PATENTS
- WHAT IS A PATENT?
- HOW DO YOU OBTAIN A PATENT?
- WHAT IS DIRECT INFRINGEMENT?
- WHAT IS INDIRECT INFRINGEMENT?
- WHAT IS WILLFUL INFRINGEMENT?
- HOW DOES AN ALLEGED INFRINGER ESTABLISH THE INVALIDITY OF A PATENT?
- WHAT IS INEQUITABLE CONDUCT?
- WHAT IS LACHES?
- WHAT IS EQUITABLE ESTOPPEL?
- WHAT IS UNCLEAN HANDS?
- WHAT ARE THE DIFFERENT TYPES OF COMPENSATORY DAMAGES THAT A PATENT HOLDER MAY BE ENTITLED TO RECOVER?
- WHAT ARE ENHANCED DAMAGES?
- HOW DOES A PATENT HOLDER ESTABLISH A CLAIM FOR PERMANENT INJUNCTIVE RELIEF?
A patent is a limited monopoly granted by the U.S. government whereby the patent owner is authorized to prevent an infringer from making, using, selling, offering for sale, importing, or exporting a product which contains all of the elements contained in one of the patent’s claims. Any product containing all of the elements in a patent’s claim is known as a commercial embodiment. For an invention to be patentable, it has to be (a) useful, (b) novel, and (c) non-obvious. There are three types of patents protecting inventions: (a) utility patents, (b) design patents, and (c) plant patents. A utility patent claims the useful aspects of a product or method, a design patent claims the ornamental features of a product, and a plant patent claims an invention related to plants. A U.S. patent application must be submitted within the first year of the invention being disclosed to the public, anywhere in the world, or the invention is forever ceded to the public domain. A narrow exception to this requirement exists for inventions embodied in products which are test marketed outside the one year window.
Obtaining a patent begins by submitting an application. That application is assigned to an examining attorney. Unless a petition is filed to keep it confidential, the application will be published within eighteen months of the filing date. At some point during the application process, the examining attorney makes an initial determination whether the claimed invention is useful, and then searches the public records to determine if the claimed invention is novel and non-obvious. After performing his examination, the examining attorney will either issue a notice of allowance indicating that the patent will be issued or an office action indicating that he or she objects to the claims on technical reasons or rejects certain claims on the assertion that they are unpatentable. In the vast majority of applications, the examining attorney issues either an objection or rejection. If such an office action is issued, then the applicant has to either submit a paper arguing that the examining attorney has made an error or edit the patent’s claims in such a way as to avoid or overcome the examining attorney’s arguments.
Approximately 50% of patent applications do not ripen into an issued patent, and an additional 50% of issued patents (which are litigated) are ultimately found to be invalid and unenforceable. As to litigation, the novelty and non-obvious elements of patentability are most frequently litigated elements of patentability. The typical patent litigation costs $1.2 million through trial. Finally, once a patent has issued, a third party may request that it be reexamined by the United States Patent and Trademark Office.
Notwithstanding these hurdles, an enforceable patent can provide its holder with an extremely powerful business tool: it enables the exclusion of others from making a commercial embodiment of the patented invention for a period of twenty years. Also, the mere filing of an application has some deterrent value: after filing the application, the patent applicant should begin marking commercial embodiments, and designating them as “patent pending.” This will have distinct deterrence. Additionally, after a patent application has been published for opposition, the applicant should begin marking commercial embodiments with “Patent Pending, U.S. Application No. xxxxxx.” An entity that infringes a patent after it has been published for opposition may be liable for damages from the time of publication forward. This will likewise have a significant deterrent effect.
An entity who infringes a patent is liable to the patent owner for at least a reasonable royalty. This assumes, however, that the commercial embodiments were properly marked with a patent number, or that the infringer was placed on actual notice by sending it a copy of the patent. Additionally, under some circumstances, the patent owner may be entitled to recover its lost profits, and if the infringement caused an erosion of the monopoly price then the patent owner may be able to recover the delta between what its future profits would have been, but for the infringement, and what they will be likely be after the price erosion. A willful infringer may be liable for three times the amount of damages it caused. Finally, preliminary and permanent injunctive relief may be granted in patent infringement actions.
There are two types of direct infringement: (1) literal infringement and (2) infringement under the doctrine of equivalents. In order to prove direct infringement by literal infringement, the patent holder must prove by a preponderance of the evidence, i.e., that it is more likely than not, that alleged infringer made, used, sold, offered for sale within, or imported into the United States a product or process that meets all of the requirements of a claim and did so without the permission of patent holder during the time the patent was in force. Under the doctrine of equivalents, a product or process infringes a claim if the accused product or process contains elements or performs steps corresponding to each and every requirement of the claim that is equivalent to, even though not literally met by, the accused product or process. You may find that an element or step is equivalent to a requirement of a claim that is not met literally if a person having ordinary skill in the field of technology of the patent would have considered the differences between them to be “insubstantial” or would have found that the structure or action: (1) performs substantially the same function and (2) works in substantially the same way (3) to achieve substantially the same result as the requirement of the claim. In order for the structure or action to be considered interchangeable, the structure or action must have been known at the time of the alleged infringement to a person having ordinary skill in the field of technology of the patent. Interchangeability at the present time is not sufficient. In order to prove infringement by “equivalents,” the patent holder must prove the equivalency of the structure or actions to a claim element by a preponderance of the evidence.
WHAT IS INDIRECT INFRINGEMENT?
There are two types of indirect infringement: (1) active inducement and (2) contributory infringement. When claiming indirect infringement by active inducement a patent holder will allege that the alleged infringer is liable for infringement by actively inducing someone else or some other company to directly infringe the patent literally or under the doctrine of equivalents. The alleged infringer is liable for active inducement of a claim only if the patent holder proves by a preponderance of the evidence: (1) that the acts are actually carried out by the direct infringer and directly infringe that claim; (2) that the alleged infringer took action during the time the patent was in force intending to cause the infringing acts by the direct infringer; and (3) that the alleged infringer was aware of the patent and knew that the acts, if taken, would constitute infringement of that patent. On the other hand, when claiming indirect infringement by contributory infringement a patent holder must prove by a preponderance of the evidence: (1) the alleged infringer sells, offers to sell, or imports within the United States a component of a product, or apparatus for use in a process, during the time the patent is in force; (2) the component or apparatus has no substantial, noninfringing use; (3) the component or apparatus constitutes a material part of the invention; (4) the alleged infringer is aware of the patent and knows that the products or processes for which the component or apparatus has no other substantial use may be covered by a claim of the patent or may satisfy a claim of the patent under the doctrine of equivalents; and (5) that use directly infringes the claim.
WHAT IS WILLFULL INFRINGEMENT?
A patent holder will first have to prove that the alleged infringer infringed. Then, a patent holder will have to prove that the alleged infringer infringed willfully by establishing that the alleged infringer acted recklessly. To prove that the alleged infringer acted recklessly, a patent holder must prove two things by clear and convincing evidence: (1) that the alleged infringer acted despite a high likelihood that alleged infringer’s actions infringed a valid and enforceable patent, and (2) that the alleged infringer actually knew or should have known that its actions constituted an unjustifiably high risk of infringement of a valid and enforceable patent.
HOW DOES AN ALLEGED INFRINGER ESTABLISH THE INVALIDITY OF A PATENT?
An alleged infringer may defend against an alleged infringement by proving that a patent is invalid. There are several ways to attack the validity of a patent.
1. Written Description Requirement
An alleged infringer contends that claim(s) of a patent holder’s patent is invalid because the specification of the patent does not contain an adequate written description of the invention. To succeed, the alleged infringer must show by clear and convincing evidence that the specification fails to meet the law’s requirements for written description of the invention.
2. Enablement
An alleged infringer contends that claim(s) of a patent holder’s patent is invalid because the specification does not contain a sufficiently full and clear description of how to make and use the full scope of the claimed invention. To succeed, the alleged infringer must show by clear and convincing evidence that the patent does not contain a sufficiently full and clear description of the claimed invention. To be sufficiently full and clear, the description must contain enough information to have allowed a person having ordinary skill in the field of technology of the patent to make and use the full scope of the claimed invention at the time the original patent application was filed.
3. Best Mode
An alleged infringer contends that claim(s) of a patent holder’s patent is invalid because the specification does not describe the best way to make/use/carry out the claimed invention. To succeed, the alleged infringer must show by clear and convincing evidence that the patent does not disclose what the inventor/any of the inventors believed to be the best way to make/use/carry out the claimed invention at the time the patent application was filed. The best mode requirement is designed to prohibit the inventor/any of the inventors from concealing a better mode of practicing the invention than the mode he/she/they disclosed in the patent application.
(Under section 15 of the America Invents Act, enacted on September 16, 2011, failure to disclose the best mode is no longer a basis for invalidity or unenforceability)
4. Prior Art
Prior art may include items that were publicly known or that have been used or offered for sale, publications, or patents that disclose the claimed invention or elements of the claimed invention. To be prior art, the item or reference must have been made, known, used, published, or patented either before the invention was made or more than one year before the filing date of the patent application. However, prior art does not include a publication that describes the inventor’s own work and was published less than one year before the date of invention. The alleged infringer must show that all of the requirements of that claim were present in a single previous device or method that was known of, used, or described in a single previous printed publication or patent.
5. Anticipation
An alleged infringer contends that claim(s) of the patent is invalid because the claimed invention(s) is anticipated or because the patent holder lost the right to obtain a patent. These contentions must be proved by clear and convincing evidence.
6. Obviousness
Even though an invention may not have been identically disclosed or described before it was made by an inventor, in order to be patentable, the invention must also not have been obvious to a person of ordinary skill in the field of technology of the patent at the time the invention was made. An alleged infringer may establish that a patent claim is invalid by showing, by clear and convincing evidence, that the claimed invention would have been obvious to persons having ordinary skill in the art at the time the invention was made in its specific field.
7. Inventorship
An alleged infringer contends that the patent is invalid because of improper inventorship. A patent is invalid if it fails to meet the requirement that all of the actual inventors, and only the actual inventors, be named as inventors in the patent.
Every applicant for a patent has a duty of candor and good faith in its dealing with the United States Patent and Trademark Office (“PTO”). When a person involved in the prosecution of an application fails to supply material information or supplies false information or statements and does so with an intent to deceive the PTO, he or she may commit what is called “inequitable conduct.” When inequitable conduct occurs during the examination of an application, any patent that issues from that application is unenforceable as a matter of fairness. This means that despite the existence and validity of the patent, the patent holder may not prevent others from using the invention covered by the patent and may not collect damages from those who use the invention that is covered by the patent. To prove inequitable conduct an alleged infringer must prove by clear and convincing evidence both that a person meaningfully involved in the prosecution of the patent withheld material information or submitted materially false information or statements to the PTO during the examination of the patent(s), and that the person did so with an intent to deceive the Examiner into issuing the patent(s).
An alleged infringer contends that a patent holder is not entitled to recover damages for acts that occurred before it filed a lawsuit because: (1) the patent holder delayed filing the lawsuit for an unreasonably long and inexcusable period of time, and (2) the alleged infringer has been or will be prejudiced in a significant way due to patent holder’s delay in filing the lawsuit. This is referred to as laches. The alleged infringer must prove delay and prejudice by a preponderance of the evidence.
The owner of a patent may forfeit its right to any relief from an infringer where: (1) the patent holder communicates something in a misleading way to the infringing party about the lack of infringement or about not being sued, (2) the infringer relies upon the misleading communication from the patent holder, and (3) the infringer will be materially harmed if the patent holder is allowed to assert a claim relating to the issue that is inconsistent with the patent holder’s prior misleading communication. The alleged infringer must prove each of these elements by a preponderance of the evidence, but even if all these elements are proven, equitable estoppel may be negated if such a finding would be unfair in light of the conduct of the parties.
The owner of a patent may be barred from enforcing the patent against an infringer where the owner of the patent acts or acted inequitably, unfairly, or deceitfully towards the infringer or the Court in a way that has immediate and necessary relation to the relief that the patent holder seeks in a lawsuit. An alleged infringer must prove unclean hands by a preponderance of the evidence.
WHAT ARE THE DIFFERENT TYPES OF COMPENSATORY DAMAGES THAT A PATENT HOLDER MAY BE ENTITLED TO RECOVER?
A patentee who is successful in bringing forth a patent infringement claim may be awarded: (1) lost profits, (2) price erosion, (3) collateral sales, or (4) a reasonable royalty.
1. Lost Profits
A patent holder is entitled to lost profits if it establishes each of the following: (1) that there was a demand for the patented product/method/product produced by the method; (2) that there were no available, acceptable, noninfringing substitute products, or, if there were, its market share of the number of the sales made by the alleged infringer that the patent holder would have made, despite the availability of other acceptable noninfringing substitutes; (3) that the patent holder had the manufacturing and marketing capacity to make any infringing sales actually made by the alleged infringer and for which the patent holder seeks an award of lost profits—in other words, that [patent holder] was capable of satisfying the demand; and (4) the amount of profit that [patent holder] would have made if the alleged infringer had not infringed.
2. Price Erosion
A patent holder can recover additional damages called price erosion if it can establish that it is more likely than not that, if there had been no infringement, the patent holder would have been able to charge higher prices for some of its products. If this fact is established, additional damages may be awarded on the difference between: (A) the amount of profits the patent holder would have made by selling its product at the higher price, and (B) the amount of profits the patent holder actually made by selling its product at the lower price the patent holder actually charged for its product.
3. Collateral Sales
A patent holder is seeking lost profits from sales of an item which the patent holder contends it would have sold along with the product it sells that competes with the infringing products. These products sold along with the competitive product are called collateral products. To recover lost profits on sales of such collateral products, the patent holder must establish two things. First, the patent holder must establish it is more likely than not that the patent holder would have sold the collateral products but for the infringement. Second, a collateral product and the competitive product together must be analogous to components of a single assembly or parts of a complete machine, or, in other words, they must constitute a single functional unit. Recovery for lost profits on sales of collateral products must not include items that essentially have no functional relationship to the competitive product and that have been sold with the competitive product only as a matter of convenience or business advantage.
4. Reasonable Royalty
A royalty is a payment made to a patent holder in exchange for the right to make, use, or sell the claimed invention. A reasonable royalty is the amount of royalty payment that a patent holder and the infringer would have agreed to in a hypothetical negotiation taking place at a time prior to when the infringement first began.
To obtain any enhanced damages, a patent holder must have successfully proven that willful infringement occurred, showing the infringer acted in utter disregard towards the patent holder’s patent rights. The maximum enhanced damages that can be awarded are treble damages, meaning three times more than the normal amount.
HOW DOES A PATENT HOLDER ESTABLISH A CLAIM FOR PERMANENT INJUNCTIVE RELIEF?
A patent holder must prove, as in all other types of cases requesting permanent injunctive relief, the following: (1) it has suffered an irreparable injury; (2) the remedies available at law, such as monetary damages, are inadequate to compensate for its injury; (3) a remedy in equity is warranted after considering the balance of hardships between the patent holder and the alleged infringer; and (4) the public interest would not be disserved by an injunction.