Affirming dismissal of a patent infringement complaint and an award of attorneys’ fees, the US Court of Appeals for the Federal Circuit reiterated that a nonpracticing entity (NPE) seeking pre-suit damages cannot disregard its licensees’ obligations under the patent marking statute, and that a pattern of abusive litigation conduct supports an exceptional case finding under 35 U.S.C. § 285. VDPP, LLC v. Volkswagen Group of America, Inc., Case No. 24-2226 (Fed. Cir. Aug. 19, 2026) (Moore, Lourie, Cunningham, JJ.)
VDPP, an NPE, sued an auto manufacturer for infringement of a patent directed to electrically controlled spectacles. The district court dismissed the complaint under Rule 12(b)(6) and denied leave to amend as futile. Because VDPP sought pre-suit damages, it was required to plead compliance with 35 U.S.C. § 287(a), including compliance by its licensees.
VDPP had entered into 11 settlement agreements that included patent licenses, but its proposed amended complaint did not allege that any licensee had marked its products. Instead, VDPP relied on its status as an NPE and asserted that it had no products of its own to mark. VDPP appealed the district court’s dismissal and fee award.
The Federal Circuit affirmed. Although a patentee that does not make or sell patented products may not have products of its own to mark, its licensees remain subject to § 287’s marking requirements. The Court rejected VDPP’s attempt to distinguish licenses granted through settlement agreements, explaining that a settlement license is no different for marking purposes from any other patent license. The Court noted that all 11 settlement agreements were structured as licenses and that one expressly stated that the licensee had no obligation to mark. Because VDPP could not plausibly allege that it made reasonable efforts to ensure compliance by its licensees, the Court affirmed the denial of leave to amend as futile.
The Federal Circuit also affirmed the district court’s exceptional case determination and fee award under § 285. The district court relied on several aspects of VDPP’s litigation conduct, including seeking future damages and injunctive relief on an expired patent, failing to disclose relevant settlement agreements despite being reminded of them, and advancing positions the district court characterized as frivolous.
The Federal Circuit rejected VDPP’s argument that conduct must independently satisfy Rule 11 before it may support an exceptional case finding. It also concluded that the district court properly considered VDPP’s broader pattern of filing patent infringement suits followed by low-value settlement demands, noting that such a pattern is relevant to an exceptional case determination where adequate evidence of an abusive litigation strategy is presented.
The Federal Circuit dismissed the appeal as to sanctions imposed on VDPP’s counsel for lack of jurisdiction. VDPP’s counsel’s notice of appeal listed only VDPP as the appellant, and the counsel’s name appeared only incidentally within a description of the orders being appealed. Corrected notices filed more than 90 days after entry of the orders came too late. The Court also rejected VDPP’s argument that it had standing to contest its own counsel’s sanctions.
Practice note: A patentee seeking pre-suit damages should evaluate marking compliance not only for its own products, but also for products sold by its licensees. That obligation does not disappear merely because the patentee is an NPE or because the licenses arose through litigation settlements.
