Patent settlements are usually negotiated to end a particular dispute. But the Federal Circuit’s decision in VDPP, LLC v. Volkswagen Group of America, Inc. illustrates why their consequences may extend well beyond the defendant receiving the release or license. A settlement that authorizes continued sales of products covered by the patent can affect whether the patent owner later recovers damages from entirely different defendants.
That makes patent marking more than a manufacturing issue. For companies that license, enforce, acquire, or monetize patent portfolios, compliance with 35 U.S.C. § 287 can become part of settlement strategy, ongoing license administration, and portfolio diligence. The Federal Circuit did not hold that every patent settlement requires a marking provision. It did, however, make clear that calling an agreement a “settlement” does not insulate the resulting licensed sales from the marking analysis.
A Settlement With One Company Can Affect Damages Against Another
VDPP sued Volkswagen in 2023 for infringement of U.S. Patent No. 9,426,452. Although the patent principally concerns electronically controlled spectacles for viewing three-dimensional video, one claim more broadly covers technology for combining images from multiple video streams. VDPP alleged that Volkswagen’s surround-view camera system infringed that claim.
The dispute over damages arose from VDPP’s earlier enforcement activity. Before suing Volkswagen, VDPP had entered into eleven settlement agreements licensing the same patent to other companies. VDPP nevertheless sought damages from Volkswagen for infringement occurring before Volkswagen received actual notice through the lawsuit.
Section 287 generally limits pre-suit damages when patented articles are sold without appropriate patent marking. VDPP argued that the restriction should not apply because it was a non-practicing entity and therefore sold no products of its own that could have been marked. The Federal Circuit rejected that framing. The relevant inquiry was not limited to VDPP’s own manufacturing activity. VDPP had authorized licensees to continue making, using, and selling products that VDPP itself contended practiced the patent.
That distinction carries a significant commercial consequence. A patent owner cannot necessarily separate its settlement program from its later damages strategy. Transactions resolving earlier cases can create facts that determine whether constructive notice exists in subsequent enforcement.
The Federal Circuit Looked to What the Agreements Authorized, Not What They Were Called
VDPP attempted to distinguish its earlier agreements from conventional commercial patent licenses because they resulted from settlements. The Federal Circuit found the distinction unpersuasive.
The court relied on TransCore, LP v. Electronic Transaction Consultants Corp., which treats a patent license in functional terms as an agreement by the patent owner not to exercise its exclusionary patent rights against specified conduct. VDPP’s settlements permitted the counterparties to continue making, using, and selling licensed products. The fact that those permissions were negotiated to resolve litigation did not change their significance for § 287.
The licensees’ refusal to admit infringement did not solve the problem either. VDPP continued to maintain that their products infringed. Drawing on Lubby Holdings LLC v. Chung and Amsted Industries Inc. v. Buckeye Steel Castings Co., the Federal Circuit focused the notice inquiry on the conduct of the patent owner rather than the alleged infringer’s subjective view of whether its products were actually covered.
The practical point is broader than patent terminology. When evaluating the downstream consequences of a settlement, substance matters more than the document’s label. An agreement drafted primarily as a litigation resolution can simultaneously operate as an ongoing authorization affecting later patent remedies.
Marking Becomes a License-Administration Issue
The decision does not establish a categorical requirement that every patent settlement contain a marking clause.
Under Arctic Cat Inc. v. Bombardier Recreational Products Inc., a patent owner seeking the benefit of constructive notice must make reasonable efforts to ensure compliance by licensees. VDPP’s difficulty was that its proposed allegations addressed only its own status as a non-manufacturer. They did not identify marking by its licensees or reasonable efforts by VDPP to secure their compliance. One settlement reportedly went further by expressly providing that the licensee had no marking obligation.
The Federal Circuit therefore left room for patent owners to establish reasonable efforts without placing a particular clause in every agreement. But that flexibility makes the transactional question more important, not less: if a later defendant challenges constructive notice, what evidence will show that the patent owner reasonably addressed marking by authorized sellers?
For settlement and licensing strategy, that question can affect how agreements address matters such as identification of licensed products, patent-marking obligations, cooperation as product lines change, and documentation of compliance efforts. The appropriate mechanism will depend on the transaction, but the objective is to avoid discovering years later that an earlier settlement created a gap in the damages case.
Historical License Terms Can Become Part of Patent-Portfolio Value
The same reasoning matters outside active litigation.
A company acquiring or licensing a patent portfolio may naturally investigate ownership, prosecution history, validity risks, prior litigation, existing encumbrances, and revenue-generating licenses. VDPP shows why prior settlement agreements and their administration can deserve similar attention. If earlier licensees sold products the patent owner considered covered by the patents, their marking practices and the licensor’s efforts to obtain compliance may affect the damages available in future enforcement.
That risk can become particularly important after a patent expires. Actual notice can ordinarily establish a damages period prospectively when constructive notice is unavailable. Once the patent has expired, however, there can be no new post-expiration infringement period. A later enforcement action may therefore depend heavily on whether the patent owner can establish constructive notice during the historical damages period.
For portfolio transactions, this means that the economic value of enforcement rights may depend partly on agreements negotiated long before the current transaction. A settlement file that appears to document only how an old case ended may also contain information bearing directly on the value of claims against future defendants.
Settlement Strategy Should Account for the Next Case
The most useful lesson from VDPP v. Volkswagen is not that every patent settlement needs the same marking language. The Federal Circuit expressly stopped short of creating such a rule. The larger lesson is that patent settlements should be evaluated as part of a continuing enforcement and commercialization strategy rather than as isolated resolutions of individual disputes.
A settlement may determine who can practice patented technology, on what terms, and in which markets. VDPP adds another dimension: authorized sales under that agreement may later influence the remedies available against companies that were never parties to it.
For patent owners, that makes § 287 compliance a matter connecting litigation strategy, licensing, contract administration, and portfolio management. For purchasers and licensees evaluating patent assets, it makes settlement history part of meaningful enforcement diligence. The commercial value of a patent depends not only on the rights written into the patent itself, but sometimes on how those rights were exercised and administered years earlier.