## Facts

- Craig H. Cover owned U.S. Patent No. 4,605,992 covering a lighting-fixture insulation batt used to protect wiring from heat.
- Cover granted Pacor, Inc. an exclusive license to commercialize the patented product.
- Pacor supplied insulation units to Sea Gull Lighting, Inc., but the units were not marked with the patent number as required by 35 U.S.C. § 287(a).
- Sea Gull later provided Hydramatic Packing Co., Inc. with drawings and specifications, and Hydramatic manufactured insulation units to Sea Gull’s specifications (1988–1993).
- Cover sent Hydramatic a cease-and-desist letter (June 1989) and later wrote Sea Gull warning that purchasing from Hydramatic violated the patents (October 1989).
- Cover sued Sea Gull for direct infringement and Hydramatic for contributory infringement; both defendants settled with Cover (Sea Gull: $75,000; Hydramatic: $175,000).
- After settlement, only Hydramatic’s cross-claim against Sea Gull remained: indemnification under Pennsylvania’s UCC § 2-312(3), 12 Pa. Cons. Stat. § 2312(c), for Hydramatic’s settlement payment.
- The district court held the state-law indemnification claim was preempted by federal patent law based on 35 U.S.C. § 287(a), and entered judgment for Sea Gull.

## Issues

1. Whether 12 Pa. Cons. Stat. § 2312(c) (UCC § 2-312(3)) indemnification for a “rightful claim” of patent infringement is preempted by federal patent law, including the damages limitation and notice regime of 35 U.S.C. § 287(a).
2. Whether allowing indemnity between commercial parties after the patentee has been paid conflicts with the objectives of § 287(a).

## Decision

- The Federal Circuit reversed and remanded.
- The court held Pennsylvania § 2312(c) was not preempted by the Patent Act.
- The court concluded there was no express or field preemption, and no conflict preemption because § 287(a) regulates only what a patentee may recover from an infringer, not loss allocation between buyer and seller after settlement.
- Each party was ordered to bear its own costs.

## Legal Principles

- Federal preemption occurs through express preemption, field preemption, or conflict preemption (impossibility or obstacle to federal objectives).
- 35 U.S.C. § 287(a) limits a patentee’s ability to collect damages for unmarked patented articles to infringement occurring after the infringer receives notice; it governs the patentee–infringer damages relationship.
- UCC § 2-312(3), as enacted in Pennsylvania at 12 Pa. Cons. Stat. § 2312(c), permits indemnification for a “rightful claim” of infringement in certain buyer–seller transactions unless otherwise agreed.
- State commercial indemnification rules are not preempted merely because they involve patented subject matter; preemption requires a direct conflict with the federal patent scheme.
- An indemnity claim shifting a settled loss between defendants does not enlarge the patentee’s recovery and therefore does not frustrate § 287(a).

## Conclusion

The Federal Circuit held that Pennsylvania’s UCC-based indemnification claim could proceed because it allocates loss between commercial parties after the patentee has been satisfied and does not alter the patentee’s federal damages limits under 35 U.S.C. § 287(a).


Cover v. Hydramatic Packing Co., 83 F.3d 1390 (Fed. Cir. 1996)