The Federal Circuit’s Recent Ruling On The Patent-Marking Requirement And Its Implications For Licenses And Settlements

On August 19, 2026, the Federal Circuit issued its decision in VDPP, LLC v. Volkswagen Group of America, Inc., No. 24-2226, holding that the patent-marking requirement of 35 U.S.C. § 287(a) is triggered by settlement agreements that include a patent license—obligating patentees to make “reasonable efforts” to ensure that settling defendants mark any licensed products, even if those settling defendants do not admit that their products practice the licensed patent.

Background

VDPP, LLC was the owner by assignment of U.S. Patent No. 9,426,452 (the “’452 Patent”), which relates to electrically controlled spectacles that enable viewers to see three-dimensional effects. More than 18 months after the patent’s expiration, VDPP filed a complaint against Volkswagen Group of America, Inc. in the U.S. District Court for the Southern District of Texas, alleging that Volkswagen had infringed at least one claim of the ’452 Patent.

The district court granted Volkswagen’s motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), ruling that because VDPP did not provide actual or constructive notice of infringement before filing suit, it could not recover pre-suit damages for alleged infringement that occurred prior to patent expiration.

The district court explained that where a patent (like the ’452 Patent) is directed to a physical article, 35 U.S.C. § 287(a) bars recovery of pre-suit damages unless the patentee provides either (a) actual notice of infringement to the alleged infringer, or (b) constructive notice by marking any patented physical articles the patentee makes or sells, or which are made or sold “for or under” the patentee by others, with the word “patent” or “pat.” Although VDPP, a non-practicing entity, did not make or sell any products—and had no articles of its own to mark—VDPP had entered into several settlement agreements licensing the ’452 Patent to other entities that continued to sell their products. Because VDPP had not provided pre-suit notice to Volkswagen, and VDPP never alleged—including in its proposed amended complaint—that it took reasonable steps to ensure that the entities with which it had settled were marking their products, the district court concluded that VDPP could not obtain pre-suit damages. As a result, VDPP could not obtain any damages on its expired patent. The district court later determined that the case was “exceptional” under 35 U.S.C. § 285, awarded attorneys’ fees to Volkswagen, and imposed sanctions on VDPP’s counsel.

The Federal Circuit’s Decision

VDPP appealed the dismissal as well as the fees and sanctions awards. The Federal Circuit affirmed the dismissal of the complaint and rejected VDPP’s arguments that, as a non-practicing entity, it had no obligation to mark, and that its settlement agreements with entities that did not admit infringement did not trigger the marking requirement of § 287(a). The court held that “[b]ecause VDPP sought pre-suit damages, VDPP had a burden to plead compliance with the notice provision of 35 U.S.C. § 287(a), including compliance by VDPP’s licensees,” even though the licenses were conveyed through settlement agreements. The court reasoned that its precedent “suggests there is no difference between a license entered into under a settlement agreement and any other patent license agreement.” In other words, license grants in settlement agreements are not exempt from the requirements of § 287(a). The court also concluded that it was irrelevant that the licensees did not admit that their products practiced the ’452 Patent; VDPP continued to maintain that the licensed products practiced the ’452 Patent, and, on those facts, that was enough to trigger the marking requirement.

In addition, the Federal Circuit noted that VDPP’s arguments were contrary to the public policy goals of § 287(a), which is intended to encourage patentees to provide public notice of patents, aid the public in identifying whether a tangible article is patented, and help the public avoid innocent infringement. According to the court, VDPP’s proposed exception to the marking requirement would allow unmarked products to enter the marketplace, misleading the public about whether those products were patented.

The court, however, qualified its § 287(a) ruling by noting that it was “not foreclos[ing] the possibility that a licensor can ever establish it made reasonable efforts to ensure licensee compliance with 35 U.S.C. § 287 in the absence of a marking obligation.”

Finally, the Federal Circuit affirmed the district court’s award of attorneys’ fees under 35 U.S.C. § 285 and dismissed the appeal of the district court’s imposition of sanctions on VDPP’s counsel for lack of jurisdiction.

Implications

• The Federal Circuit’s decision clarifies that the patent-marking requirement of § 287(a) is triggered by settlement agreements that include a license to a patent—even if the licensee does not admit that its products are covered by the licensed patent.
• The Federal Circuit left the door open as to what actions by a patentee can qualify as “reasonable efforts” to ensure compliance with § 287(a) by its licensees, including whether an express marking obligation in some, but not all, of the settlement agreements at issue could satisfy § 287(a). However, even if certain actions could be sufficient to defeat a motion to dismiss, they may not be enough to succeed on the merits of a claim for pre-suit damages.
• The decision underscores the strategic value—for both patentees and licensees—of clearly delineating the scope of any license grant and addressing marking obligations at the time of agreement, rather than leaving those issues unresolved.
• The decision revives a tension between marking obligations and false marking risk that many practitioners considered settled. Before the America Invents Act of 2011 (the “AIA”), qui tam exposure under 35 U.S.C. § 292 discouraged marking where patent coverage was uncertain—the pendulum had swung decidedly away from marking. The AIA reduced that risk by eliminating qui tam standing and limiting suits to competitive-injury plaintiffs. VDPP now pushes the pendulum back: even a licensee that does not admit infringement may need to mark to preserve the patentee’s pre-suit damages.
• Key takeaways for licensing counsel: (1) include an express marking obligation in every settlement license, even where the licensee does not admit coverage; (2) structure marking clauses to address the licensee’s concern that marking could be perceived as an admission or create residual § 292 risk; and (3) note that while the court recognized that “reasonable efforts” short of a contractual marking clause may suffice, it offered no guidance on what those efforts look like in practice.
• A patentee enforcing a patent should expect that it may need to disclose all agreements with license grants in any later enforcement action and, when negotiating those agreements, ensure it has the ability to include the existence of the license and the marking provision in any subsequent complaint.
• Conversely, a defendant accused of patent infringement should investigate whether the plaintiff has previously entered into any settlement agreements and consider whether those settlement agreements—particularly if they lack an express marking obligation—could support a § 287(a) defense against a claim for pre-suit damages, including a motion to dismiss at the outset of the case.

Summer associate Anna Johnson also contributed to this alert.

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