Making Your Mark

Most of you reading this piece have an opinion about patents. Many see patents as an opportunity for a pharma entity to protect a valuable R&D spend against direct competitors. There are two key elements at play. First, the patent must be broad enough to cover the commercial embodiments and infringing activities. Second, the patent must be “valid,” in light of the “prior art” that existed at the time of filing of the patent application.

Since the US is known to present the greatest opportunity for (or threat of) damages – often in the millions of dollars or more – let’s begin with US litigation. Damages are calculated using a wide array of formulae guided by experts. However, what really matters is the time over which the infringement occurred. Infringement occurs when the infringer starts making, using, selling, offering for sale, or importing into the US. This can result in a relatively lengthy period of infringing activity, especially in the area of pharma with notoriously lengthy research and production timelines.

If your pharma entity wins, you’ll want the largest quantum. What you may not know (and might be surprised to learn) is that the increase in quantum will depend on the practices of the patent owner, not the infringer.

A game-changing intellectual property law that is relatively infrequently used is Virtual Patent Marking (VPM), found in 35 U.S.C. 287(a). When the savvy pharma entity patent owner builds and maintains a compliant VPM program, they can use and rely on it to maximize the period for calculating damages.

The option to use a virtual form of patent marking was enacted in the US in 2011 when 35 U.S.C. §287 was amended. This change enables patent owners to use an Internet URL as evidence of “constructive notice” to the public, with patented articles providing a link to the URL. This also lets the public find patents associated with the patented articles. Updating the VPM listing is easier and updating happens in real time. Assuming the product is marked with the URL, the clock on constructive notice starts as soon as the VPM link is updated, which means that damages start running as soon as the infringer starts infringing, even before the patent owner discovers the infringement or sends an actual notice letter.

Some discipline is needed. The VPM listing must be up to date and freely accessible to the public, without cost or other access requirements, and generally not prone to outages. The marking on the products must be demonstrably substantial and continuous. 

How does a pharma patent owner take advantage of VPM? Typically, the patent owner notifies an infringer by communicating information about the patent and articulating how the infringer infringes the patent. This infringement communication is usually via a cease and desist letter or filing of a complaint. The date the infringement is communicated to the infringer establishes an “actual notice date.” Without VPM, this actual notice date is the earliest date from which to start calculating damages.

In the US, a patent owner can claim damages for up to six years prior to the actual notice date. With VPM, damages can reach back to and start from the constructive notice date, up to six years earlier than the later actual notice date. It is thus well worth the effort of maintaining a VPM program to secure the earliest constructive notice date, such as by the use of a VPM compliance platform.

In other countries, there are differences and it’s important to do your research. In the UK, for example, webmarking notifies a potential infringer that a product is patented, and therefore webmarking mitigates against the “innocent infringer” defence. This is relevant because UK courts cannot award money damages against an innocent infringer (in other words, someone who at the date of the infringing act was not aware and had no reasonable grounds for supposing that the patent existed).

Even without incurring the costs made famous by US litigation, a prospective licensee may be persuaded of the value in a higher licensing rate, where a verifiably compliant VPM-backed patent portfolio provides added perceived value in a patent licensing market.

Thus, the benefits and value of an early constructive notice date are extensive. To those of you who see a chance at capitalizing on your groundbreaking pharma technology, covered by strong patent protection, you owe it to yourself to learn more about VPM as a game changer to leverage the value provided by early constructive notice.  

This article should not be construed as legal advice or legal opinion on any specific facts or circumstances. This article reflects only the personal views of the authors and not the views of the authors’ firms. Consult your patent professional regarding your specific questions.