Federal Circuit Clarifies Patent Marking Requirements For Settlement Licenses

In VDPP, LLC v. Volkswagen Group of America, Inc., 186 F.4th 1372 (Fed. Cir. 2026), the Federal Circuit applied the requirement that patent owners must make reasonable efforts to ensure their licensees comply with the patent marking requirements of 35 U.S.C. § 287. In so doing, the court rejected arguments that § 287’s marking provision was not triggered because the licenses were executed to settle litigation or because the licenses did not admit infringement.

Patent marking background

Under 35 U.S.C. § 287, to recover pre-suit damages for patented products, an alleged infringer must be notified of alleged infringement, or the patentee must have marked the patented products with a patent number either physically or virtually. The purpose of this rule is to put the public on notice that a product is patented, helping people and companies avoid accidentally infringing.

There are two exceptions to this marking requirement. First, a patentee that neither makes nor sells products generally has no articles of its own to mark (sometimes called a “non-practicing entity”), so is absolved from the marking requirement. Second, the requirement does not apply to “method patents,” which claim a process or way of doing something rather than a physical product. As a practical matter, a patent number cannot be affixed to actions.

The marking requirement extends beyond just the patent owner. If a patent owner licenses its patent to another company, and that licensee sells products under the patent, those products must also be marked. Because a patent owner does not directly control its licensees’ marking practices, the law requires the patent owner to make “reasonable efforts” to ensure its licensees mark their products in compliance with 35 U.S.C. § 287.

VDPP, LLC v. Volkswagen Group of America, Inc.

In VDPP, the district court held that VDPP failed to state a claim, because VDPP did not comply with the marking statute before the asserted patent expired, and the proposed amended complaint was futile. The Federal Circuit agreed, noting that VDPP’s proposed amended complaint did not resolve VDPP’s failure to allege facts showing compliance with the marking statute given its past licenses. Because it sought pre-suit damages, VDPP was required to plead facts showing compliance with the marking statute, including by VDPP’s licensees. VDPP’s proposed amended complaint, which stated that it had “pled all statutory requirements,” and that “all conditions precedent to recovery are met,” was insufficient because those statements were bare legal conclusions unsupported by factual allegations.

VDPP also argued that it had no requirement to mark because it sells no products, and its licensees did not have to mark because they settled to end litigation without admitting infringement. The court rejected these arguments. VDPP executed 11 settlement agreements containing standard licensing language that allowed the licensees to make, use, and sell licensed products.

VDPP therefore had to plead facts showing compliance with the marking statute including by its licensees, together with facts showing that it had made reasonable efforts to ensure that its licensees complied. Notably, one license agreement specified that the licensee had no obligation to mark. The court also explained that its precedent did not distinguish between a settlement license and any other patent license.

The court further explained that § 287 serves three key purposes:

• Helping to avoid innocent infringement
  
  
• Encouraging patentees to provide public notice that their products are patented
  
  
• Helping the public identify whether a given product is patented

The court reasoned that all three purposes would be undermined if patent owners were not required to ensure that their licensees mark products.

Procedure to challenge marking outside the pleadings

Under the framework set out in Arctic Cat Inc. v. Bombardier Recreational Products, Inc., 876 F.3d 1350 (Fed. Cir. 2017), an alleged infringer has an initial “burden of production” to identify products that it believes are unmarked patented articles. The alleged infringer may raise the issue through a letter identifying potentially unmarked products, such as licensee products alleged to practice a patent claim.

After the alleged infringer meets its burden of production by identifying potentially unmarked products, the patentee bears the burden of proving compliance with § 287 and that the products do not practice the patented invention. If the patentee fails to meet its burden, its damages begin at the point of actual notice to the alleged infringer.

Key takeaways

Patent owners should carefully consider marking requirements when drafting licenses. Patent owners may wish to include express marking requirements in settlement and license agreements and consider reviewing existing licenses for compliance.

When licensees make or sell patented articles, patent owners must make reasonable efforts to ensure that licensees comply with marking requirements. The Federal Circuit did not foreclose the possibility that a licensor could establish reasonable efforts in the absence of a marking obligation but held that VDPP could not do so on these facts. Thus, past licenses without a marking requirement do not necessarily preclude a finding of “reasonable efforts,” but they may warrant careful review and documented diligence.

Alleged infringers should continue to obtain and review prior license agreements to identify potential marking issues. Licenses without marking requirements may warrant closer examination to meet the “reasonable efforts” standard. If a marking issue is discovered, counsel may wish to consider whether to raise it at the pleading stage or through the Arctic Cat framework.