U.S. Patent Litigation Basics2011

David A. Kelly

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Before pursuing litigation, you should consider:

• Strength of your case;

• Nature of the remedies available (damages, injunction, exclusion order);

• Costs and length of litigation.

Pre-Suit Considerations

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Where to Enforce a Patent

• District Court – Determines issues of infringement, validity, and enforceability. Remedies include damages and an injunction.

• Int’l Trade Commission – Hears patent cases involving importation of infringing products. Remedy is an exclusion order enforced by Customs and/or a cease & desist order enforceable in district court.

• PTO – May agree to reexamine an issued patent based on prior art, or (under recently-enacted law) review an issued patent based on other grounds as well.

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Commencing Litigation

• Rule 11 – Patentee must perform pre-filing due diligence to ensure it has a reasonable basis for asserting infringement and whether any defenses bar its claims.

• Venue – Patentee can sue anywhere the defendant resides or does business. Factors include speed, convenience, bias, sophistication, etc.

• Complaint – Must include the patent numbers, the owner, the accused products, and the basis for jurisdiction and venue.

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Litigation Phases

• Pleadings – Complaint, Answer/Counterclaim

• Fact Discovery – Documents, Depositions, Interrogs.

• Claim construction – Briefs, Hearings.

• Expert discovery – Reports, Depositions

• Summary Judgment – Briefs, Hearings

• Trial – Infringement, Defenses, Damages

• Post-Trial – Permanent Injunction, Other

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Claim Construction

• Before turning to infringement or invalidity, the court firsts construe the claims in what’s known as a “Markman” hearing.

• The court looks to the intrinsic record, i.e., the claim language, the specification, and the prosecution history.

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Establishing Infringement

1. Direct Infringement

• Defendant made, used, sold, offered for sale, or imported the claimed invention.

• Two types:

• Literal – The accused product is identical to the claims

• Doctrine of equivalents – The accused product performs substantially the same function in the substantially the same way to achieve substantially same results.

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Establishing Infringement

• Indirect (Contributory) Infringement

• Defendant sold, offered for sale, or imported a material component of a patented invention knowing it was especially made or adapted for use in the infringing product.

• An exception is made for the sale of “staple” products, i.e., those that have a substantial non-infringing use.

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Establishing Infringement

• Indirect (Induced) Infringement

• Defendant actively encouraged another to directly infringe the patent.

• Examples of inducement can include marketing, helping implement, or providing support for an infringing use.

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Persons inside the U.S. cannot:

• Provide all or most of the components of a patented invention to an overseas manufacturing facility with the intention of making the patented invention.

• Import into the U.S. a product made overseas using a process patented in the U.S.

Prohibited Foreign Activities

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• Patents are presumed valid.

• Invalidity must be proven by “clear and convincing evidence.”

• Bases of invalidity include:

1. Invention was known, obvious, or not useful;

2. Claims not fully disclosed; and/or

3. Application was filed too late.

Invalidating a Patent

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To be patentable, an invention must be new, non-obvious, and useful:

• Anticipation – Same invention was first made by another or was known or used by others or described in a printed publication before the invention date;

• Obviousness – Invention was obvious to “one of ordinary skill in the art” at the time of the invention;

• Uselessness – The invention has to have a real-world use.

Invalidating a Patent

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The claims must be sufficiently precise and fully described and enabled:

• Indefiniteness – Claims are overly vague or ambiguous;

• Inadequate Description – Specification fails to show that the inventor was in “possession” of the invention;

• Non-Enablement – Specification fails to describe the invention well enough to enable a person of ordinary skill in the art to make and use it.

Invalidating a Patent

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Inventor must file its application within 1 year of the invention being publicly used, offered for sale, or sold:

• Public Use Bar – Invention was used in public or disclosed to a third party without the requirement that the information be kept confidential.

• On-Sale Bar – Invention need not have been reduced to practice, just ready for patenting. Offers to license and licenses typically do not qualify.

Invalidating a Patent

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Other Defenses

– Inequitable Conduct – Patentee failed to disclose and/or misrepresented “material” information with the specific intent of deceiving the PTO.

– Laches – Patentee unreasonably delayed bringing the lawsuit, thereby materially prejudicing the infringer. Bars pre-suit damages only.

– Equitable Estoppel – Patentee misled the infringer into reasonably believing it would not be sued, and the infringer relied on that misleading conduct to its detriment.

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Remedies for Infringement

1. Injunctions

• Permanent – Patentee who prevails at trial may obtain a court order enjoining the defendant from further infringement during the life of the patent.

• Preliminary – In some circumstances, patentee can obtain a pre-trial injunction. Factors include: (1) the likelihood that the patentee will win at trial; (2) relative rights and hardships on the parties, (3) possibility of irreparable harm; and (4) the public interest.

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Remedies for Infringement

2. Money Damages

• Reasonable Royalty – Calculation of how much patentee would have received from the defendant in a hypothetical negotiation. Amount depends upon royalties the patentee charges others, going-rate of similar licenses, defendant’s expected profit, etc.

• Lost Profits – Profits patentee would have made but for the infringement. Patentee must show: (1) no acceptable non-infringing substitutes, (2) product demand, (3) capacity to meet that demand, and (4) detailed calculation of lost profits.

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Remedies for Infringement

1. Other Damages

• Enhanced Damages – Court may order the infringer to pay up to three times the money damages if patentee proves that its infringement was “willful.” Factors include deliberate copying, failure to obtain clearance opinion, litigation misconduct, any remedial actions taken, etc.

• Attorneys’ Fees – May be granted where the patentee prevails and the defendant has willfully infringed the patent and/or litigated in bad faith.

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Limitation On Damages

• To recover money damages, a patentee that makes patented products must mark those products, e.g., with the patent number or a web site that gives notice to the public.

• Failure to mark will limit damages for the time period after the defendant is notified. Marking does not apply to method patents.

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Appeals

• Appeals are taken to the United States Court of Appeals for the Federal Circuit, which applies its own law for patent issues.

• Discretionary appellate review by the Supreme Court of the United States, though this is rare.

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The End

U.S. Patent Litigation Basics