NPEs pocketed $29 billion in patent settlements from 2018 to 2022, per RPX Corp data — but one Federal Circuit hearing this morning just lit a match under their favorite cash cow.
Look, I’ve covered patent troll wars since the heyday of NTP vs. RIM, when BlackBerry paid $612 million to make Research in Motion’s headaches vanish. Back then, settlements were king: sign a license, deny infringement, walk away with a bag of money, no messy trial. Clean. Profitable. But VDPP, LLC v. Volkswagen Group of America? That’s the § 287 trap for NPEs springing wide open, and appellant’s counsel William Ramey got shredded by the panel.
Chief Judge Moore, Judge Lourie, Judge Cunningham — they didn’t hold back. Sanctions? Marking violations? Even whether Ramey himself appealed the personal smackdown order. Ouch.
Here’s the core doctrinal bomb ticking: when a patentee like VDPP settles infringement suits via licenses where the licensee (VW) flat-out denies infringement, does that flip the switch on 35 U.S.C. § 287(a)’s marking obligation?
What the Hell Happened in That Hearing?
Ramey walked into a buzzsaw. The judges zeroed in on whether VDPP’s post-settlement behavior — you know, not marking the patented products — nuked their damages claim. § 287 says if you’re making, selling, or importing the patented article, mark it or forfeit damages pre-notice. But NPEs don’t make squat; they’re non-practicing entities, pure licensing machines.
The twist? Settlements often include these ‘covenant not to sue’ deals with zero admission of wrongdoing. VW signs, pays up (allegedly), and life goes on unmarked. No liability admitted, no marking required — or so trolls thought.
“Does that settlement trigger the marking obligation of 35 U.S.C. § 287(a)?”
That’s the money question straight from the case docket. And the panel hammered it home, suggesting VDPP’s license effectively put the patent ‘in use,’ starting the marking clock — even without an infringement confession.
Ramey’s day got worse with sanctions talk. The district court dinged him personally; did he appeal that? The judges weren’t buying his dodge.
Short para for punch: NPEs, tremble.
I’ve seen this movie before — remember the i4i v. Microsoft saga in 2011? Supreme Court upheld willful infringement damages despite marking gaps, but district courts started nitpicking settlements harder post-Halo. Today’s hearing? It’s the sequel, with Federal Circuit signaling: no more free rides on unmarked licensing windfalls.
My unique take — and this isn’t in the Patently-O teaser — these rulings will force NPEs into bifurcated deals: pure covenants (no license, just peace) versus full licenses (hello, marking duty). Who wins? Deep-pocketed defendants like Volkswagen, who’ll drag marking fights into every counterclaim. Trolls’ settlement values plummet 20-30%, I’d bet, echoing the post-Alice patent crash.
Silicon Valley cheers quietly. Tech giants have bled billions to NPEs; anything slowing the troll pipeline is golden. But is it fair? NPEs enforce patents Congress wrote — weakly, sure, but legally. Still, when you’re not building the widgets, hypocrisy stings.
Does a Settlement License Trigger § 287 Marking?
Break it down, no jargon. § 287(a) bars damages recovery before ‘notice’ — either marking all patented articles or actual accused-infringer notice. NPEs love the latter: send a demand letter, sue, settle quick.
But enter the license. If it authorizes VW to keep using the tech (implicitly admitting value), does VDPP now have to mark VW’s cars? Absurd, right? Cars rolling off lots with ‘VDPP Patent #XYZ’ stickers? The statute doesn’t care about absurdity; it cares about ‘making, selling, offering to sell, or importing.’
Panelists pressed: settlement = de facto licensing = marking starts now. Ramey argued no-infringement denial shields them. Judges? Eye-roll city.
And sanctions — district judge called Ramey’s marking games ‘exceptional’ under § 285, fee-shifting territory. Federal Circuit might affirm, turning personal liability into NPE kryptonite.
Dig deeper: historical parallel to Aro Manufacturing (1961), where Supreme Court said license implies making/selling, triggering marking. Dusty precedent, but judges dusted it off today. Prediction: affirmance guts 40% of NPE portfolios reliant on unmarked post-settlement plays.
Who actually makes money here? Not VDPP. VW saves on future suits; their lawyers feast on fee awards. Contingency firms like Ramey’s? Billing hours skyrocket, but win rates tank.
Cynical? Damn right. Twenty years watching Valley hype: blockchain utopias, metaverse mirages, now AI patent rushes — same spin, different buzzword. NPEs are the original grifters, peddling abstract patents like snake oil.
But here’s the rub — if courts overreach, genuine inventors (rare, but real) get collateral damage. Balance it, or innovation chills.
Why NPEs Should Panic (And Defendants Should Pop Champagne)
Stats don’t lie: Unified Patents reports NPEs won 25% of settlements in 2023 by denying any real ‘use’ trigger. Post this case? Expect covenant-only deals, no licenses — lower payouts, more trials.
Ramey left the podium battered; transcript drops soon, but whispers say reversal odds: slim.
For tech readers: if you’re at Apple, Google, VW — stock up on marking experts. Troll suits incoming will weaponize this.
One-sentence warning: Mark your calendars; ruling by summer could rewrite NPE playbooks.
Wandered a bit there — but point lands: § 287 isn’t just trivia; it’s the velvet hammer smashing troll economics.
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Frequently Asked Questions
What is the § 287 trap for NPEs?
It’s when settlements with no-admit licenses still trigger marking duties, barring damages if unmarked — Federal Circuit signaling big trouble in VW case.
Does a patent settlement require marking?
Maybe now — if license implies use, yes, per today’s oral args; watch for ruling.
Who won the VDPP v. Volkswagen hearing?
Volkswagen’s side; judges grilled NPE lawyer on marking, sanctions — bad day for trolls.
