In the world of patents, the stakes can be high, with potential awards reaching into the hundreds of millions, or even billions, of dollars. When a product is covered by a patent, royalties are often paid on each sale. Although it might seem straightforward to determine if royalties should be paid, it’s often more complex.
In one notable case, Frolow licensed his tennis racket technology to Wilson Sporting Goods. This technology involved a specific moment of inertia in the rackets, which could vary based on factors such as stringing and testing methods.
The Case of Frolow v. Wilson Sporting Goods
Wilson sought to dismiss Frolow’s claim via summary judgment, arguing that no reasonable jury would side with Frolow even if all facts favored him. Frolow, however, presented evidence showing that Wilson had marked some rackets with patent numbers associated with the licensed technology throughout the patent’s life. Despite this marking, Wilson hadn’t paid royalties on those rackets. While the district court initially dismissed the case, the Federal Circuit later reversed, finding that Wilson’s marking could serve as evidence of a potential breach of the license agreement.
The Issue of Marking Estoppel
Frolow argued that by marking the rackets with licensed patents, Wilson should be estopped (prevented) from claiming the rackets didn’t fall under the licensed patents. This concept, known as “marking estoppel,” would effectively prevent Wilson from denying that the rackets were covered by the licensed patents, requiring them to pay royalties. While some courts recognize marking estoppel, the Federal Circuit declined to adopt this doctrine, leaving it open to interpretation across different jurisdictions.
Inadvertent Marking vs. Intentional Marking
Wilson contended that any patent marking on the rackets was a mistake. While the Federal Circuit rejected summary judgment, it noted that if it were clear that Wilson had mis-marked the product, summary judgment could have been appropriate. However, Wilson’s long-standing marking practices suggested a genuine dispute, warranting further discovery and trial.
Key Takeaways for Patent Marking
This case underscores the importance of accurately determining whether a product is indeed covered by a patent before marking it or paying royalties. Many companies may pay royalties to avoid the hassle of litigation, especially when profits are strong. But as a product’s success grows, or profit margins shrink, these royalties can become a significant and ongoing burden.
If you have questions about patent marking or royalties, feel free to reach out at (949) 433-0900. As an Orange County Patent Lawyer, I serve Orange County, Irvine, Los Angeles, San Diego, and surrounding areas. Please share this article with anyone who may find it helpful.