When should you seek to enforce a patent?
A patent affords its owner the right to “prevent others from making, using, or selling” the patented invention. A patent can be used to bar others from entering a particular field and to preserve the owner’s market position. If a patent is infringed, the owner stands to obtain a monetary settlement to compensate for lost income.
Patent cases are generally filed in a Federal District Court, the exclusive jurisdiction for patent cases. The particular venue can be selected from the defendant’s residence or in any district in which the defendant does business. When choosing the forum, factors to be considered can include speed of the court, convenience to the plaintiff, sophistication of the district, and the nature of the jury pool.
Historically, plaintiff-friendly districts have been the Eastern District of Texas, the Eastern District of Virginia, the District of New Jersey, and the Central District of California. Recently, however, two published studies (one by Professor Mark A. Lemley of Stanford Law School and second by PriceWaterhouseCoopers) and have collected data that indicate that the Middle District of Florida, which includes Orlando, has proven the best venue for patent owners.
What happens before a patent infringement suit is filed?
Prior to initiating an infringement action, Federal Circuit case law requires an inquiry to be conducted, which includes, at a minimum, a determination of the plaintiff’s standing to file the action, an analysis of the accused product relative to the issued claims of the patent, and an interpretation of the claims. Consideration should also be given as to the validity and enforceability of the patent. As this consideration should include an analysis of the prosecution history of the patent, current best practices dictate that the law firm that prosecuted the patent should not conduct this analysis. Finally, the option of initially sending the alleged infringer a cease and desist letter should be considered.
How is a patent infringement suit conducted?
The actual process of an infringement action is quite complicated. The steps include filing a complaint, conducting discovery, and filing pretrial motions. Typically patent cases are very complicated, as they often involve highly technical subject matter. In one patent-specific procedure that occurs prior to a trial, a so-called “Markman hearing,” the Federal judge hears arguments from both sides of the case as to how the language of the claims should be interpreted. This step can determine the outcome of the case, since the judge’s finding is used to instruct the jury in what the claims mean, and even could terminate the suit. The action then continues with a jury trial.
What are the potential rewards of a patent infringement suit?
If the plaintiff wins their suit, damages can be awarded commensurate with lost profits or at least a reasonable royalty. Treble damages can be awarded if the infringement is found to be “willful,” that is, the defendant was infringing knowingly. An injunction can be filed prohibiting the defendant from continuing their infringing activities. In some particularly exceptional cases, attorney fees can even be assessed.
The largest patent award in history was granted in Centocor v. Abbott: $1.67 billion. The second largest was in Alcatel-Lucent v. Microsoft: $1.5 billion (this award was later reversed). In 2007, according to a study by PriceWaterhouseCoopers, the median damages award was $6 million.
Often patent suits settle prior to a trial verdict. Notable damages have included $612.5 million in NTP v. Blackberry (2006) and $80 million in Sprint v. Vonage (2007).
One intangible reward of an infringement action is that the patent owner establishes his/her intent to enforce the patent. This is important because, if a patentee is aware of infringing activity and does nothing to assert his/her rights, the patent can subsequently be found to be unenforceable.
What are the potential risks of a patent infringement suit?
A patent owner takes considerable risk when initiating an infringement action. It is a virtual certitude that the validity of the patent will be challenged by the defendant. The defendant will also likely allege that the patent is unenforceable on the basis, for example, of actions taken during the patent’s prosecution. Inequitable conduct is frequently asserted against inventors, patent owners, and the prosecuting practitioner attorney or agent. Therefore, the patent owner’s pre-suit investigations must be extremely thorough to ensure that the patent will stand such challenges.
Patent lawsuits are extremely expensive, with even the least costly actions costing over $500,000 in attorney fees and costs. High-stakes patent actions can cost over $10 million.
After the verdict
Either side can appeal the result of an infringement action. Such appeals are heard by the Court of Appeals for the Federal Circuit (CAFC). The next step after the CAFC is the Supreme Court, which, if it decides to hear a case, can decide all or part of an infringement question, and can also decide to return the case to the CAFC for reconsideration of certain portions of the question.
Clearly the decision to proceed with an infringement lawsuit should not be taken without careful consideration and consultation with a patent attorney.
