The sole means of enforcing a patent is through litigation. This module focuses on the procedure of patent litigation, various types of patent infringement, defenses to infringement and remedies.
Initiating the Litigation
Federal courts have exclusive subject matter jurisdiction[1] over patent infringement litigation. All patent litigation occurs either in federal district courts or, less frequently, in the International Trade Commission.
In patent litigation in federal district courts, the patent owner – known as the “patentee” – can seek an injunction, basic economic, potentially enhanced damages and attorneys’ fees. The district court chosen for litigation must have personal jurisdiction over the alleged infringer, which requires sufficient minimum contacts with the court’s forum state.[2] Such minimum contacts can be established through a variety of mechanisms, such as the purposeful direction of business activities towards the state or the placement of infringing products in the stream of commerce that reaches the state.
The issue of venue presents a much more significant hurdle for patentees in choosing the appropriate forum. Prior to the Supreme Court’s 2017 TC Heartland decision, a defendant could be sued for patent infringement in any district court having personal jurisdiction over the accused infringer. Because patentees were free to choose the forum, a single pro-patentee district — the Eastern District of Texas — handled more than a third of all patent litigation. In TC Heartland, the Supreme Court significantly narrowed the venue options, ruling that patent lawsuits can be brought only where the alleged infringer resides or has committed acts of infringement and has a regular and established place of business.[3]
Businesses are deemed to “reside” only in their states of incorporation. Thus, since this decision, the District of Delaware has seen an influx of patent litigation because many companies are incorporated in Delaware. Out of a desire to avoid lawsuits in the Eastern District of Texas, many corporations closed their regular places of business in the district, eliminating that district as a potential venue. Judges in the Eastern District have responded with some overly expansive interpretations of what constitutes a “regular and established place of business,” once going so far as to rule that Google’s cache servers in the district, in a space leased from internet service providers, subjected Google to suit in the district.[4] Nevertheless, patent litigation in the Eastern District of Texas has fallen drastically.[5]
In most patent infringement litigation, the local rules or the judge’s own procedures impose requirements that differentiate patent litigation from other types of litigation. For example, the patentee typically must make an early decision regarding which claims are infringed, and the patentee must provide detailed infringement contentions. These contentions are typically part of a claim chart, which contains each element of each claim in the left column and evidence of infringement in the right column.[6] In addition, these contentions must specify which types of infringement are at issue.
Following service of the infringement contentions, the accused infringer must provide detailed invalidity contentions if it wishes to challenge the validity of the patent. Patents can be invalidated for any of the reasons they could have been denied at initial application, including anticipation by prior art, obviousness based on a combination of prior art references, improper listing of inventors and lack of subject matter eligibility. The accused infringer’s invalidity contentions must specify the grounds for invalidity. For any anticipation or obviousness defenses, the accused infringer can provide a claim chart, showing where each element of each asserted claim is found in the prior art.
Stages of Patent Litigation
Patent litigation often hinges on the words used to describe the inventions in each asserted claim of a patent. The judge overseeing each case must make determinations regarding the meaning of each disputed term. To do so, judges typically request a Markman hearing, in which the parties — and often their expert witnesses — educate the judge regarding the technology at issue and explain why certain terms should have a certain meaning. [7]
Parties typically base their proffered meanings on strategic considerations. For example, where infringement is fairly clear, but where the prior art could cause some validity concerns, patentees might propose narrow definitions, while the accused infringers might proffer broad definitions. The evidence used to support these “claim constructions” must focus on the term in the context of the claim language, the use of the term in the description of the patent, and any discussion about the term in the written history of the patent prosecution. After considering all of this “intrinsic” evidence, the judge may also consider “extrinsic” evidence, such as dictionary definitions, treatises and expert testimony.
A few other issues are unique to Markman hearings. First, the words of a patent are generally given their ordinary and customary meaning as understood by a person of ordinary skill in the art in the context of the specification and prosecution history.[8] If the patentee wants to depart from this meaning or simply wants to avoid any controversy during litigation regarding the meaning of a term, the patentee is allowed to act “as his own lexicographer” by clearly setting forth the definition of a term in the patent’s written description.[9]
Second, the concept of prosecution history estoppel can limit the range of definitions that a patentee can provide during litigation. For example, if a patentee argued for a certain meaning of a term during prosecution of the patent, such as to avoid some invalidating prior art, the patentee cannot proffer a broader meaning at the Markman hearing.
Even design patents are subject to claim construction. While the claims of design patents are the figures themselves, the judge must determine whether any of the design features are purely functional.[10] If so, these features should be ignored in any infringement and invalidity analyses.
As in other litigation, patent infringement lawsuits include discovery periods, which can be the most time consuming and expensive aspect of the lawsuit. Each party is allowed to serve broad interrogatories, request broad categories of relevant documents and depose up to ten witnesses. Patentees typically depose those people responsible for the development of the allegedly infringing products, often trying to find evidence of intentional copying of the patented invention. Patentees can also build their damages cases with information learned during the discovery phase. Accused infringers often depose the inventors of the patent, hoping to obtain testimony that would be useful in a Markman hearing, and also hoping to find evidence of improper inventorship or prior art that was intentionally withheld during prosecution of the patent.
Following the fact discovery phase, the parties engage in expert discovery, which is essential for motion practice and trial. In most patent cases, patentees hire technical experts to provide detailed infringement reports, and accused infringers hire technical experts to write detailed invalidity reports. In addition, accused infringers typically hire damages experts to prepare reports detailing the bases and amounts of all claimed damages. Finally, each parties’ technical experts can provide rebuttal reports to the other sides’ experts. The expert witnesses are then deposed, and their testimony and reports are used in drafting dispositive motions.
Once discovery is over, each side can move for summary judgment as with all litigation. Assuming that the dispositive motions do not end the case, patent litigation proceeds to trial, for which there is the same right to trial by jury as in other civil litigation. Patent litigators and expert witnesses must therefore be uniquely skilled at comprehending the complex technology and presenting it to lay jurors in an understandable fashion. This process starts as early as voir dire, and the opening statements are vital. Graphics and other demonstratives also play key roles. At the close of evidence, the parties might move for judgment as a matter of law.[11] If they are unsuccessful, the judge will instruct the jury and the jury will render its determination of all factual issues, including those pertaining to infringement, invalidity and damages.
Parties to patent litigation can appeal the trial verdict to the Federal Circuit Court of Appeals. It is not uncommon to have cross-appeals, such as the accused infringer appealing an infringement finding and the patentee appealing the amount of damages. Appeals often drag on for years, and cases are often remanded to the district court following appeal and partial or full reversals. As a consequence, some patent cases involve outdated technology by the time they are ultimately resolved.
Types of Infringement
The most common type of patent infringement is referred to as literal infringement, which means that every element of an asserted claim is in the accused product. For example, suppose a patent claim covers a vehicle with an internal combustion engine, two doors and four wheels. To literally infringe, an accused product must be a vehicle with an internal combustion engine, two doors and four wheels.
Without literal infringement, an accused infringer can also be liable for infringement by equivalence. If some claim elements are not literally present in the accused product, the Doctrine of Equivalents provides that there can still be infringement if the accused product has an element that is substantially equivalent to the missing element. For example, if the vehicle lacked an internal combustion engine, but instead had an electric engine, there could still be infringement. Traditionally, the patentee would have to prove that the substitute element performs the same function in substantially the same way to achieve substantially the same result.
This “function-way-result” test is still used, although recent cases have applied an “insubstantial differences” test for the Doctrine of Equivalents. This test provides that the entire accused product must be substantially similar to the product described in the patented claim.
One interesting twist regarding the Doctrine of Equivalents is known as “prosecution history estoppel.” If a claim was narrowed during prosecution to avoid the problem of some prior art, the patentee may be “estopped” from asserting the Doctrine of Equivalents, as allowing this broad rule to apply to shifting patent claims could be unfair to other users.[12]
Patent infringement can also be categorized as either direct or indirect. Direct infringement is the most common, and it occurs when a person or entity makes, uses or sells a patented invention within the United States, or imports a patented invention into the United States. Indirect infringement means inducing someone else’s direct infringement or contributing to direct infringement.
Induced infringement occurs when someone knowingly aids and abets direct infringement by another.[13] This requires knowledge that the induced acts constitute patent infringement.[14] The inducer must know that the patent existed or must have been willfully blind to its existence. For example, suppose a Canadian manufacturer obtains a product marked with a U.S. Patent number, copies that product and sells it to an American company, knowing that it will be resold in the United States. Even though the Canadian manufacturer did not directly infringe the patent in the U.S., it could be liable for induced infringement if the American company is liable for direct infringement.
Contributory infringement occurs when a party gives away or sells a component of a patented combination constituting a material part of the invention, knowing that the component was made or can be adapted for use in the infringement of the patent.[15] As with induced infringement, the accused infringer must have knowledge of the patent. Contributory infringement does not apply where the component is a staple article of commerce suitable for non-infringing use. For example, a semiconductor manufacturer selling Apple-specialized chips for iPhones could be liable for contributory infringement of a patent claiming a mobile phone with those chips. But the manufacturer of an AA battery would not be liable for contributory infringement of a patent claim requiring a battery.
Defenses to Infringement
Accused infringers raise the same two defenses in nearly every patent infringement action — non-infringement and invalidity. The patentee bears the burden of proving infringement[16] by a preponderance of the evidence, so the patentee must show that it is more likely than not that there is an infringement. Accused infringers, of course, try to establish that it is more likely than not that there is no infringement.
Patents issued by the USPTO are presumed valid, and accused infringers bear the burden of proving invalidity by clear and convincing evidence.[17] The most common invalidity defenses are anticipation, where a single prior art reference discloses all elements of a claim and obviousness, where multiple prior art references are combined to cover all elements of the patent. To establish an obviousness defense, the accused infringer must prove that, assuming knowledge of the prior art, the claimed invention would have been obvious to persons having ordinary skill in the art at the time of the invention.
Patents can also be invalidated for lack of subject matter eligibility. For example, patent claims covering a law of nature, mathematical equations or certain methods of organizing human activities are invalid.[18]
A patent can also be invalidated if the inventorship listing is improper.[19] Each listed inventor must have made a significant contribution to the conception of at least one of the claims of the patent. In addition, no person who made such a contribution may be omitted.
Finally, certain equitable defenses apply to patent claims. For example, a patent can be rendered unenforceable if the accused infringer establishes, by clear and convincing evidence, that the inventor failed to supply material information to the Patent Office, or supplied false information, with the intent to deceive the Patent Office. The failure to disclose known, relevant prior art often forms the basis for an inequitable conduct defense.
Equitable estoppel is another defense to patent infringement. Equitable estoppel occurs when the patentee communicates something to the infringing party that indicates no infringement or that the patent will not be enforced, and the infringing party relies upon the communication.[20] For example, if a patentee, during negotiations with the alleged infringer, said that she would refrain from enforcing the patent if the infringer limited the scope of marketing the new product and the infringer did limit the marketing scope, the patentee may be estopped from enforcing it. This is true even if there was no binding contractual agreement on this point.
Remedies
A patentee who prevails on a claim for patent infringement is entitled to damages of at least a reasonable royalty. Damages experts propose royalty rates based on the factors set forth in the Second Circuit Georgia Pacific case,[21] which include past royalty rates for similar patents, the nature and scope of the license, the commercial success of the product and other factors.
The patent owner can alternatively seek its lost profits, which are the profits the owner would have obtained but for the infringement. The infringer can defend against a claim for lost profits by establishing that there were available non-infringing substitute products on the market that could have been used to generate the same profits.[22] In addition, a design patent owner can seek the profits made by the infringer of any article of manufacture that is covered by the design patent.[23]
A prevailing patentee can also seek injunctive relief, prohibiting the infringer from practicing using the patent in the future. Operating companies that compete against an infringer can typically obtain permanent injunctions, whereas non-competitors and non-practicing entities are generally not entitled to injunctive relief.[24]
A patentee can obtain enhanced damages if it establishes willful infringement by proving, by a preponderance of the evidence, that the infringer engaged in egregious activity beyond typical infringement.[25] The judge has the discretion to enhance damages up to three times the amount determined by the jury.[26]
Finally, in exceptional cases, the prevailing party is entitled to recover attorneys’ fees from the losing party.[27] A case is exceptional if it “stands out from others with respect to the substantive strength of a party’s litigation position or the unreasonable manner in which the case was litigated.”[28]
[1] https://www.law.cornell.edu/wex/subject_matter_jurisdiction
[2] International Shoe Co. v. Washington, 326 U.S. 310 (1945)
[3] TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1517 (2017).
[4] SEVEN Networks v. Google, 315 F. Supp. 3d 933, 947 (E.D. Tex. 2018).
[5] https://lewisbrisbois.com/blog/category/intellectual-property-technology/patent-litigation-trends-in-the-wake-of-tc-heartland
[6] https://www.upcounsel.com/claim-chart
[7] Markman v. Westview Instruments, 517 U.S. 370 (1996); https://www.upcounsel.com/markman-hearing
[8] Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005).
[9] CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002).
[10] Sport Dimension, Inc. v. The Coleman Company, Inc., 820 F.3d 1316, 1320 (Fed. Cir. 2016).
[11] Fed. R. Civ. P. 56
[12] UCB, Inc. v. Watson Laboratories Inc., 927 F.3d 1272 (Fed. Cir. 2019)
[13] 35 USC § 271(b)
[14] Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766, 131 S. Ct. 2060, 2068 (2011)
[15] 35 USC § 271(c)
[16] Medtronic, Inc. v. Mirowski Family Ventures, L.L.C., 571 U.S. 191 (2014)
[17] Microsoft Corp. v. 141 Ltd. P’ship, 564 U.S. 91 (2011)
[18] https://www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.pdf
[19] https://www.uspto.gov/web/offices/pac/mpep/s2157.html
[20] 35 U.S.C. § 282; Gasser Chair Co. v. Infanti Chair Mfg. Corp., 60 F.3d 770 (Fed. Cir. 1995)
[21] Georgia-Pacific Corporation v. United States Plywood Corp., 446 F.2d 295 (2nd Cir. 1971)
[22] Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978).
[23] 35 U.S.C. § 289.
[24] https://ilr.law.uiowa.edu/assets/Uploads/ILR-101-5-Seaman.pdf
[25] Halo Electronics Inc. v. Pulse Electronics Inc., 118 USPQ2d 1761 (U.S. 2016)
[26] 35 USC § 284
[27] 35 USC § 285
[28] Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).