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Patent Litigation: Everything You Should Know

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patent litigation

What is Patent Litigation?  

Patent litigation is a legal procedure in which one party sues another for unauthorized use of a patent. In the court of law, a patent holder may sue a company or an individual for financial damages and an injunction against infringement. By all means the patent holder must file a lawsuit within six years of the infringement date. 

Why Is Patent Litigation Necessary? 

Patent litigation is essential for defending your patents against violations or infringement. Even if you have a patent, you are not always safeguarded from infringement. With patent litigation, you can sue another party if you believe they have used your patent without your permission or licensing. Patent litigation, on the other hand, takes time and money.  

If you are involved in patent litigation, the court can impose a variety of penalties, the most common are: 

Actual losses 

  • Profits lost as a result of infringement 

Payment of royalties for unauthorized use

  • These are determined by the time remaining on the patent, the type of product, and other royalties’ agreements

Costs 

  • Fees for filing in court 
  • Litigation costs 
  • Lawyer’s fees 

The International Trade Commission can issue an exclusion order

Negotiated Settlement 

  • If the patent owner works with a top-tier law firm, they may be able to reach an agreement. Instead of the courts deciding the penalty, attorneys decide how much is owed to the plaintiff. Generally, 70% of cases are resolved within a year of filing. Only 4% of cases are resolved in court. As a result, negotiated settlements are the most common outcome of patent litigation 

Mediation (Arbitration)  

  • A plaintiff litigator can compel the defense to accept intervention or mediation to resolve the dispute. This usually results in a settlement rather than a trial 
  • Arbitration clauses can be enforced in US courts 
  • Arbitration cases can only be reviewed by appellate courts. However, private organizations frequently do the same thing 

In addition to costs and penalties, you may seek a preliminary or permanent injunction. A permanent injunction inhibits the infringer from producing more of the allegedly infringing product. A preliminary injunction is issued at the start of a case. It can only be granted if: 

  • Based on the evidence, the plaintiff has a good chance of winning the case 
  • If the infringing product is still manufactured, the patent holder must demonstrate financial hardship 
  • There is no harm to public opinion or interest 

Preliminary injunctions are uncommon. It becomes easier, however, if there is a prior case that established patent validity. Plaintiffs do not receive monetary settlements from injunctions. 

A Basic Overview of Patent Litigation 

There are two types of patent litigation laws: 

In most cases, patent litigation is limited to federal laws. Typically, states are only concerned with patent ownership and contractual law. 

Patent litigation is handled by federal district courts at the federal level. Their responsibilities include the following: 

  • Constitutional interpretation 
  • Defining federal statutes 
  • If necessary, making laws 
  • Making use of the Federal Rules of Civil Procedure 
  • Using Federal Rules of Evidence 

The two main governing bodies are the United States International Trade Commission (USITC) and the United States Patent and Trademark Office (USPTO). Particularly, patents are examined and issued by the USPTO. The Patent Trial and Appeal Board (PTAB) governs inter partes (between parties) proceedings within the USPTO. Patents are enforced by the USITC at borders and ports of entry. 

Both organizations operate under their own set of rules and are subject to federal regulations. The Manual for Patent Examining Procedure and Title 37 of the Code of Federal Regulations are examples of internal rules. These regulations establish the procedures and rules for patent examination. 

Precedence Order  

In patent litigation, the following rules take precedence: 

  • The United States Constitution 
  • Federal statutes and regulations  
  • Legal Cases  

In the context of patent law: 

  • United States Supreme Court  
  • The Court of Appeals for the Federal Circuit 
  • The regional circuit’s federal district courts  
  • Federal district courts that are not part of the regional circuit  
  • Administrative bodies’ decisions and rules 

To begin with, each patent litigation case is heard by the Federal Circuit Court of Appeals (CAFC). Some may go all the way to the United States Supreme Court. Currently, the United States lacks a court dedicated to patent litigation. Thus, each case is then left to the experience and discretion of a federal judge. Infringement and validity are dealt with by both the ITC and federal courts. Inter partes review only addresses validity. When dealing with an inter partes case, litigants can request the federal court for a stay of action. 

A stay of proceedings can be issued in the following circumstances: 

  • Both parties agree to hold settlement talks 
  • Re-examination or a post-grant review is required 
  • A non-final judgment is being appealed 

Patent claims cannot be amended in court. However, in USPTO proceedings or post-grant cases, a party may amend patent claims. There are patent amendment claims available: 

  • If you want to correct a mistake without deception
  • If you want to broaden the scope of the patent, this must be completed within two years of the filing date
  • During requests for re-examination
  • During post-grant inter partes and ex partes USPTO proceedings, such as inter partes reviews (IPRs), covered business method reviews (CBMs), and post-grant reviews (PGRs). However, PGRs and IPRs cannot be conducted if an invalidity allegation is made during: (i) Patent infringement acts, (ii) Proceedings under ITC Section 337, (iii) Detailed invalidity bases in new drug/pharmaceutical cases 

Patent claims may also be unenforceable due to the following reasons: 

When obtaining the patent, if there was a fraud (unequitable behavior) 

  • This is a violation of US law by patent holders of good faith 
  • To establish unfair conduct, the defense must demonstrate that the patent holder omitted information from its claim in order to deceive the USPTO 
  • To protect against this behavior, the patent holder can use an explanation of the claim 
  • The information provided during a supplemental examination of the claim is invalid 

Patent misuse  

  • This includes both antitrust and anticompetitive behavior 
  • Arrangements that link patent licensing to an unrelated product 
  • Licenses that necessitate post-expiration royalties, as well as poor packaging 

Unreasonable delay in filing a lawsuit against the infringer (laches and equitable estoppel) 

  • When the patent holder deceives the infringer through statements, actions, silence, or inaction 

Who Has the Right to Sue or Be Sued for Patent Infringement? 

The following parties are eligible to sue for patent infringement: 

  • Patent holder 
  • As a party to the patent, the exclusive licensee 
  • Patent co-owners  

Distributors, and non-exclusive licensees are not permitted to file patent infringement claims or pursue patent litigation. 

Patent infringement lawsuits can be filed against the following parties: 

  • Anyone who sells, manufactures, uses, or imports an infringing product 
  • Contributes to the above acts 

Even if employees are liable for infringement, company directors are not personally liable. Infringement is only considered in court if and only if the following conditions are met: 

  • They are aware of patent infringement, either directly or indirectly 
  • They have willful blindness, which means that the infringer took measures to avoid learning about the patent or that the defendant believes such a patent exists 

During a case, the courts can add or remove suing or sued parties. The America Invents Act (AIA) prohibits cases in which all parties are one defendant unless: 

  • Both accused infringers are liable 
  • All defendants face factual questions 

What Are the Different Kinds of Patent Infringement? 

The federal court equates the infringing product with the patent claims to determine patent infringement. The following are the different types of patent infringement: 

  • Literal infringement: Occurs when there is a direct link between the words in the patent claim and the infringing product 
  • Contributory Infringement: Occurs when a third party provides the infringer with a part that serves no purpose other than to create an infringing product
  • Willful Infringement: The deliberate disregard of another company’s patent. In effect, a direct copy of a patent is included. It also includes the continuation of production following an infringement notice
  • Direct infringement: Occurs when another company manufactures a patented product without permission
  • Indirect Infringement: Occurs when a company or individual assists a third party in developing a patent-infringing product 
  • Doctrine of Equivalents: Even if a product does not infringe on another patent, it may still be subject to this doctrine. According to this doctrine, a product infringes on a patent if it performs the same task in the same way to achieve a similar result. There are some limitations to the doctrine of equivalents:
    -Estoppel based on prosecutorial history: It cannot be used to reclaim information given up obtaining patents
    -The doctrine is not applicable under the “all elements” rule if one constraint is not present in the alleged product
    -The doctrine cannot be used to broaden the scope of a claim
    -The doctrine cannot be invoked to invalidate a claim limitation
    -It cannot be used to remove functional constraints that the public requires to avoid infringement 

What Happens If I’m Sued for Patent Infringement? 

You have several options if you are sued for patent infringement. With this in mind the most common reason is that the patent is invalid. A patent is invalid if and only if the following conditions are met: 

  • The defendant can show that the patent did not meet the non-obviousness and novelty requirements. A patent must possess both of these characteristics to be valid: (i) The invention is novel if it is new, (ii) The term “non-obviousness” refers to the fact that the patent cannot be an obvious improvement or variation on an existing invention
  • On the USPTO application, the patent holder provided false information
  • The patent was the result of anticompetitive business practices
  • The subject matter is not patentable
  • It has no utility
  • There is a lack of enablement or description
  • Claims are perpetual 

Conducting an invalidity search is not a difficult task in today’s technologically advanced world. XLSCOUT’s AI-powered patent invalidity search tool combines intelligent patent parameters such as classification, citations, assignees, and so on with natural language processing (NLP) models to generate a quick patent invalidity search that uncovers results based on contextual and expert parameters. 

Even after the AIA, the following defenses are available for patents filed prior to March 16, 2013: 

  • The invention had been used or sold in the United States for more than a year prior to the date of the patent application
  • The patent was revoked
  • The subject matter of the patent claim was not invented by the inventor
  • The invention was made in the United States prior to the date of the invention of the most recent inventor
  • The claimed invention was patented for more than a year outside the United States before being filed in the United States 

If you are sued for patent infringement, the burden of proof is on the plaintiff. This means they will have to present additional evidence to demonstrate you infringed on the patent. Under the AIA, other defenses include antitrust concerns and prior commercial use. 

Following the AIA, for all patents filed after March 16, 2013, the following defenses are available: 

  • The plaintiff claimed the invention from someone else who applied for a patent within one year of it being issued
  • Prior art is expanded to include the fact that the patent is in public use or defined in a publication
  • Prior to filing, it is for sale to the general public
  • Described in a patent application that has been published 

The AIA also provides a one-year grace period for inventor disclosures 

Insurance for Patent Litigation 

A party involved in, or contemplating litigation may purchase patent litigation insurance. It covers the risk of litigation arising from a patent or family of patents and is also known as “After the Event (ATE)” insurance. Both the defendant and the plaintiff can purchase patent litigation insurance for prosecution or defense purposes. Patent litigation insurance should not be confused with intellectual property (IP) insurance. Intellectual property insurance protects patent owners before litigation begins. 

Patent litigation includes: 

  • Legal fees that a party may incur during a lawsuit 
  • Costs if the lawsuit is unsuccessful 
  • Costs in a “loser pays cost” ruling. This is referred to as a “security for costs” ruling

Because of how it is paid, patent litigation insurance is unique. When it comes to premium payment, there is always some leeway. Payment time examples include: 

  • The premium is only payable if the case is successful. A contingent, deferred, or self-insured premium is another name for this. This enables parties to obtain patent litigation insurance without first having the funds to do so. 
  • The premium is paid up front or when the policy is purchased. The benefit of this payment is that the upfront cost is usually less than that of a deferred payment. It is also advantageous if the case involves an injunction rather than monetary damages. 

One issue with patent litigation insurance is that just a few law firms are capable of providing it. Policy formulation is a difficult task. It must have a seemingly infinite number of patent-related situations. Different industries necessitate different policies. Pharmaceutical policies, for example, differ greatly from engineering or technology patent policies. 

What Should I Expect in a Civil Case? 

Both parties present written submissions about juries and documentary evidence before the case goes to court. You can expect the following when you appear in court: 

Presentation of evidence to the judge and jury 

  • The Federal Rules of Evidence must be followed by all evidence 

Arguments for the beginning and end 

Witnesses’ live testimony 

  • A witness can be questioned by both parties 

Documents and physical evidence are admitted 

Expert evidence 

  • Experts are chosen before the trial to explain financial issues, infringement, and patents. The expert can only testify in the area of his or her expertise. This evidence can be used or rejected by the jury or judge. A court or judge may select the experts for a case 
  • Markman hearings: This is the stage at which a judge examines the physical evidence of both parties 

A jury decides on financial damages, infringement, and the patent’s novelty and obviousness. Cases are decided by judges based on claim construction and inequitable conduct. 

In civil cases, the pre-trial issues are numerous. They must both make initial disclosures (findings) that include the following: 

  • Total losses 
  • Finding relevant documents  
  • Documentation requests 
  • Oral testimony deposits  
  • Requests for admissions and inspections 
  • Written inquiries 
  • Written expert reports  
  • Inclusion of a third party with a filed subpoena 
  • As stated in the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters, discovery by entities outside the United States is permitted (1970) 

Patent Litigation and the International Trade Commission of the United States 

The International Trade Commission offers alternatives to traditional patent litigation. The ITC has the authority to hear cases from U.S. patent holders under Section 337 of the United States Code (U.S.C.). These are patent infringement cases involving imported goods. While the ITC operates differently than a district court, it is a viable option for some patent holders. 

The Advantages of ITC Litigation 

  • Faster decision-making: Section 337 requires the ITC to conduct an investigation and issue a ruling “expeditiously.” This includes establishing a judgment deadline soon after the case is filed. This period usually lasts between 12 and 15 months. It is rarely extended to 18 months. The ITC also has 30 days after the plaintiff’s filing to decide whether to open an investigation
  • No juries: There are no jurors in ITC Section 337 cases. An administrative law judge (ALJ) instead hears the case and makes a decision. If both parties agree, the case can be decided by a committee of six ITC commissioners. Case proceedings are governed by the Administrative Procedure Act and the Federal Rules of Civil Procedure. A Section 337 ITC trial mimics a district court bench trial due to the style of proceedings
  • Wide jurisdiction: The ITC has broad jurisdiction as it has in rem jurisdiction over all imported goods. This enables a single person to file a lawsuit against multiple parties at the same time. This includes parties from various jurisdictions. If necessary, the ITC can issue subpoenas to all states and territories in the United States
  • Customs enforcement: If the patent holder wins the case, the ITC will request that the infringing product be barred from entering the country. This is enforced by the United States Customs Service. The ITC also collaborates with customs to create a document that customs officers can understand. The patent holder is not the only party accountable for enforcing the decision with the help of customs

The Disadvantages of ITC Litigation 

  • Domestic Industry Requirements: In order to maintain a good standing with the ITC, the patent holder must demonstrate the existence of a relevant domestic industry. The ITC uses a two-part test to determine the relevant domestic industry. The first section is an examination of the infringing product. The second part is economic, demonstrating that the patent holder has invested significantly in the United States. This includes employing people and establishing a manufacturing facility in the country
  • Absence of 271 g defenses: 271 g prevents the importation of infringing products. However, it also provides the allegedly infringing company with two lines of defense. One is when a product is altered by certain processes. The other is when the product is altered to become a component of another product. Typically, this is seen in the pharmaceutical and biomedical industries

Patent Drawings in Patent Litigation 

The worst-case scenario for a patent holder is patent litigation. Litigation should be avoided with good drawings. Instead, it discourages infringers from stealing your idea. The best way to get quality and detailed drawings is to use computer-aided design and drafting (CADD) software. You can also easily load them from a hard drive onto your computer, allowing you to save time on resketching hand drawings. 

Patent drawings are crucial in patent litigation because they educate juries, judges, mediators, and arbitrators on the patented product. They also aid in demonstrating your product’s patent claims. In some courts, attorneys may be unable to enter enlarged versions of patent drawings. Instead, they receive a duplicate of the original patent application. The better the drawings, the better your chances of winning. 

Employ an Expert

If you require a patent drafter, look for someone who has experience creating patent drawings. This should apply to both the application and the alternative dispute resolution process (ADR). The more familiar this person becomes with the patent, the faster they can work. This reduces the cost of a high-quality patent drawing. If you do end up in court, patent drafters may be able to demonstrate the invention more clearly or in depth. 3-D animation and blow-up charts are examples of this. 

Many elements of a patent drawing can prove to be useful in court. The position of elements, size, and clarity of your patent all help others understand it. Colors can also help to draw attention to specific parts. In general, your patent drawing alternatives in patent litigation cases are as follows: 

  • Graphs and charts to help you understand complex parts of your invention 
  • Realistic animations to demonstrate product differences and similarities 
  • Timelines 
  • 3-D animations that demonstrate how a technology works 
  • Working models, PowerPoint presentations, or photographs are all acceptable 

Keep in mind that only drawings are used to determine infringement. Even evidence of unfair competition is less effective in court. 

When creating a patent drawing, keep in mind that the entire visual disclosure of the patent claim is required. This means that “nothing about the design desired to be patented is left to conjecture,” according to the USPTO. This concept was central to the landmark Gorham v. White case. The ordinary observer test is based on this case, in which an ordinary observer should be able to determine whether two inventions are the same. Patent drawings are an efficient means of defense and protection because patent litigation considers a product’s visual aspects, design, and form. 

FAQs about Patent Litigation 

Q1. How long do I have to file a patent infringement lawsuit against another company? 

You must file a lawsuit within six years of the date of infringement. The infringement is ratified after six years. After this point, there is no legal recourse. Proceedings can last for any length of time. A timetable can be agreed upon by the parties. They may also reach an agreement in court using a “rocket docket.” The goal is to have cases resolved within a year. 

Q2. Is patent litigation similar to other types of court cases?

Patent litigation court cases are similar to other types of court cases. A plaintiff, a defense, lawyers for both parties, and jurors are all involved. The main difference is that the judge decides what is patent validity and infringement based on his or her own beliefs. 

Q3. Where are court proceedings held? 

The venue is determined by the plaintiff. The defendants’ main concern, however, is that the trial is too far away from their place of business. Changes to the law are constantly being proposed. 

Q4. Who can help me with patent litigation? 

An experienced lawyer is the preferred party in federal court. Counsel for PTAB trials must be required to register with the USPTO. 

Q5. In what language are the proceedings being held? 

The proceedings are entirely in English. If necessary, witnesses can testify through an interpreter. All other foreign-language documents must be accompanied by a certified translation. 

Q6. What are my options for enforcing my patent? 

A civil lawsuit can be filed, which would include an injunction, a monetary judgment, and a declaratory judgment. A border agreement prohibits the infringing item from being imported into the country. You cannot currently file criminal charges against the infringer. 

Q7. What are some other factors to consider in patent litigation? 

You should not send a cease-and-desist letter. The infringer can use this to obtain a declaratory judgment. Cross-border injunctions can also be recognized by US courts. However, they do not wait for pending litigation in other countries. 

 

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