The Federal Circuit affirmed-in-part and dismissed-in-part the Southern District of Texas's dismissal with prejudice of VDPP, LLC's patent infringement suit against Volkswagen Group of America, Inc. concerning U.S. Patent No. 9,426,452 (relating to electrically controlled spectacles), as well as the district court's award of attorney fees under 35 U.S.C. § 285 and sanctions against VDPP's counsel William Peterson Ramey III. The court held that the district court did not abuse its discretion in dismissing VDPP's complaint without leave to amend on futility grounds because VDPP's proposed amended complaint failed to plausibly allege compliance with 35 U.S.C. § 287's marking requirement by VDPP's eleven licensees under prior settlement agreements. The court rejected VDPP's argument that settlement licenses requiring no admission of infringement escaped § 287's marking obligations, holding that such licenses are substantively indistinguishable from standard patent licenses and that the licensees' subjective views of infringement are irrelevant. The court also affirmed the § 285 attorney fee award based on VDPP's pattern of frivolous positions, procedural errors, and nuisance-value settlements, concluding that such conduct need not independently violate Rule 11 to support a fee award under Octane Fitness's totality-of-circumstances standard. The court dismissed for lack of appellate jurisdiction VDPP's challenge to Ramey's personal sanctions because Ramey's notices of appeal listed only "Plaintiff VDPP, LLC" as appellant and failed to specify Ramey as a party taking the appeal under Federal Rule of Appellate Procedure 3(c)(1)(A).
The decision clarifies that patentees seeking pre-suit damages must affirmatively plead reasonable efforts to ensure licensee compliance with § 287's marking requirements, even for settlement licenses where accused infringers deny infringement. The Federal Circuit rejected any categorical exception for settlement-based licenses, relying on TransCore to treat covenants not to sue and licenses identically and on Lubby Holdings to focus § 287 analysis on patentee conduct rather than infringer knowledge. This imposes a substantial pleading burden on non-practicing entities that monetize patents through serial litigation and settlement, particularly where settlement agreements—as here—expressly disclaim marking obligations or were structured to minimize licensee compliance burdens. The court's willingness to affirm § 285 fee awards based partly on litigation patterns and low-value settlement demands, while reaffirming that such factors alone are insufficient under SFA Systems and Thermolife, signals closer scrutiny of business models centered on nuisance-value settlements when coupled with other indicia of unreasonable conduct. The jurisdictional dismissal of Ramey's sanctions appeal underscores the strict application of Rule 3(c)(1)(A)'s party-specification requirement in cases involving joint and several liability, where the notice's reference to a sanctioned attorney within a list of appealed orders was insufficient to manifest appellate intent on the attorney's own behalf under Torres and Fifth Circuit precedent in Batiste.