Patent Contributory Infringement

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Patent Contributory Infringement

Patent contributory infringement occurs when a person purchases a part that is used in creating a patented product.  For contributory patent infringement to exist, the main use of the part must be to create a patented product.

Types of Patent Infringement

The two primary types of patent infringement are direct infringement and indirect infringement.

Direct Infringement

Direct infringement occurs when an individual, company or other entity uses, sells, offers to sell, produces or imports an invention that’s received patent protection from the U.S. Patent and Trademark Office (USPTO). This can include products, processes, manufacturing articles, machines, production methods and even certain varieties of flora.

A finding of direct infringement requires that the party’s actions be willful and within the jurisdiction of the United States, but it’s not necessary for the infringer to know of the patent.  It’s also necessary to show that the violating article contains each element of at least one of the invention’s listed claims.

Even if an allegedly infringing item doesn’t meet a patent’s claims exactly, the Doctrine of Equivalents dictates that infringement may still have occurred. If the item (1) performs substantially the same function in (2) substantially the same way and (3) produces the same result, the defendant may still be held liable for patent infringement. This also applies if two elements of the items in question are interchangeable.

Indirect Infringement

Indirect patent infringement occurs when someone violates an IP owner’s rights without directly infringing.   An example is a distributor selling an infringing device.  This can occur through inducement or contributory patent infringement.

Courts have also found that “willful blindness” can meet the required elements of indirect infringement. If an entity has an active policy of not searching patent databases in order to avoid knowledge of an invention’s existence, their actions may still be considered willful. This means that inducing and contributory actions can exist even without firsthand knowledge of registered patents.

What is Contributory Infringement?

A person who imports, sells or offers to sell a component or part that’s used exclusively for a patented item or process is likely contributorily liable. They do not have to be involved in the sale, manufacture or use themselves to be liable.

Selling a generic item that’s not used exclusively for a patented product does not constitute a contributory violation. Even if the end user uses an item to infringe on a patent, the seller typically cannot be held liable if said item has substantial non-infringing use. A company that sold a repair kit for a patented convertible top, for instance, didn’t break the law since the materials had other uses.

These are examples of contributory infringement:

  • Selling components used exclusively to construct a patented item.
  • Selling non-infringing components with instructions on how use them in an infringing manner.
  • Importing a 3D-printed device with the exact specifications of a patented device.

There are typically about 3,000 patent litigation cases each year.  In some of these cases, defendants have argued that their addition of components that allow non-infringing use absolved them of liability. Courts have frequently ruled against this defense and found that the infringing component and intent are paramount.

Other defendants have claimed that they believed a patent was invalid. The owner of such a patent would have no rights, but if it proved to be valid, the mere belief of invalidity doesn’t negate liability.

Without knowledge of an existing patent, there can be no finding of contributory infringement. This doesn’t mean, however, that recklessly avoiding knowledge of a patent or believing it’s invalid excuse such actions.  If the defendant can actually prove invalidity, though, there will be no rights to enforce.

Contributory vs Induced Infringement

One of the most often confused aspects of patent law is contributory vs induced infringement. While both are indirect infringements and require knowledge of a patent, there are a few differences between the two. Rather than supplying components that will lead to infringement – such as with contributory actions – inducement involves directing, advising or instructing another party on how to infringe.

For liability to apply, the inducer must have more than mere knowledge that infringing actions could occur. Infringement must be their active intent. Additionally, an instance of direct infringement must occur. Similar to contributory liability, inducement doesn’t result in liability unless a direct violation also takes place.

The following are examples of infringement by inducement:

  • Hiring a third party to produce a patented item without appropriate licensing.
  • Selling guides that contain instructions on assembling a patented item.
  • Providing any assistance whatsoever in manufacturing, selling, using or importing patented products without authorization.
  • Providing information on a manufacturing process used to build patented devices.

Cease and Desist Letter

Cease and desist letters are partially credited with keeping more than 97 percent of legal disputes out of American courtrooms.

A patent cease and desist letter put infringers on notice that their actions aren’t going undetected. They explain the infringing activities and demand that such actions stop. This is an important part for establishing an evidentiary trail that can later be used in court. If an individual ignores the letter, it becomes difficult for them to claim they were unaware their actions were infringing.

To be effective, these legal notices should include the following:

  • All contact information for involved parties.
  • Demand that infringer end their illegal activities.
  • Demand that infringer never resume activities.
  • Proof of ownership (e.g. patent registration number).
  • Dates and circumstances of violations.
  • Explanation of additional legal action that may occur.
  • Deadline for recipient’s response (typically 10 days).

There is a variety of additional information that could be included dependent on the situation. Some patent owners, for instance, use cease and desist letters as an opportunity to establish licensing agreements. This could prove profitable since contributory infringers have already established relationships with others who use the patented item.

Since infringers may face enhanced damages, informing them of the infringement can lead to the immediate cessation of infringing activities.

Contributory Patent Infringement Damages

Acts of willful patent infringement – such as contributory violations – make up a substantial percentage of court awards. When it cannot be proven that infringing actions were willful and malicious, the best an patent owner can hope for is reasonable royalties or lost profits. If it’s shown that such actions weren’t accidental, though, court awards can increase threefold.

Judges and juries aren’t required to award enhanced damages even if contributory patent infringement is proven. The specifics of each case will be taken into account, and if they feel increased compensation isn’t warranted, they will calculate appropriate damages based on an expected reasonable royalty or the actual profit lost (if a causal relationship can be established).

Due to the willful element of contributory acts, the following patent infringement damages are also possible:

  • Treble monetary damages.
  • Attorneys’ fees.

Willful design patent infringement can also result in higher awards, but only in certain circumstances. Enhance damages may apply if a design patent is applied to an item for the purpose of sale, exposed for sale or actually sold with an intent to infringe.  In such cases the plaintiff may be entitled to all profits garnered by the infringer.

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