US patent law allows the patent owner the exclusive rights, for a limited time, to make, use, sell, offer to sell and import his or her invention. A patent is a sword, not a shield. It gives right to attack a competitor who makes commercial use of ("infringes") patented technology.
A patent infringement lawsuit is extremely expensive compared to other types of lawsuits. A patent infringement lawsuit typically will cost million or more US dollars in legal fees alone. It is not uncommon for even simple patent infringement lawsuits to end up costing a company $2 – $5 Million. 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’s 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 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 law suit?
It is of prime importance to know what options you have to defend an inevitable patent lawsuit. Based on our experience in the industry, we could summarize the options as below:
- Prove that you have not done anything wrong either by showing that you are not infringing or the asserted patent is invalid.
- You may stop selling or making the infringed product.
- You may negotiate a licensing fees from the patent owner by cross asserting yours patent portfolio, if the plaintiff is not an NPE.
You should start with non-infringement defense to avoid the infringement claim as cost of hiring an expert for non-infringement defense is least among all the available options.
Non-infringement defense works on the principle which says that even if your patent is valid, the accused product or process does not fall within the scope of the patented invention. As per the 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 defense, we have helped our client to generate non-infringement argument for 8 out of 15 assets which were not reading on the products of our client.
How Claim terms disputes are settled?
It has been seen that literally every case involve disputes over the meaning of claim terms as words of claims have ordinary and customary meaning, thus, open to interpretations. The disputes over the claim terms are resolved via process called Markman Process.
We would like to discuss briefly about Markman process. In Markman v. Westview Instruments, Inc., the Supreme Court ruled that the responsibility for claim construction determinations 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 its case based on claim construction ruling. While the accused infringer would want to have it as early as possible so that it can focus prior-art search, refine its non-infringement defenses, and possibly limit the amount of discovery obtainable by the plaintiff. In general, for majority of the cases, it has been seen that Markman hearing takes place before discovery.
Further, for the litigated cases, claim construction is available online. Based on claim construction, we have helped our multiple clients in negating the lawsuit either by proving that their product is outside the scope of the invention or it’s a contributory infringement. Contributory infringement is a theory of divided infringement and can also be considered as a non-infringement defense.
If you cannot prove the non-infringement, then, you might go for invalidity defense.
This defense is based on the assertion that even if the PTO has granted the patent, the patent is invalid because inventor failed to comply with basic requirements of patentability. In the invalidity, we generally use either obviousness defense or anticipation defense. In the anticipation and obviousness defense, 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.
As per the data provided by the USPTO, few insights can be drawn about the IPRs’:
- Only 50% of the total IPRs filed is instituted. Thus, if you have filed an IPR, then you have 50% probability that your IPR will be 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 favour of you.
Are prior-art searches independent of non-infringement defense?
It is believed that non-infringement and invalidity defense are independent; however, these both approaches are based on the scope of the claim. For non-infringement defense, defendant would want to read the claim in the narrowest sense possible whereas for the invalidity defense, it 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 and to identify the trade-off is a cumbersome task, if done without the help of an expert.
Invalidity is not all about Prior-Art identification
Apart from obviousness or anticipation defense, 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 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 have helped one of our clients accused of infringing the patents of memory based company in identifying those assets in their portfolio which are 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. The client has a very broad patent portfolio and not the whole portfolio is 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. The 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 such types of pointers, 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 to acquire small targeted portfolio which reads on the plaintiff’s products. In the IP industry, there are NPEs and patent aggregators, which have a very diverse portfolio and at times lend their portfolio to the interested entities for counter assertion. To know more about strategic patent acquisition, click here.[to be hyperlinked]
"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 expert in IP industry which won’t take more than few thousand dollars but can help you avoid a patent infringement lawsuit.