patent expired on January 9, 1999.
Complaint at ¶¶ 15, 16, 18.
By letter dated September 27, 1996, Lans advised defendants of alleged
infringements of the '986 patent. Complaint at ¶ 21. When defendants
failed to refrain from the alleged infringement, or seek a settlement of
the dispute, Lans filed suit against the defendants in his own name on
October 24, 1997.*fn2
During the normal course of discovery, Gateway discovered that, on
October 19, 1989, Lans had executed an "Assignment and Declaration" in
sold, assigned and transferred to Uniboard Aktiebolag
("Uniboard" or "Uniboard AB"),*fn3 a Swedish
corporation, all [his] right, title and interest in
and to United States Patent No. 4,303,986 and all
patents and patent applications of other countries
corresponding to said United States patent, together
with the right to sue third parties in respect of any
infringement of any of said patents and patent
applications which infringement has occurred prior to
the date of this assignment. [Furthermore] the said
Uniboard Aktiebolag is now the sole owner of said
United States patent and said patents and patent
applications of other countries corresponding
Assignment and Declaration (attached to Consolidated Opposition of
Uniboard Aktiebolag to Motions of Defendants to Dismiss Uniboard's
Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6), or in
the Alternative for Summary Judgment ("Uniboard's Consolidated
Opposition") (filed Jan. 3, 2000)). See also Complaint at ¶ 17.
On November 23, 1999, this Court granted summary judgment to the
defendants and dismissed the Lans cases for patent infringement. The
basis for dismissal was that Lans conceded that, although he was the
original inventor-patentee, he was no longer the owner of the patent due
to the assignment to Uniboard. See Lans v. Gateway 2000, Inc.,
84 F. Supp.2d 112, 114 (D.D.C. 1999). As such, the Court concluded that
Lans lacked standing to sue for the patent's infringement. Id., at 123.
The Court also denied Lans's motion to amend the complaint in order to
substitute Uniboard as plaintiff See Id., at 115-22.
Upon dismissal of the Lans cases, Lans and Uniboard embarked on two
separate tracks, although they both continued to be represented by the
same counsel. First, Lans, in his personal capacity, filed an appeal of
the Court's dismissal of the Lans cases with the United States Court of
Appeals for the Federal Circuit ("Federal Circuit") on December 22, 1999.
Furthermore, on January 24, 2000, Lans filed motions under Federal Rule
of Civil Procedure 60(b)(2) ("Rule 60(b)(2)"), requesting relief from
judgment due to the discovery of new evidence.*fn4 Finding that the new
evidence submitted by Lans did not satisfy the requirements of Rule 60
(b)(2), the Court denied those motions. It is the Court's understanding
that Lans has subsequently appealed those rulings to the Federal Circuit
Second, on November 29, 1999, Uniboard filed its own patent
infringement action against the eight defendants from the Lans cases.*fn6
On December 23, 1999, defendant Gateway filed a motion to dismiss for
failure to state a claim. As noted above, each of the other defendants
adopted Gateway's motion. With the motion fully briefed, the Court held
oral arguments on June 7, 2000.
In response to Uniboard's complaint, defendant Gateway filed a motion
to dismiss for failure to state a claim. Gateway's theory is that
Uniboard can only collect damages for the period of infringement after
the date on which Uniboard provided actual notice of the infringement.
Gateway alleges that this date is November 29, 1999, the date on which
the Uniboard suit was filed. Since the patent expired on January 9,
1999, there is no measurable period of damages, and no injunctive relief
is possible. Therefore, the suit must be dismissed.
Uniboard replies that defendants received actual notice of the
infringement on one of two earlier dates: either September 27, 1996, the
date on which Lans originally wrote to the defendants, or October 24,
1997, the date on which the Lans cases were filed.*fn7 Uniboard alleges
that both of these notices satisfy the notice requirement. Gateway
alleges that neither of these notices are sufficient since both came from
Lans in his personal capacity, and not from Uniboard.
The Court begins by looking at the notice requirement, as expressed in
the patent statutes, and as construed , by the courts. The patent law,
provides, in relevant part, that
in the event of failure . . . to mark, no damages
shall be recovered by the patentee in any action for
infringement, except on proof that the infringer was
notified of the infringement and continued to infringe
thereafter, in which event damages may be recovered
only for infringement occurring after such notice.
Filing of an action for infringement shall constitute
35 U.S.C. § 287 (a) (2000).
The constructive notice (marking) provision of § 287(a) is not
relevant to this dispute, as Uniboard does not allege that it complied
with the patent marking provisions. Therefore, the Court focuses its
inquiry on if and when Uniboard provided the defendants actual notice of
the alleged infringement.
The controlling Supreme Court precedent in this dispute is Dunlap v.
Schofield, 152 U.S. 244, 14 S.Ct. 576, 38 L.Ed. 426 (1894). Dunlap
interpreted the notice requirements of section 4900 of the Revised
Statutes, the precursor to the modern section 287(a). In addressing the
notice requirement, Dunlap places the responsibility of providing notice
squarely on the patentee, holding that
the patentee or his assignee, if he makes or sells the
article patented, cannot recover damages against
infringers of the patent, unless he has given notice
of his right, either to the whole public, by marking
his article `Patented,' or to the particular
defendants, by informing them of his patent, and of
their infringement of it.
One of these two things — marking the articles,
or notice to the infringers — is made by the
statute a prerequisite to the patentee's right to
recover damages against them. Each is an affirmative
fact, and is something to be done by him. Whether his
patented articles have been duly marked or not is a
matter peculiarly within his own knowledge; and, if
they are not duly marked, the statute expressly puts
upon him the burden of proving the notice to the
infringers before he can charge them in damages.
Dunlap, 152 U.S. at 247-48, 14 S.Ct. at 577 (emphasis added).
The Court's understanding of Dunlap is that it places the burden of
providing notice to parties suspected of patent infringement squarely on
the patentee or his assignees, whomever has legal title to the patent.
This, in part, reflects that section 287's
clear purpose, when a patentee has failed to mark his
article so as to charge the public with constructive
notice, is to require actual notice of the alleged
infringement to the defendant as a condition for the
recovery of damages. It is not asking too much of a
patentee who receives a monopoly grant under his
patent for a 17-year period that he either mark his
product or serve actual notice upon a claimed
infringer if he seeks to recover damages.
Lemelson v. Fisher Price Corp., 545 F. Supp. 973, 975 (S.D.N.Y. 1982).
The Federal Circuit has had occasion to consider section 287's actual
notice requirement. In Devices for Medicine, Inc. v. Boehl, 822 F.2d 1062,
(Fed.Cir. 1987) ("DFM"), the court considered a situation in which the
plaintiff failed to provide either constructive notice through marking or
actual notice, but in which the defendant had independent knowledge of
the patent and even stipulated to the infringement. The trial judge
instructed the jury that in order to establish infringement, DFM had to
show that section 287's notice requirement had been satisfied. Not
finding any action undertaken by DFM to provide the defendant with actual
notice of the infringement, the jury concluded that the notice
requirement had not been satisfied, and that DFM was not entitled to any
damages, despite defendant's independent knowledge of DFM's patent. On
appeal, plaintiff argued that "stipulation of infringement made notice
unnecessary, that [Boehl] admitted `knowledge of the patents.'" DFM, 822
F.2d at 1066. The Federal Circuit dismissed both of these assertions,
holding that "DFM's suggestion that notice was rendered unnecessary by
the stipulation is simply irrational. Absent notice, Boehl's `knowledge
of the patents' is irrelevant. Section 287 requires `proof that the
infringer was notified of the infringement.'" Id. In summary, the court
affirmed the conclusion that DFM had failed to carry its burden of
demonstrating that it had performed affirmative acts in compliance with
section 287. Furthermore, in American Medical Systems, Inc. v. Medical
Engineering Corp., 6 F.3d 1523, 1537-38 (Fed.Cir. 1993) ("AMS"), the
court held that notice of infringement of a patent must come from the
patentee, and that section 287(a) requires the party asserting
infringement to provide either constructive notice through marking or
The Federal Circuit has further followed Dunlap in one of its more
recent interpretations of section 287. In Amsted Industries Inc. v.
Buckeye Steel Castings Co., 24 F.3d 178, 186 (Fed.Cir. 1994), the
Circuit held that Dunlap "established that notice must be an affirmative
act on the part of the patentee which informs the defendant of his
infringement."*fn8 Furthermore, Amsted held that "[it] is irrelevant,
. . ., whether the defendant knew of the patent or knew of his own
infringement. The correct approach to determining notice under section
287 must focus on the action of the patentee, not the knowledge or
understanding of the infringer." Amsted 24 F.3d at 187. See AMS, 6 F.3d
at 1537 n. 18, Devices for Medicine, 822 F.2d at 1066; see also Maxwell
v. J. Baker, Inc., 86 F.3d 1098, 1111 (Fed.Cir. 1996).
Considering the plain meaning of section 287(a), as well as Dunlap and
the Federal Circuit precedents discussed herein, Uniboard has the burden
of demonstrating that it took affirmative acts to provide the defendants
with actual notice of potential infringements of the '986 patent.*fn9
The Court's inquiry into if and when the defendants received actual
notice will focus on Uniboard's actions.*fn10 Any knowledge the
defendants might have had of the infringements before Uniboard gave them
actual notice is irrelevant.
The Court now turns to the issue of determining if and when Uniboard
provided actual notice to the defendants. Under the facts of this case,
there are three potential dates on which actual notice was provided to
the defendants: September 27, 1996 (the date on which Lans wrote to the
defendants about potential infringement); October 24, 1997 (the date on
which Lans filed suit against the defendants for infringement); and,
November 29, 1999 (the date on which Uniboard filed suit against the
defendants for infringement). Since the patentee is Uniboard, it appears
that any notice given by Lans is not sufficient to satisfy Uniboard's
burden. It is irrelevant that Lans is the inventor of the patent since he
assigned his rights to the patent, including the right to sue for its
infringement, to Uniboard.
However, as with the previous Lans cases, the analysis gets complicated
of the relationship between Lans and Uniboard. As already noted, Lans is
the sole shareholder and managing director of Uniboard. Because of this
status, Uniboard argues that Lans is the only individual who could have
given notice on its behalf and that Lans is the only individual available
to vindicate its rights under the patent. Alternatively, defendants argue
that since Lans and Uniboard are two distinct legal entities, any notice
given by Lans on his own behalf is insufficient to satisfy Uniboard's
This Lans-Uniboard dichotomy is directly analogous to the situation in
the original Lans cases. In those cases, the Court held that Lans was
unable to maintain an infringement action against the defendants in his
personal capacity. See Lans v. Gateway 2000, Inc., 84 F. Supp.2d 112
(D.D.C. 1999). As the Court noted,
although Lans might be the managing director and sole
shareholder of Uniboard, Lans and Uniboard are two
distinct legal entities. "One of the more important
and pervasive principles underlying corporations law
is the `entity theory.' This theory provides that a
corporation is a separate entity, distinct from its
corporate and non-corporate shareholders. . . . A
corporation is an entity irrespective of, and entirely
distinct from, the persons who own its stock, and it
is well settled that all the shares in a corporation
may be held by a single person and yet the corporation
continue to exist; nor does the fact that one person
owns all the stock, make him and the corporation one
and the same person . . . ." Stamp v. Inamed Corp.,
777 F. Supp. 623, 626 (N.D.Ill. 1991) (citations
omitted); see generally Fletcher Cyc. Corp. §§ 25,
25.10 (Perm.Ed.). Furthermore, the law generally does
not allow the option of "reverse piercing" the
corporate veil when it suits the corporation's owner.
See Fletcher Cyc. Corp. § 41.70 (Perm.Ed.) ("[The]
better rule would seem to be that a person who has
voluntarily adopted the corporate form to engage in
business is precluded from asking courts to disregard
that form merely because the person is disadvantaged
by its use.").
Lans, 84 F. Supp.2d at 123 n. 10.
The Court's previous holding in Lans necessitates the result in this
case. Any notice provided by Lans in his personal capacity is not
attributable to Uniboard. However, if Lans sent notice to the defendants
in his capacity as Uniboard's managing director and sole shareholder,
then that notice would be sufficient for the purposes of section 287.
Having held that the Court's inquiry into whether section 287(a)'s
actual notice requirement has been satisfied will focus on Uniboard's
actions, and having further held that any notice given by Lans in his
personal capacity does not satisfy Uniboard's burden, the Court now turns
to an evaluation of the potential dates of actual notices referenced by
A. September 27, 1996
The initial contact between Lans and the defendants came in the form of
letters ("September 1996 letters") sent by Lans to each of the defendants
informing them that some of their product might infringe the '986
patent. Each defendant was sent essentially the same letter, copies of
which are attached to Uniboard's Consolidated Opposition to Gateway's
Motion to Dismiss ("Consolidated Opposition") (filed Jan. 3, 2000).
The September 1996 letters do not satisfy section 287(a)'s
requirements for two reasons. First, the letters do not meet the
requirement that the notice come from the actual patentee. A cursory
review of the letter sent to Gateway ("Lans Letter to Gateway" (attached
to Consolidated Opposition, Exh. B)) plainly reveals that Lans was acting
in his own personal capacity. Not only is Uniboard not referenced
anywhere in the letter, the letter goes so far
as to state that "Lans is prepared to offer a license" to Gateway to
remedy the infringement. Lans Letter to Gateway at 2 (emphasis added).
This clearly indicates that Lans was acting on his own behalf, not as
Uniboard's corporate representative.
Second, the September letters do not appear to the Court to have the
level of specificity required to put the defendants on notice of the
infringement. As Amsted instructs, "notice must be of `the infringement,'
not merely notice of the patent's existence or ownership. Actual notice
requires the affirmative communication of a specific charge of
infringement by a specific accused product or device." Amsted, 24 F.3d at
187. Again reviewing the September 1996 letters submitted by Uniboard as
proof of notice, the Court cannot identify a single specific charge of
infringement by a specific accused product or device of the defendants.
What each letter does provide is notice of the patent's existence, a
statement that Lans considers the defendants to have infringed the '986
patent, a reference to infringement litigation in Germany involving the
'986 patent, and a description of Lans's background and credentials.
Thus, the letters lack the required level of specificity contemplated by
section 287(a) and Amsted.
For both of these reasons, the September 1996 letters from Lans to the
defendants do not constitute actual notice from Uniboard.
B. October 24, 1997
The Lans cases, previously mentioned, were filed on October 24,
1997.*fn11 A review of the complaints filed in the Lans cases reveals
that they suffer from the same basic flaw as the September 1996 letters:
not only are they devoid of any references to Uniboard, their clear
language suggests that Lans filed the complaint solely on his own behalf.
For example, the complaint against Gateway refers to "Mr. Lans' patent
rights." Lans Complaint at ¶ 13. The complaint refers to an "amount
of money damages that Mr. Lans has suffered by reason of the acts of
infringement." Lans Complaint at ¶ 14. Finally, the Prayer for Relief
is stylized as Mr. Lans's prayer for relief, and seeks an "award to Mr.
Lans for his damages", as well as an "award for Mr. Lans' costs and
attorneys' fees." Lans Complaint at 4. Without belaboring the point,
Lans's complaints suffer from the same problem of authorship as the
September 1996 letters. Therefore, the complaints filed on October 24,
1997, in the Lans cases are not sufficient notice in the present action.
C. November 29, 1999
As previously noted, following this Court's dismissal of the Lans
cases, Uniboard filed this action against the same defendants that Lans
had sued on November 29, 1999. Since Uniboard is the patentee, its
complaint satisfies section 287's notice requirement. Paving considered
the relevant evidence and the oral arguments of the parties, the Court
holds that the first date on which Uniboard gave actual notice to the
defendants of the infringement of the '986 patent is November 29, 1999.
Having established that the first date on which Uniboard gave notice to
the defendants of the infringement of the '986 patent is November 29,
1999, the Court now turns its attention to the basis for dismissing this
complaint. Section 287 does not permit a patentee to collect infringement
damages unless the product is marked, or until after notice of
infringement has been given. Furthermore, 35 U.S.C. § 271 (a)
provides that "whoever
without authority makes, uses or sells any patented invention, within the
United States or imports into the United States any patented invention
during the term of the patent therefor [sic], infringes the patent."
Construing these statutory provisions together, the period of damages
for infringement of an unmarked patent is necessarily limited to the
period of time between the date on which the patentee first gave actual
notice to the infringer and the date on which the patent expires.
The '986 patent expired on January 9, 1999, but Uniboard did not
give notice to the defendants of the alleged infringement until
November, 29, 1999, and there's the rub. Since Uniboard did not give
notice of the alleged infringement to the defendants until after the
'986 patent had expired, there exists no period of time for which
defendants can be held liable for damages resulting from the alleged
infringement of that patent. Furthermore, since the patent has already
expired, no injunctive relief is available either. As a result,
plaintiff has failed to state a claim for which relief can be granted.
Therefore, the motions to dismiss the complaint must be granted.
For the reasons set forth in this memorandum, defendants' motions to
dismiss are granted. An appropriate order accompanies this memorandum.