Mandour & Associates is a patent litigation law firm. We handle patent litigation and patent infringement matters, and we can also assist with patent registration. For a consultation with a patent attorney, please contact us.
If the process of sending a cease and desist letter does not stop a patent infringement, or does not lead to an acceptable settlement, patent litigation may become necessary. In these instances‚ we are aggressive patent litigation attorneys.
The Patent Litigation Process
The first step with patent litigation is the filing of a Complaint. This begins the pleading stage of the case.
The Complaint details the facts of the patent infringement claim, with reference to the applicable laws and a request for relief. A patent complaint must be filed in federal court. Upon service of the Complaint‚ the defendant must file a responsive pleading within 21 days.
The response is usually either an Answer or a Motion to Dismiss. The defendant may file a Motion to Dismiss is there is some defect with the complaint such as a failure to state a claim or if venue is improper. If there are no grounds for immediate dismissal of the lawsuit, the defendant must file an Answer which admits or denies each allegation of the complaint.
At the outset of a case the parties typically discuss settlement. If an early settlement does not occur, the case will go into the discovery phase. The discovery phase includes issuing and responding to discovery requests such as document requests, interrogatories, and requests for admissions. During the discovery phase, the plaintiff and defendant may also notice depositions during which an attorney asks witnesses questions under oath. If required to prove the case, expert witnesses may also be retained and deposed.
When the discovery phase is complete‚ both sides can then file dispositive motions such as motions for summary judgement. To prevail on summary judgment, the moving party must show that it is entitled to a judgment as a matter of law because there are no genuine issues of material fact. If issues remain in the case, it then proceeds to trial.
Though popular on television, only a very small percentage of patent cases go to trial. If a case makes it to trial, both sides will present all evidence gathered during the case to the judge or jury until a verdict is issued. Trial typically lasts 4-6 days.
What Constitutes Patent Infringement?
A patent registration issued by the U.S. Patent and Trademark Office confers upon the patent holder the right to exclude others from making‚ using or selling the invention or its equivalent throughout the United States and its territories and possessions. Patent infringement occurs when someone sells, uses, or makes a patented item without the express permission of the patent holder.
In patent litigation‚ the patent owner’s rights are defined in the claims of the granted patent. Generally, to be an infringement‚ the defendant’s product‚ service or business method must fall within one or more of the claims of a registered patent. The plaintiff must prove that every element of at least one claim of the patent at issue was infringed and that the infringement caused damages.
When the definition of the words in a patent claim are contested‚ courts will hold a Markman hearing to resolve the issue. The Markman hearing, also known as a claim construction hearing, is determined by a judge and can be held before or after the discovery phase.
Damages in Patent Litigation
When you prevail in a patent infringement claim, you can stop the infringement by obtaining a court order for an injunction from the court. You may also receive monetary damages for your losses, which may include:
- Reasonable royalties – This is the fair market estimation of the royalty value you would have received had the infringement been licensed activity.
- Lost profits – These are the profits you would have earned if the infringement had not occurred.
- Treble damages – These are enhanced damages, by which the court multiplies the amount of your actual damages up to three times. This generally occurs in cases involving willful infringement.
- Costs and attorney’s fees – When you are successful in proving patent infringement, the court can order the infringing party to cover all your costs of litigation, including attorney’s fees in exceptional cases.
Lost profits are the preferred route for many plaintiffs because they typically result in larger court awards. To recover lost profits, a plaintiff must show that it suffered actual financial loss due to the infringement. Damages can occur in a variety of ways including:
- Lost sales: In this case the plaintiff must prove that sales declined due to the infringement.
- Price erosion: This occurs when the patent holder has to reduce their prices in order to compete with infringing products or technologies.
- Damaged reputation: If the infringer creates a low-quality product similar to the patented item, it could damage public perception of the original product and the company that produces it.
- Additional losses: If a patent holder can prove additional losses, such as damage to their stock price, these damages may also be recovered
Individuals who are knowingly violating a patent or become aware of accidental infringement have a huge incentive to cease their actions. The reason is that willful patent infringement can lead to enhanced damages such as treble damages. In exceptional cases, the non-prevailing party in patent litigation may be liable to pay the other sides attorneys fees. Recognizing the damage that bad-faith cases can have on the economy and innovation, the Supreme Court has recently made it easier for prevailing parties to recover attorneys fees incurred due to patent infringement.
To determine lost profits, courts may use the Panduit test to see if profits were actually lost. This test focuses on reconstructing the market to prove causation. It looks at the demand for the product, a lack of unpatented substitutes, the likelihood of benefiting from said demand and proof that profit was forthcoming.
Unfortunately, there are instances when actual loss cannot be proven. In these situations, a reasonable royalty must be determined by the court. A common way to determine a reasonable patent royalty is to consider factors that fall into five general categories:
- Preexisting relevant licenses: These factors include preexisting royalty agreements, similar patent royalties and the restriction or exclusivity of potential licenses.
- Patent holder’s value on exclusivity: These considerations focus on the value perceived by the patent holder. Courts will look at patent lengths, unpatented item sales linked to the patent, whether the two parties are competitors and whether previous licenses have been granted.
- Product valuation: With these factors actual value determinations are attempted. Factors include current profits, advantages over prior products with similar results, and the nature of the invention along with benefits attained by users.
- Infringer’s valuation: This focuses on value gained by infringer. Considerations include how often the infringer used the innovation, the portion of profits that would be paid to use the patent, and the portion of profits that can be attributed to the innovation.
- Hypothetical negotiation: Courts will consider the royalties that may have come from a fruitful negotiation. Expert testimony is typically used during this process.
A second reasonable royalty methodology approved by Federal Courts is the “analytical approach.” When using this approach, courts will consider internal profit projections from the infringing party. The projected profits are apportioned between the parties as a percentage of sales to determine a reasonable royalty.
Defenses of Patent Infringement Claims
There are many defenses that defendants can use during patent litigation. A typical strategy for a defendant in a patent infringement lawsuit is to attempt to invalidate the patent at issue. A patent can be deemed invalid if the holder of the patent submitted fraudulent information in its application to the U.S. Patent and Trademark Office. A patent may also be deemed invalid if the patent never met the requirements of non-obviousness or novelty. Commons patent infringement defenses include:
- Non-infringement: This is the most common defense to patent infringement. With this defense a defendant attempts to prove that its product or process does not utilize all elements of the claims of a patent.
- Inequitable conduct: If the patent holder obtained the patent through deceptive means – including failure to disclose prior art – the entirety of the patent may become unenforceable.
- Prior art invalidity: Proof that an invention was not original at the time of filing can be used as a defense in patent litigation.
- Equitable estoppel: This defense is available if the patent owner knowingly made false or misleading statements and the alleged infringer detrimentally relied on the statements.
Mandour & Associates – Patent Litigation Attorneys
If you are involved in a patent litigation or patent infringement matter‚ we encourage you to seek the advice of a patent litigation attorney at the earliest possibility because important deadlines exist. We have offices located throughout southern California including Los Angeles‚ Orange County and San Diego. We look forward to assisting you.
If you are interested in having us assist you with a patent litigation matter‚ please contact us.