Before we deep dive into patent infringement, let’s first begin with patent law. According to US patent law, a patent owner owns the exclusive rights, for a limited time, to make, use, sell, offer to sell, and import his or her invention. This gives the company/person who owns the patent, a right to attack a competitor who makes commercial use of (infringes) patented technology.
Whenever there is a competitor infringing upon a patent, lawsuit is inevitable. Patent infringement lawsuit, however, is extremely expensive compared to other types of lawsuits. It typically will cost million or more U.S. dollars in legal fees alone. It is not uncommon for even simple patent infringement lawsuits to end up costing a company two to five million dollars. If you lose the lawsuit, you will then be responsible for paying damages to the patent owner along with the potential for treble damages and attorney fees.
“These [patent] lawsuits are also about limiting competitor options. By suing, you lay down your territory, limit options and send a clear message that ‘we will sue you’ if you come too close to our technology”, says Lawrence G. Hrebiniak, a management professor at Wharton.
Further, these lawsuits distract competitors, drain capital and potentially derail product plans – all of which could be devastating to younger companies without adequate resources.
How to defend a lawsuit?
It’s important to consider the options required to defend an inevitable patent lawsuit. Based on our experience in the industry, we summarize them as below:
- Prove that you are compliant, by data that shows you are not infringing, or argue that the asserted patent is invalid, if that be the case.
- Stop selling or making the infringed product.
- Negotiate licensing fees from the patent owner by cross asserting your patent portfolio (if the plaintiff is not an NPE).
- Start with non-infringement defence to avoid the infringement claim. Cost of hiring an expert for non-infringement defence is the best amongst all the available options.
Non-infringement defence works on the principle that even if your patent is valid, the accused product or process does not fall within the scope of the patented invention. As per modern laws of patent infringement, claim defines the scope of the invention or the monopoly of the inventor’s right. A patent claim generally has two parts: preamble and a listing of limitations describing the invention. Thus, for an infringement, the accused product or process must satisfy every limitation of the claimed invention, either literally, or under the doctrine of equivalents to fall within the scope of the patent claim.
As patent is a legal document, you may consult a patent counsel or an expert in IP to determine the scope of the claim and see whether you are infringing. If your product is in the initial stage, you may circumvent the claim to prevent infringement. If it is determined that your product is outside the scope of the invention, then, patent infringement can be completely avoided.
One of our clients was approached by a memory-based company for a licensing deal and by advising non-infringement defence, we helped our client generate non-infringement argument for 8 out of 15 assets which were not reading on the products of our client.
How are claim terms dispute settled?
We have observed that literally every case involves disputes over the meaning of claim terms as words of claims have ordinary and customary meaning, which are, open to interpretations. The disputes over the claim terms are resolved via Markman Process.
In Markman vs. Westview Instruments, Inc., the US Supreme Court ruled that the responsibility for claim construction determination falls on a judge and not on a jury (517 U.S. 370 (1996)). Thus, judge instructs the jury over the meaning of the disputed terms which would then use that claim construction to resolve issue of infringement and invalidity. After this judgement, it has become customary to have Markman hearing in patent litigation. The timing of Markman plays an important role in any patent infringement litigation. The patentee would want to have Markman hearing as late as possible in the case so that defendant would get less time to adjust their case based on claim construction ruling. While the accused infringer would want to have it as early as possible so that it can focus on prior-art search, refine their non-infringement defences, and possibly limit the amount of discovery obtainable by the plaintiff. In general, for majority of the cases, it has been seen that the Markman hearing takes place before discovery.
Further, for the litigated cases, claim construction is available online. Based on claim construction, we have helped multiple clients in negating the lawsuit either by proving that their product is outside the scope of the invention or there is a contributory infringement. Contributory infringement is a theory of divided infringement and can also be considered as a non-infringement defence.
If you cannot prove non-infringement, then, you might go for invalidity defence.
This defence is based on the assertion that even if the PTO has granted the patent, the patent is invalid because the inventor failed to comply with basic requirements of patentability. Here, we generally use either obvious defence or anticipation defence. In such cases, we identify disclosures which are made public either before the date of the invention or the patent filing date.
The AIA, enacted on September 16, 2011, transitioned the US from a “first-to-invent” to a “first-inventor-to-file” patent system. It includes changes to the definition of prior art for patent applications having an effective filing date on or after March 16, 2013. Pre-AIA prior art is generally defined with reference to the patent holder’s date of invention, rather than the patent’s application filing date. While AIA prior art is defined with reference to the effective filing date of the relevant patent application.
From USPTO data, few insights can be drawn about the IPRs:
- Only 50% of the total IPRs filed are instituted. Thus, if you have filed an IPR, then you have a 50% probability of your IPR getting instituted.
- An instituted IPR will often lead to at least some claims being invalidated. However, it also shows that the PTAB does allow some claims to survive (~16%) if the patent owner is persuasive on a technical level. Thus, about one-third of the instituted patent claims survive after the PTAB trial.
Considering the above facts, it is essential to have strong prior art in your IPR so that odds are in your favour.
Are prior-art searches independent of non-infringement defence?
It is believed that non-infringement and invalidity defence are independent; however, both these approaches are based on the scope of the claim. For non-infringement defence, defendant would want to read the claim in the narrowest sense possible whereas for the invalidity defence, they might want to read in the broadest possible interpretation. Thus, there is a need to determine the trade-off between the claim interpretations of both the approaches. The challenge is that identifying the trade-offs is a cumbersome task, if done without the help of an expert.
Invalidity is not all about Prior-Art identification
Apart from obvious or anticipation defence, the defendant can also argue invalidity, if it can prove that the plaintiff engaged in inequitable conduct such as by withholding information that the examiner should have known about or lying to the examiner.
If you cannot prove that either non-infringement or patent is invalid, then you may go for counter-assertion. By counter asserting, you can negotiate the licensing cost with the plaintiff, if it is not an NPE.
It is the process of identifying the assets within its own portfolio which are reading on the plaintiff’s products. Recently, we helped one of our clients accused of infringing the patents of memory-based company in identifying those assets in their portfolio which were reading on the products of the memory-based company.
To help our client in counter assertion, we have devised an approach which is flexible as per the client’s requirement. If a client has a very broad patent portfolio then the whole portfolio is not relevant for counter-assertion. Hence, we have devised a method to extract those patents from the client’s portfolio which are relevant to the plaintiff. A few pointers that we have used to identify the relevant assets are:
- Client’s patents cited by plaintiff
- Client’s patents in similar IPC/CPC of the patents asserted against plaintiff
- Client’s patents in the top IPCs (at least 5% patents) of plaintiff
Using these parameters, , we extract workable assets from the client’s portfolio. These workable assets are then used to identify potential cases for counter assertion.
What if I have no patents to assert?
It might be possible that your patent portfolio does not cover the products of the plaintiff. In such scenarios, we advise our clients for strategic patent acquisition in which we help them acquire small targeted portfolio which reads on the plaintiff’s products. In the IP industry, there are NPEs and patent aggregators, which have very diverse portfolios and at times lend their portfolio to interested entities for counter assertion.
“The one advantage of suing HTC is that the company doesn’t have a big patent portfolio to strike back with,” says R. Polk Wagner, a law professor at the University of Pennsylvania.
Considering the cost involved in a patent lawsuit, it is advisable to consult an IP expert who won’t take more than few thousand dollars but can help you avoid a patent infringement lawsuit, which would otherwise cost you millions.