Federal Circuit Rejects Patent Appeal on Notice Grounds

The Federal Circuit issued an opinion in a case brought by Iron Oak Technologies against Microsoft. The case was appealed from the Northern District of Texas by Iron Oak Technologies. However, the court notes that “the entire appeal as presented is not from a final decision within the scope of 28 U.S.C. §1295(a)(1)” because “resolving an appeal of the Agreed Final Judgment would require this court to adjudicate the issue of notice as to the defendants in ongoing consolidated cases, which are not parties to Microsoft’s declaratory judgment action.” As a result, the Federal Circuit “affirm[s] the district court’s decision only to the extent it held that Iron Oak did not provide sufficient notice under 35 U.S.C. §287 to Microsoft.” The Circuit notes that it does not have jurisdiction to state anything beyond what applies to Microsoft of sufficient notice under §287.  

Originally, Iron Oak Technologies filed the lawsuit against Microsoft and other laptop, tablet, and mobile device manufacturers in 2016 and 2017, claiming that their products and services infringed two of Iron Oak Technologies’ patents. However, Microsoft stated that these lawsuits “implicated Microsoft software and products installed on the manufacturers’ devices.” As a result, Microsoft filed a suit against Iron Oak “‘seeking a declaratory judgment action that Microsoft has not infringed, induced others to infringe, or contributed to the infringement of any claim of the’ patents at issue.” All of the cases were consolidated and Microsoft moved for summary judgment, “arguing that Iron Oak ‘did not provide notice to any Defendant [and] that a Microsoft product was alleged to infringe.” As a result, Microsoft argues that Iron Oak Technologies “cannot recover damages from the Defendants [in the Manufacturer Suits] for infringement by the use of Microsoft products.”

The district court granted Microsoft’s motion, stating that Iron Oak Technologies could not recover damages in this situation, dismissed Microsoft’s declaratory judgment claims as moot and denied Iron Oak’s motion for reconsideration. After clarification, the district court entered an Agreed Final Judgment, where it confirmed Microsoft’s summary judgment was granted. Iron Oak has appealed “arguing the district court applied the incorrect standard under 35 U.S.C. §287 in determining that Iron Oak’s pre-suit notice letters to the Manufacturers did not provide sufficient notice regarding infringement by Microsoft products and services on the Manufacturers’ devices.” The Federal Circuit disagreed with this reasoning.

The Federal Circuit noted that it only has jurisdiction over a district court’s final decision as mandated under 28 U.S.C. §1295(a)(1). However, the court said “[t]he procedural posture of this case is unconventional.” For instance, the appealed case is only between Microsoft and Iron Oaks, however, the briefing focuses on whether Iron Oaks notice letters to the manufacturers, not Microsoft, were sufficient under § 287 for Microsoft products and services installed on these devices. The Federal Circuit added that Microsoft never received a notice letter from Iron Oaks, that Iron Oaks has not sought damages from Microsoft and that Microsoft is not a defendant in the manufacturer suit and the manufacturers are not parties in Microsoft’s suit; thus, the manufacturers are not part of this appeal. Consequently, the Federal Circuit cannot rule on summary judgment in the manufacturer suits. The Federal Circuit affirmed the district court’s decision as it pertains to the fact that Iron Oak Technologies did not provide sufficient notice to Microsoft about its products’ alleged infringement under 35 U.S.C. §287. The Federal Circuit states that in relation to the notices sent to other defendants, not in this case, the judgment is not final nor are their respective cases repealed; therefore, they cannot take a position on the district court’s conclusion.

The Federal Circuit also states that unlike a typical case where a manufacturer might seek a declaration of noninfringement for its product or processes “because of allegations against its customers,” there are no allegations against customers in this suit. Instead, “the summary judgment required the court to consider the notice letters and claim charts sent to the Manufacturers, which though similar in some respects, were ultimately specific to each Manufacturer.” These notice letters were not sent to Microsoft. Microsoft argued that since it has indemnity agreements with the manufacturers it has “standing to sue for a declaration of non-infringement by Microsoft customers accused by reason of their use of Microsoft products and services.” The Federal Circuit stated that a party would typically file declaratory judgment and state indemnity before an infringement suit, however, Microsoft filed this while the lawsuits were ongoing. Additionally, the court stated that “the record is largely devoid of the contours of Microsoft’s indemnity agreements,” they are only briefly mentioned. The court added that “[w]e do not know to what extent, if any, Microsoft is obligated to defend the Manufacturers under their agreements and therefore to what extent Microsoft may ‘stand in their shoes.’”

Iron Oak Technologies is represented by McAughan Deaver PLLC. Microsoft is represented by Sidley Austin LLP.