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Patent Infringement and Litigation

Many small businesses and inventors believe that receiving a patent offers complete protection against someone stealing their ideas. The legal term for this is “infringement." Patent holders take drastic measures to protect their interests. Often these patent owners file patent lawsuits to protect patents against infringement. These lawsuits could grant a small company with patented invention monetary damages or an injunction.

This article explains direct infringement, indirect infringement, demand letters, and the basics of patent infringement cases.

What Is a Patent?

Patents are a form of intellectual property. The United States Patent and Trademark Office (USPTO) accepts and reviews patent applications. Three types of patents exist: utilitydesign, and plant. The USPTO requires the invention, method, design, or process to be useful, novel, and non-obvious to receive patent protection.

Patents are available to individual entrepreneurs, business owners, start-ups, and large businesses. Patent holders have exclusive rights to the invention or product they patent.

What Is Patent Infringement?

Patent infringement occurs when another party makes, uses, or sells a patented item without the patent holder's permission. Permission happens through written contracts like a license. A person or small business receives a license after they pay licensing fees to the patent holder.

The patent holder has a few options at this point. First, they may send a demand letter to the other party. This is also known as a “cease and desist notice." Second, they may sue the infringing party to stop their activities. In doing so, the patent owner can demand compensation for the unauthorized use.

Where Do Patent Infringement Trials Happen?

Federal law governs intellectual property. A patent holder must sue the unauthorized party in federal district court. The patent holder can sue in any federal court where the infringed product is found. Patent lawsuits are time-consuming. Depending on where you live, these suits can take years to get to trial.

Patent holders must bring infringement actions within six years from the date of infringement. If the suit is not brought in this time frame, it is time-barred. This means an infringement case cannot get filed in any court after that time.

Patent litigation proceeds like any other federal case. However, there are complex legal issues. Questions surrounding patent validity and infringement get decided in court. Some patent litigation cases use juries for different aspects of the overall claim.

Different Types of Patent Infringement Cases

There are different ways another party may infringe on your patent, including:

  • Direct Infringement: When the manufacturing of a patented product occurs without permission
  • Indirect Infringement: When an indirect infringer induces infringement by encouraging or aiding another
  • Contributory Infringement: When a party supplies a direct infringer with a part that has no substantial non-infringing use
  • Literal Infringement: When there is direct correspondence between the words in the patent claims and the infringing device

Patent attorneys are often consulted to check the use of a patent to see if it is valid and non-infringing. Even if an invention does not literally infringe the patent, it may still infringe under the doctrine of equivalents. This doctrine says that a device infringes the patent if it:

  1. Performs the substantially same task;
  2. In substantially the same way;
  3. To achieve substantially the same result

If the court finds infringement, it will next determine if it was willful.

Willful Infringement

Willful infringement involves intentional disregard for another's patent rights. It includes direct and intentional copying as well as continued violation after notice. Notice occurs when the patent holder or their patent attorney issues a cease and desist letter to the infringer. This is also sometimes known as a demand letter.

Seeking a legal opinion before or after infringement is not evidence of willful infringement alone.

If the court finds that the infringement was willful, the infringer faces a large financial penalty. A willful infringer may end up paying triple the actual damages suffered by the patent holder. They may also pay the plaintiff's attorneys' fees.

Defenses to a Patent Infringement Lawsuit

There are individuals or businesses that buy patent rights just to sue others for infringement. These people are patent trolls. Their lawsuits overreach their actual patent rights. Patent trolls' frivolous lawsuits caused the Supreme Court to award attorney's fees in those cases.

Invalid Patent

One of the most common defenses in federal circuits is the argument that the patent is invalid. Patents are invalid if:

  1. The holder included fraudulent information in their U.S. Patent and Trademark Office application;
  2. The patent resulted from anti-competitive business activities; and
  3. Defendant shows that the patent did not meet the requirements of novelty and nonobviousness

Novelty requires that the invention be entirely new. Nonobviousness means that the invention cannot be a variation or an obvious improvement of an existing invention.

Noninfringement of a Patent

Another defense is simply noninfringement. This means the Defendant says, "Yes, they have a patent, but my invention/idea/product is not anything like that one."

First Sale Doctrine

A Defendant uses this if they bought the allegedly infringing product or process and then sold it to someone else.

Other Examples of Patent Infringement Defenses

  1. Estoppel: Defendant relied on the assurances of the patent holder that they could use the patent
  2. Experimental Use: Defendant argues they used the patented information for philosophical inquiry, curiosity, or amusement
  3. Repair Doctrine: Defendant legally has the right to a patent, and they replace parts, but those parts are not patented
  4. Licensed Use: Defendant bought a license to use the patent. They are using it appropriately within that license's terms and conditions
  5. Exhaustion: The Supreme Court declared in 2017 that when a patent holder sells the patent in full or via license, they cannot claim patent rights on it any longer. They have "exhausted" their right to it

Patent Lawsuit Burden of Proof

The patent holder bears the burden of proof to show that the defendant infringed the patent. The plaintiff must prove infringement by a preponderance of the evidence. This standard means that the greater weight of the evidence shows patent infringement.

Patent Infringement Penalties

Below are the possible penalties for patent infringement.

Damages

When a court finds infringement, the infringer usually must pay damages to the patent holder. This can be in actual damages or a reasonable royalty for unauthorized use. Actual damages include lost profits the patent holder would have received but for the infringement. A reasonable royalty depends on the product type, other royalty arrangements, time remaining on the patent, and other issues.

In addition to damages, the prevailing party is also entitled to costs. Costs include court filing fees and related litigation expenses like expert witnesses.

Injunctions

In addition to infringement damages, a patent owner may stop the infringer from producing infringing products.

In some instances, the patent holder will seek a preliminary injunction. This happens at the start of the lawsuit. If the patent holder can show the following, then the court will likely rule in their favor:

  1. There is no detriment to the public interest;
  2. There is a substantial likelihood of success on the merits of the case; and
  3. There will be compelling hardship for the patent holder if the infringer continues their activities during the case

The patent holder will find it difficult to get a preliminary injunction unless a prior judgment proves the patent was valid.

The court usually issues a permanent injunction at the end of a case. This happens when it has declared the infringer liable for violating the patent.

Contact a Lawyer for a Patent Infringement Claim

Patent holders and accused infringers should seek skilled legal help. Patent attorneys can help you develop your case and plan aggressive litigation strategies. Federal courts and complicated subject matter like patent law are difficult. Contact an experienced intellectual property attorney today and protect your business.

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