Uh oh... Litigation!? Run for the hills, right? Before you go, consider that it’s not what you might be thinking... Patent Litigation usually (and I mean 95%+ of the time) is NOT in a courtroom, but rather in an email, in a conference room, a phone meeting, or video call. The goal is never to go to trial, but instead to settle amicably so that all parties can go on their way and be fruitful. As you will begin to understand through this article, “litigating a patent” (or a portfolio of patents covering one or more inventions) is not something that inventors should be afraid of or shy away from; in fact, it’s something you should HOPE FOR. Why would you hope to litigate? Well, that means you have such an inspiring innovation that others are either knowingly or unintentionally infringing on it. This means the market is demanding the product/solution, so you had a great idea! It also means that you will likely be able to strike a deal with the infringer to either pay you a royalty for every one sold, a lump sum payout, or some combination of the two. Simply the threat of a suit is often all that is needed to enforce a patent against an infringer. So, I decided to write this article to dispel these MYTHS OF PATENT LITIGATION:: That you should avoid patent litigation at all costs That patent litigation and Patent Attorneys are always expensive That it’s only for the “big guys” That there’s no way a small or solo inventor can take on big companies in litigation That most patent litigation matters are out of your hands and are decided by a judge/jury Any other myths out there? I’m sure you’re thinking of one or two right now... Before you forget, shoot me an email at firstname.lastname@example.org or put in the comments below, and we’ll get back to you right away to address those concerns! Ok, so I want you to keep those bullet points in mind, as those are what I hear most often from our clients and are why they fear patent litigation. And, as I mentioned above, we do our best to prepare them mentally and legally to expect and welcome litigation over their patent. If you are new to the patent process, wait just a second! To gain an appreciation for the patent process, it will be vital for you to get the foundations of patent law under your belt before reading on. Luckily, I can help inventors like you with all the basics on patent law in my book. And as you guessed, there are many blog articles that touch on the basics of patent law, such as how to write a patent application - so check out our other blog articles to gain a core understanding of the subject matter first. So, now you’re ready! Let’s outline the areas I’ll be covering in this article. I’ll be leaving no stone unturned when it comes to patent litigation... we’re covering it all: The diligence required before threatening suit Deciding which tribunal to threaten to file suit The cease and desist letter threatening suit Seeking Settlement Filing suit Discovery phase Motions and Court Procedures Trial The diligence required before threatening suit In order to begin a patent suit, there are a number of fundamental things that must be researched and verified before you just go off and start suing people or businesses! You’ve got to assure you have the Title and Right to Sue. This means that you must be the owner of the patent and have the title to it. Sometimes, this is not as simple as being an inventor (or co-inventor) of an invention. You’ve got to analyze any recorded (and unrecorded) assignments of the patent portfolio. An assignment is when you or other co-inventors sell or give up a portion of your rights to making, using, selling, or importing the claimed invention to a 3rd party individual or business entity. Here’s a template/example of a patent assignment agreement: Once you confirm that you do in fact own/have title to the invention, now you need to confirm both that 1) your patent is valid and 2) there is an infringement of your patent claim(s). 1. Patent Validity One nice thing that most inventors like to hang their hat on is the fact that the courts are to carry a presumption of validity on patent claims. This is a big nod of the head to the work that the USPTO administration did during examination and prosecution. It is a sad (but important) truth that a patent issued just a year ago may no longer be valid because a precedential Federal Circuit or Supreme Court decision changed the way patents are interpreted. Therefore, a determination and opinion by a Patent Attorney is required in order to interpret the latest laws and opinions by judges and administration (USPTO) that would deem your patent valid and enforceable. In addition to patent law changes, there are major considerations with respect to “on sale” and “public use” bar defenses that could come up. Patents can be invalidated if they can be shown to have been sold (or even offered for sale) more than 12 months prior to filing the underlying patent application. Patents are also invalidated if it can be shown that the patent was disclosed to the public more than a year ago. There are several cases on the point that can help you and your attorney understand whether disclosure of the patent subject matter is deemed to be a “publication”. The argument turns on whether the disclosure would have reasonably been available and known by a person of ordinary skill in the art (POSTIA). Patents can be invalidated for misuse as well, such as if used in combination to form an illegal anti-competitive strategy. Or maybe even if they are attempting to license or contract around the patent claims or extending the rights beyond their bounds (patent exhaustion). Lastly, confirm that the inventor (or inventors) of the patent did not derive the invention from another inventor or 3rd party. 2. Patent Infringement There are many different types of patent infringement that have been characterized by the judges over the years, and you must be able to show one or more of them and meet the burden of proof required for each. Therefore, before you begin filing lawsuits, it will be in your best interest to hire a registered USPTO Patent Attorney to provide you an opinion on patent infringement first! So, what kinds of infringement are out there? Direct Infringement: This is where one actor/individual/company is completing all elements of the claimed inventions - this is the most cut and dry Extraterritorial Infringement: This is where the one-party involved is carrying out a portion of the claim elements in another jurisdiction to attempt to avoid infringement Induced Infringement: When one party (usually overseas and outside the patent jurisdiction) with financial or other inducement means gets another individual or entity to perform some of the elements of the patented claim (in an effort to avoid infringing themselves) while still reaping the financial benefit of the infringement Contributory Infringement: When one party (usually innocently) benefits in part from the infringing activity upstream from them in a supply chain In addition to these different types of infringement, there are different standards associated with infringement claims for different types of patents: Utility Patent Infringement: Literal infringement of the claim language words that are associated with at least one specific claim. The burden of proof is a preponderance of the evidence (it is more likely than not that there is infringement) Equivalent infringement which has an entire doctrine/case governing when someone is performing inexact claim terms but equivalent activity that is encompassed in the specification and meaning of the claimed words. The burden of proof here is whether the infringer is “performing substantially the same function in substantially the same way” Design Patent Infringement: When there is infringement, the standard is “whether the beholder of an accused device giving it the same attention that would be given to an ordinary purchaser would consider the accused device to be substantially the same as the patented product.” Plant Patent Infringement: The same analysis under the burden of a preponderance of evidence as a utility patent literal infringement standard Alrighty! So… you’ve confirmed that your patent is valid/enforceable and you’ve sought a Patent Attorney’s opinion on infringement, and they’ve confirmed it. There are a few more things you can do prior to filing suit to make the patent claim stronger: Ex Parte Reexamination: This comes into play if there is a new patent document or publication relevant to the patentability of the invention that either the plaintiff asserting rights or another 3rd party comes across. The idea is that if prior art reference is found, anyone can request that the USPTO reexamine the patent to confirm it is still patentable over the prior art. The benefits of doing this are to add to the record the administration's decision on whether the claims are still valid under today’s laws as well as over the prior art reference. The downside is if the examiners don’t think it is patentable over the prior art or if the reissue certificate/examination takes too long to pursue timely litigation Reissue: This is sought when a patent claim is thought to be overly broad or narrower than what was disclosed in the specification. Supplemental Examination: This replaces the old reexamination process for patent applications filed after 2011. Similar approaches to strengthen the position of a patent to get a second opinion or issuance of a patent confirming or denying patentability over subsequent patents or printed publications. Deciding which Tribunal to Threaten Suit There are three major tribunals for which a patent owner may seek to enforce their patent rights on an alleged infringer or that an infringer may use to defend themselves against a patent holder: Federal Court International Trade Commission (ITC) Patent Trial and Appeal Board (PTAB) Federal court is by far the primary mode for most plaintiffs (those asserting patent rights), especially when seeking monetary damages. There are district courts in every state (some have several). However, federal court proceedings can take a long while, and motions, as well as discovery, can take even longer. ITC is a very popular forum for rights holders to achieve an injunction or seizure of products at customs if there is an alleged infringement. So, if the goal of the rights holder is simply to stop the import of certain goods/products, then ITC is the way to go as the timeline for getting to a decision is quick. The PTAB is more popular with defendants. Those who have been identified as allegedly infringing can stay (or pause) a federal court proceeding and resolve the merits of patent infringement at the PTAB tribunal in a more expeditious route with judges that are steeped in patent law. Rely on the careful guidance of your Patent Attorney to decide which tribunal to work through. As will be the case for every client, the business plan and goals will be what aids the attorney to suggest one tribunal over another. The cease and desist letter threatening suit Yep, this is “the letter” that you never want to get. In essence, it says: “We have a patent, you are infringing our patent by making, using, selling, and/or importing our invention, and you must pay us damages, cease all operations, or face litigation.” Yikes! Well, it’s not as simple as that. Ok, maybe we do use simple language like that - but not before laying out the rationale first. Another reason for doing an infringement analysis first is so that we can make a very compelling case that there is infringement so 1) the client understands it; but more importantly that 2) the opposing party (and their lawyers) can understand it as well. A Cease and Desist letter or a Patent Notice letter can take on many different tones and contain a variety of different information for the recipient. To level-set, these types of notices are typically written by an attorney on behalf of a party who owns the patent. The letters are sent to alleged infringers of the patent. Patent attorneys are trained in the art of crafting these sorts of letters for their clients who hold patent rights because it takes a trained eye to be able to see whether someone has actually infringed the claims of a patent. A patent owner is wise to consult an attorney to help them strategize the type and timing of the communication to the alleged infringer right from the very first interaction and try to set the course for reaching the client’s goals. The client’s goals can range widely from a settlement and reaching a licensing agreement (the patent owner would get a royalty on the products or services sold in the marketplace) to more aggressive measures like injunctive relief, seeking damages, and customs/border action. On the one side, licensing usually means allowing the infringer to continue doing what they are doing (likely selling the product or service) but, say, taking a percentage of the profit and sending that to the patent holder. On the other side, the more aggressive action involving litigation takes a lot of careful preparation to assure the patent owner’s patent claims would hold up in court, being certain that the infringer is practicing what is claimed in the patent among others. This preparation is needed in order to prepare for a response, which can be just as aggressive. It is important to also review the claims of your patent first to see whether the claims are valid and enforceable in today's laws. Working with an attorney, you can get what's called a validity opinion - this will analyze case law and determine whether your claims would be upheld by a judge/jury given the laws as they are today. Secondly, an infringement opinion will help you determine whether and to what degree the alleged infringer is actually making, using, selling, or importing your patented claims. These two opinions are vital to moving ahead with confidence in asserting your patent rights on a third party. So, what are the pros and cons of sending a Cease & Desist letter? Pros: Notice: Puts the infringing party on notice! The notice is kind of obvious, but it helps courts understand definitively when one of the parties were made aware of the situation Big Damages: If the alleged infringer continues the infringing activity after receiving notice – this could be BIG trouble for them if they are found liable. This is called “willful infringement” Settlement: The letter could surprise the other party who may be innocently infringing. The other party may then be scared of litigation (rightfully so) and decide to settle with the patent owner – this is the best situation for all involved Efficient: Lower cost than litigation, quick resolution, and no one gets hurt. Cons: First Move: The alleged infringer could try to beat you to the court after receiving the letter. Often times this is through a “declaratory judgment” (DJ) motion. This DJ action could result in a ruling in favor of the alleged infringer and they may have a leg up on your because they made the first move Venue: Along with bringing the DJ action is the ability to force the patent owner to the alleged infringer’s turf! This could mean having to fly across the country to defend a DJ action. Post-Grant Actions: The alleged infringer could “stay” or put on hold a court action by filing an Inter Partes Review (IPR) or Post Grant Review (PGR) on the patent owner’s patent – seeking to have the USPTO re-evaluate the patent claims. This could mean having to go defend the patent first, before making any headway on the civil front. Seeking Settlement Ok - so, you’ve sent the letter and you’re honestly hoping for one thing… ANY RESPONSE! Yes, any professional, thoughtful response is a very good sign. A response means that you have a reasonable (and likely proactive) infringer who either realizes they are caught or at least wants to play ball. An important point to catch is whether it is an attorney responding on their behalf or the individual; you (the client) may not want to directly contact the infringer/owner if you’re represented. If you disclose certain things, or even give verbal waivers, you may stand to call into question parts of your potential claims against the other party. On top of that, these matters (as most legal issues) come with lots of emotions (think… “Who do they think they are??? They stole my idea!!!”). Allow your well trained (rational) attorney to represent your best interests. The kinds of discussions that occur after a cease and desist letter get sent vary so widely that it is not helpful to discuss them here. What is important to keep in mind as you work toward a settlement is to: Adhere to any timelines/deadlines that were imposed in the letter Document as much as you can about the discussions, just in case you need to refer back to them in later trial/motion Have the end in mind, have researched the industry and know what a “low”, “fair”, and “high” royalty rate or lump-sum payment might be Conduct research on the market and demand for your product to have accurate forecasts or actual numbers of units sold to help negotiate a fair deal Filing Suit Believe it or not, this is STILL part of negotiating/settling a case. Bu it does likely mean that initial settlement discussions didn’t yield any fruit, and there was either a stalemate or no response to a cease and desist letter. Yes, it does mean actually filing a court case and setting certain timelines in motion and additional scrutiny. A very important first step to filing suit is deciding where to file suit. This is called “venue”. Depending on your goals (whether you are the defendant or the plaintiff), you will want to make your case in the court that is likely to support your position. For example, plaintiff-friendly venues like the Eastern District of Texas are sought after because the decisions are quick, as certain judges have made it known that they understand patents, tend to enforce patent claims against infringers, and don’t waste any time doing it. Other jurisdictions are more defendant-friendly where federal judges may not be familiar with patents and may be more likely to side with the defendant and be sympathetic as opposed to ordering huge damages be paid out. The first part of a lawsuit is called the “Complaint” and is where the plaintiff articulates the argument and cites the specific laws that they believe the defendant is breaching. It is also where they propose remedies, usually in the form of both damages (monetary) and injunctive relief. The defendant must file an “Answer” along with any “Counterlclaims” which usually provide legal argument and contrary factual challenges to the complaint and must respond to every allegation that is made by the plaintiff. Discovery Phase Patent litigation is really no different than any other litigation when it comes to discovery. The goals are to discover and obtain all facts that are related to the dispute, and for patent cases that would be related to: Infringement Validity Enforceability Specifically, the plaintiff (the patent holder) is going to want to find and be focused on finding the following types of things from the other party: To what degree is the infringer infringing on the rights to make, use, sell, or import? How long has the infringer been infringing? Has the infringer contributed to other infringement or induced infringement by any 3rd parties up/downstream? All financial information related to the infringing product or surrounding products/assemblies (if the patent is on a steering wheel, for example, look at how many steering wheels were sold is good, but also consider how many cars were sold) The commercial success of the product - is it in demand? For the defendant (accused infringer) the following are the top aims when doing discovery of the plaintiff/rights holder: Ownership issues - does the inventor have any duty to assign invention to prior employers? Did they derive the invention from anyone? Was there a statutory bar issue (on sale or published more than 1 year prior to filing)? The file history and prosecution history to see if the inventor/attorney waived rights to any additional embodiments through amendment or legal argument before the USPTO Prior or contemporaneous license agreements on the same/similar invention There are specific rules about mandatory and optional discovery and timelines that go well beyond the scope of this article. The key is that discovery is a major part of patent litigation, as it defines the boundaries by which parties will negotiate. Motions and Court Procedures While there are many different types of motions that can enter play in a federal court proceeding, THE most important motions/proceedings in a patent case are: Markman Hearing Summary Judgment Motions A Markman Hearing and procedure aim to interpret the patent claims and assure all parties agree to the definition and meaning of the claims. Often times claims use words that leave some room for interpretation. Sometimes this vagueness was on purpose as part of a patent claim drafting technique to attempt to gain broader protection for their inventor clients. Sometimes it is unintended, which can lead to problematic results for rights holders as the very definition of their patent rights is undetermined going into a Markman Hearing. It is good practice in a patent application to determine the definition of certain words that are later used in the specification and in the claims. If this is done, those terms have very little (if any) wiggle room and the judge will construe (define) the language to be within the “as defined” terminology. During these hearings where definitions of individual words will have great impact on the eventual outcome of a given patent case, expert witnesses are brought in to define terms of art or words used in specific fields that may have arguably different meanings than the ordinary dictionary definitions depending on the context. Summary Judgement motions are when either party believes that their case is so strong that even if the judge took the arguments that the opposing party is claiming as true, they would still lose on the merits. Compelling motions can make quick work of a case, and avoid having to go through an expensive trial. Judges are motivated to clear their docket and resolve matters amicably, so if one part is such a clear winner on the merits, summary judgment is where that decision can come to bear. Trial Statistically speaking, less than 1% of all potential patent cases actually end up in a trial. It is so rare that such effort has been expended on all of the foregoing and yet there is no clear winner (or there was not enough motivation to settle) and both parties agree that it’s still worth fighting over. Major considerations at trial are: Evidence Jury Testimony Expert Witnesses The primary objective for both sides is to be able to get as much evidence in their favor allowed into the case as possible. As with any other court proceeding, there is a process by which documents are itemized and presented to opposing counsel and the jury. The jury is vital. Therefore, jury selection is a process that is just as important to type and quality of evidence. The jury will be deciding the fate of the patent holder and accused infringer. In fact, they decide all matters related to: Infringement Patentability (Novelty, Nonobviousness) Best Mode Written Description Damages Willfulness There is a presentation of live witness testimony (with examination and cross-examination - just like TV) as well as recorded versions of testimony all shared with the jury. There are many motions that can be filed during and after trial, including judgment as a matter of law, whereby a patent holder can seek to have a judge make a decision (without letting it go to the jury) if a case is so clear-cut. There are motions seeking a new trial if it can be demonstrated that there was some inequity/bias/error in the proceedings. Lastly, there is final jury determination and judgment as to liability and any damages/injunction. In Summary If you are a patent owner, litigation is what can really make it all feel worth it (and help you reap in some monetary benefits). If you have to litigate, you have an idea people deem to be worth stealing! Plus, you can make some extra cash on licensing or perhaps even damages. That said, you have to go into it with a Patent Attorney and basic grasp of what is in store for you. A great place to start is to remember: The diligence required before threatening suit Deciding which tribunal to threaten to file suit The cease and desist letter threatening suit Seeking Settlement Filing suit Discovery phase Motions and Court Procedures Trial Hopefully you’re a little less intimidated by the word “litigation” and a little more inspired to go out there and truly defend your idea! Have you faced possible litigation in the past? How do you think you would handle it now? Legal Note: This blog article does not constitute as legal advice. Although the article was written by a licensed USPTO patent attorney there are many factors and complexities that come into patenting an idea. We recommend you consult a lawyer if you want legal advice for your particular situation. No attorney-client or confidential relationship exists by simply reading and applying the steps stated in this blog article.