Authors: Mark S. Raskin, Robert (Bob) Whitman, Michael S. DeVincenzo

New York Office, King & Wood Mallesons

1. Introduction

US patent law gives a patent owner the right to exclude others from making, using, offering to sell, selling, or importing into the US the patented invention for a limited period of time.  To enforce its rights, a patent owner may bring a patent infringement claim against an alleged infringer in US federal district court or, if the claim involves the importation of allegedly infringing goods, before the US International Trade Commission (ITC).  If a patent is found to be valid, enforceable, and infringed in a district court action, the patent owner is entitled to monetary damages of not less than a reasonable royalty and may be able to obtain an injunction preventing further infringement.  A patent owner who prevails in an ITC action can seek to exclude the importation of infringing articles.

2. Patent Litigation in US Federal Courts & the ITC

a. US District Courts

US federal district courts have exclusive jurisdiction over patent infringement claims.  Popular districts for patent disputes include the District of Delaware, the Eastern District of Texas, and the Northern District of California.  Many districts that regularly hear patent cases have special rules for patent cases.  Some districts are known for the rapid pace at which they proceed to trial, while others tend to move at a slower pace.  Patent cases usually last between two and four years.

b. ITC 337 Patent Investigations

A patent owner may also seek to enforce its rights by initiating a patent investigation with the ITC under Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337).  The ITC is a federal agency with the authority to adjudicate trade related matters, including disputes involving a patent owner who is domestically exploiting US patent rights (the “complainant”) and adverse parties who import allegedly infringing goods (the “respondents”).  The complainant must demonstrate significant activity in the US related to at least one claim of each asserted patent, first by showing significant US activities such as production or manufacture of products that practice the patent, research and development directed to products that practice the patent, or licensing of the patent.  Second, the complainant must show that its relevant economic activities are related to the asserted patent by performing an infringement analysis.

ITC proceedings are presided over by Administrative Law Judges (ALJs).  Discovery and the claim construction process occur similarly to district court litigation, but on a compressed timeframe.  ITC proceedings tend to move more quickly than district court litigation.  A trial-like evidentiary hearing is typically held within eight to ten months after filing and a final decision typically issues withing fifteen to eighteen months.  ALJs have the power to issue exclusion orders that direct the US Customs and Border Protection to stop infringing imports at the border.  There are two types of exclusion orders: limited exclusion orders (LEOs) are limited to the infringing products of the named respondents in the action, while general exclusion orders (GEOs) are broader and exclude all infringing products.

3. Patent Infringement Claims

US patent laws recognize two types of patent infringement claims: direct infringement, where the accused infringer practices each element of at least one asserted patent claim, and indirect infringement, where the accused infringer induces another party to directly infringe or contributes to another party’s direct infringement.  In both cases, the patent owner must prove the infringement.

a. Direct Infringement

Direct infringement involves the making, using, offering to sell, or selling a patented invention within the US, or importing a patented invention into the US.  The patent owner must establish that the allegedly infringing apparatus or method practices every element of the asserted patent claim.  Direct patent infringement is a strict liability offense, not requiring intent or knowledge.

b. Indirect Infringement
  • Inducement of Infringement

Induced infringement involves the active inducing infringement of a patent claim.  The patent owner must show the alleged infringer induced or encouraged a third party to take infringing action, and that the alleged inducing infringer knew that the induced acts constitute the infringing action.  A patent holder may establish the knowledge requirement by showing defendant’s actual knowledge of the patent and that defendant intended to persuade the directly infringing party to infringe.  The knowledge requirement may also be met by showing the defendant acted with willful blindness, while believing there was a high probability of infringement and taking deliberate action to avoid confirming infringement.

  • Contributory Infringement

Contributory infringement involves party selling, offering to sell, or importing into the US a component of a patented invention or a material or apparatus for practicing a patented process where the component, material, or apparatus is especially made for or especially adapted for an infringing use. The component is not a staple article or commodity of commerce suitable for substantial noninfringing use.  Contributory infringement requires knowledge of the asserted patent.

4. Patent Claim Construction

A patent’s claims define the scope of the inventions covered by the patent.  The district court will hold a special hearing to interpret the meaning of claim terms important to resolving issues of infringement and validity.  This is often referred to as the Markman process from the seminal Supreme Court case ruling that claim construction is a legal issue for a judge to decide.

A claim term must be given the ordinary and customary meaning it would have to a person skilled in the relevant art at the time of the invention.  Courts rely on the patent’s specification and file history, known as the intrinsic record.  Courts can look to so-called extrinsic evidence, such as dictionary definitions or testimony of the inventor or an expert witness.

US courts will hold a separate claim construction hearing in the middle of the case for parties to argue interpretations of disputed claim terms before the judge.  Different jurisdictions often have local patent rules governing when in the litigation the claim construction hearing will occur.  After the hearing, the court will issue a claim construction ruling well before trial.  Claim construction is a very significant part of any patent litigation as it informs the parties as to what is legally covered by the patent and may clarify infringement and validity issues.

5. Defenses to Patent Infringement Claims

a. Patentable Subject Matter (Section 101 / Alice)

Under 35 U.S.C. § 101 a patentable invention may be directed to any “new and useful process, machine, or composition of matter, or any new and useful improvement thereof.”  However, laws of nature, mathematical formulae, physical phenomena, or abstract ideas, are not patentable.  The inability to patent abstract ideas has been the focus of litigation related to software or computer implemented processes.  Such Inventions that solve a technical problem or improve the functionality of the software or computer may be eligible for patent protection, but merely implementing an abstract idea in the software or computer realm is not patent eligible.

b. Prior Art Invalidity

Patent validity is litigated in every patent infringement.  Because patents are presumed to be valid, the patent owner does not have to establish validity.  Rather, the accused infringer must prove invalidity of the asserted patent claims.  Prior art that predates the priority date of a patent may be used to invalidate that patent.  An alleged infringer can show a patent is not novel if it establishes that all of the elements of a patent claim are found in a single prior art reference.  The obviousness of an invention can be shown where all of the elements of a patent claim would have been obvious to person of ordinary skill in the art at the time in view of a combination of prior art.

c. Non-Prior Art Invalidity

An inventor must distinctly claim the patented invention and not rely on ambiguous claims, satisfying the written description and enablement requirements.  The written description requirement is met if the patent specification includes a complete written description of the claimed inventions.  A patent is enabled if the patent specification includes sufficient detail such that a person of ordinary skill in the art could practice the claimed invention without undue experimentation.

d. Non-Infringement

Although the patent owner must prove infringement, a defendant still can present an affirmative defense of non-infringement.  To succeed, a defendant need only show that one element of each asserted patent claim is not practiced by the accused instrumentalities.  All infringement claims require that an individual entity directly infringe by practicing all elements of an asserted patent claim.  If different entities practice different elements of an asserted patent claim, a defendant might avoid liability by arguing a defense of divided or joint infringement.

e. Inequitable Conduct

Inequitable conduct is an equitable defense.  During the patent’s review, the inventor must inform the examiner of known prior art and affirm that the inventors are truthful and use candor in their communications with the examiner.  The inequitable conduct defense must identify the specific circumstances of the underlying misconduct.  Successful assertion of an inequitable conduct defense can render all of the patent’s claims unenforceable.

6. Remedies for Patent Infringement

a. Injunctive Relief

Under certain circumstances, a patent owner may be entitled to injunctive relief as an equitable remedy for patent infringement.  Such relief enjoins the infringer from making, using, selling, offering for sale, or importing into the US any infringing product.  Injunctive relief is most commonly awarded when the patent owner and the infringer compete in the same market.  But it is much more difficult for a patent owner to obtain an injunction when the patent owner does not make a product, does not compete with the infringer, or has freely licensed the patent to others in the market.

b. Monetary Damages

The owner of a valid, enforceable, and infringed patent is entitled to monetary damages of not less than a reasonable royalty, and may be entitled to lost profit damages and enhanced damages.

  • Reasonable Royalty

To determine a reasonably royalty, courts look to a hypothetical arms-length negotiation between the parties for a license to the asserted patent.  The hypothetical negotiation is set to have occurred just before the date of first infringement by the defendant and assumes a willing licensee and that the patent claims at issue are valid and infringed.  Factors considered include established royalty rates for the asserted patent, royalty rates paid by the alleged infringer for comparable patents, the nature and scope of the license, the commercial relationship between the parties, the nature and benefit of the patented invention, the portion of profits attributable to the patented invention, and expert opinion testimony.

  • Lost Profits

Under certain circumstances a patent owner may be entitled to damages for lost profits.  Lost profits, which are meant to compensate the patent owner for lost sales or price erosion, are only recoverable when the patent holder competes with the accused infringer in the market.  To receive lost profits, the patent owner must establish that but for defendant’s infringing sales, there was a reasonable likelihood that the patent owner would have made those sales.  This requires the patent owner to prove demand for the patented product, a lack of acceptable non-infringing alternatives to the patented product, the patent owner’s marketing and manufacturing capability to exploit the demand, and the profits the patent owner would have made but for the infringement.

  • Enhanced Damages and Willful Infringement

In exceptional cases, such as where a party engaged in litigation misconduct or where a defendant willfully infringed a patent, a court has discretion to award enhanced damages of up to three times the damages award.

7. Patent Trial and Appeals Board

A patent’s validity may also be challenged before the USPTO’s Patent Trial and Appeal Board (PTAB).  The availability of PTAB patent challenges may be done in parallel with ongoing patent litigation and in some cases district court judges will stay litigation pending the outcome of a PTAB challenge of the validity of the patents in suit, particularly where a PTAB challenge may resolve issues in the district court litigation.