Patent owners possess the unique right to exclude others from practicing a patented invention. Anyone who makes, uses, sells, or offers to sell a patented invention in the United States, without permission, infringes the patent and may be liable to the patent owner. Our trial lawyers work with plaintiffs and defendants in patent litigation throughout the country.
Federal Courts have exclusive jurisdiction in any case relating to patents. A patent infringement action can be filed in any district in the United States where the defendant resides or where the defendant has committed acts of infringement and has a regular and established place of business. A defendant is deemed to reside in any judicial district in which he is subject to personal jurisdiction for patent cases.
Appeals from decisions of the federal district courts are taken to the Court of Appeals for the Federal Circuit. The Federal Circuit has jurisdiction over an appeal from a final decision of a district court in any action regarding patents. The United States Supreme Court is the court of final appeal on patent matters.
In any federal action, the plaintiff must have standing to prosecute the action, which means that an individual or entity must have a sufficient stake in the controversy. Only the patentee has the right and standing to prosecute an infringement action in his own name. A patentee for these purposes includes successors in title, i.e., an assignee. A party that is not the patentee, such as a licensee, may still have standing to sue for infringement if that party has a legally protected interest in the patent. Unlike the patentee, however, that party may not sue in its own name alone, but must joint the patent owner in an action brought against an accused infringer.
Establishing patent infringement requires a two-step inquiry. First, the district court must construe the asserted patent claims. Next, the fact-finder must determine whether the accused product or process contains or practices each limitation of the patent claims.
To obtain a judgment against a patent infringer, the patent holder must prove infringement by a preponderance of the evidence. There are two types of infringement: (1) direct infringement, where the defendant made, used, sold, or offered to sell the claimed invention; and (2) indirect infringement, where the defendant contributed to the infringement or induced another to infringe.
Defenses to Infringement
Defendants in patent infringement lawsuits have two broad categories of available defenses: statutory defenses and equitable defenses. Statutory defenses include noninfringement and invalidity. Equitable defenses include inequitable conduct, misuse, equitable estoppel, and laches.
Remedies and Damages
When a valid and enforceable patent has been infringed, the patent holder may be entitled to certain remedies, such as damages, an injunction, and attorneys' fees. Damages can include lost profits or a reasonable royalty.
A reasonable royalty is an amount that a person desiring to manufacture and sell a patented article would be willing to pay as a royalty to the patent owner. Several methods have been used to determine reasonable royalties. One option is to look at an established royalty, evidenced by several past license agreements. If the evidence of past licensing activity is not consistent with the case before the court, the reasonable royalty is usually based on a hypothetical negotiated license between two parties. The court could also use the analytical approach, which takes into account historical accounting information. This approach estimates the royalty by subtracting the normal profit margin of a business from the expected profit margin to find the appropriate royalty rate. A final approach is the investment return analysis. This approach determines the royalty rate that will provide an investment-quality return on the hypothetical licensee’s assets that are contributed to the licensing relationship and the licensee’s profit from the license.
Lost profits is a measure of damages that accounts for the profits a patent holder lost as a result of the infringement. In order to recover lost profits, the patent owner must show a reasonable probability that, “but for” the infringement, he would have made the sales that the infringer made. In addition to the lost profits on defendant’s sales, the patent owner may claim damages for lost profits due to price reductions caused by competition from the infringer as well as increased costs associated with lower volumes of sales.
In some cases, a patent holder may be able to recover treble damages. The court may order the infringer to pay up to three times actual damages if the patent holder can show that the defendant’s infringement was willful. To determine whether infringement was willful, the judge or jury must consider a number of factors, including whether the defendant knew of the patent and either copied it or tried to design around it, whether the defendant has substantial defenses to infringement, and whether he engaged in any litigation misconduct.
Courts may also enjoin a defendant form infringing a patent in the form of a preliminary injunction and/or a permanent injunction. In determining whether to issue an injunction, a court considers the following factors: (1) likelihood of success on the merits (for preliminary injunctions); (2) whether the patent owner would suffer irreparable harm by the absence of an injunction; (3) a balancing of the parties’ relative hardships; and (4) whether the public interest would be served by an injunction.
In general, as with most litigation in the United States, each party in patent litigation bears its own attorneys' fees and expenses. In exceptional cases, however, the court may award reasonable attorney’s fees to the prevailing party. An exceptional case is simply one that stands out from others with respect to the strength of a party’s position or the manner in which the case was litigated. District courts use their discretion to determine whether a case is exceptional on a case-by-case basis. Typically, the circumstances that justify awarding fees against the patent holder are limited to situations where the patentee asserted a patent procured by inequitable conduct or the patentee asserted its infringement claim in bad faith. The conduct that supports awarding fees against the infringer includes willful infringement, asserting defenses in bad faith, and changing designs during trial.
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