Intellectual Property Law

Chapter 20 Lecture Notes

Major points addressed in the chapter materials include the following:

1. Any person who, without authority, makes, uses, offers to sell, or sells any patented
invention within the United States or imports into the United States any patented
invention during the term of its patent, infringes the patent. This infringement is
referred to as direct infringement. Encouraging or inducing another to infringe is
often referred to as indirect infringement. Liability can be imposed for direct
infringement without regard to the infringer’s intent; liability for indirect
infringement requires that the defendant know that the infringement will occur
because of his/her conduct (or willful blindness to such).

2. A patent is enforceable only after it is issued. Thus, making, using, or selling devices
prior to the time of a patent’s issuance is not infringement (although under the
American Inventors Protection Act, patentees may obtain reasonable royalties if
others infringe their inventions during the period between publication of their
applications, which occurs 18 months after filing, and grant of the patent).

3. Direct infringement can occur even if the infringer does not intend to infringe and has
no knowledge that his/her acts infringe a patented invention. Innocence is not a
defense to direct infringement of a patent.

4. Under the Patent Act, a company cannot use a patented process abroad to make a
product and then bring the product back into the United States to compete with the
patent owner. While using the process abroad is not an infringement, subsequent
importation into the United States is infringement. The patent owner may bring an
action for infringement, request that the International Trade Commission block the
device from entry into the United States (a Section 337 investigation), or order an
import survey from U.S. Customs and Border Protection to determine the address of
the importer.4

5. Liability for infringement can arise from inducing another to infringe a patent. Thus,
actively encouraging another to infringe (such as selling a product with instructions
on using the product in a manner that would infringe) gives rise to liability.
6. Supplying (from the United States) parts for assembly abroad into infringing devices
is also infringement, although under the 2007 U.S. Supreme Court case Microsoft v.
AT&T, prototypes, templates, and intangible blueprints must be combined with
something physical in order to infringe.

7. Selling a component of a patented invention (in the United States or for importing
into the United States), knowing it is made or adapted for use in infringement, is
contributory infringement. Selling some common article, often called a staple article,
that can be used for purposes other than in the invention does not constitute
contributory infringement.

8. While liability can be imposed for direct infringement without regard to the
infringer’s intent, liability for inducing infringement or contributory infringement
requires that the defendant know infringement will occur (or be willfully blind to
such).

9. Once a patent owner sells a patented item, the first sale doctrine applies and the buyer
has the right to resell it or use it as desired. The first sale exhausts the rights of the
patent owner. The buyer may also repair and restore the article so long as he/she does
not rebuild or reconstruct it such that a new invention is made.

10. The claims in a patent determine its exclusive rights. Determining infringement
requires interpreting the claims language in the patent and then comparing and
contrasting the accused device against those claims. It is sufficient to prove that only
one claim has been infringed.

11. If the accused invention falls within the language used in a patent claim, there is
literal infringement because the accused invention is the same as the patented one.

12. Even if the accused device does not fall within the language of a patent claim (usually
because the defendant has made some change to a patented device), under the
doctrine of equivalents, infringement may have occurred.

The accused device may be found to infringe if there is equivalence between its
elements and the claimed elements of the invention. The critical question is as
follows: Does the accused device contain elements identical to or equivalent to each
claimed element of the patented invention? If so, it will be found to infringe.
Most courts use a triple identity test (also called the function-way-result test). If the
accused device is equivalent to the patented invention in that it performs substantially
the same function in substantially the same way to reach substantially the same result
as the limitation in the patent claim, it infringes.

Other courts focus on the substantiality of the differences between the two devices; an
accused element is equivalent to a claim limitation if the only differences between the
two are insubstantial. Thus, if the differences are not found to be insubstantial, there
is infringement.

13. For a device to infringe under the doctrine of equivalents, it must have an equivalent
of each element of the patented invention. Thus, if one element of a claim is not
present in or has no equivalent in the accused device, there is no infringement.

Every limitation of a claim must be met literally or by a substantial equivalent;
merely showing that the two devices are equivalent overall is not sufficient to
establish infringement.

14. Some patents may be given more protection than others. For example, a pioneer
patent (one that is an important advance or significant breakthrough) is usually given
a wide range of equivalents so that if the accused invention is generally equivalent to
the pioneer patent, it infringes.

15. Under the reverse doctrine of equivalents, if the resulting device is different from the
patented device, there is no infringement (even if the accused device falls within a
claim’s literal language).

16. Under the doctrine of prosecution history estoppel or file wrapper estoppel, an
inventor/patentee is bound by his/her arguments made to the USPTO during the
process of obtaining a patent (and during reissue and reexamination). Thus, he/she is
estopped from asserting that a claim was intended to be or was originally broader and
the defendant has infringed the earlier broader claim.

17. In a 2002 U.S. Supreme Court case, Festo, the Court held that estoppel does not bar
suit against every equivalent to an amended claim. Prior to the Court’s holding, the
Federal Circuit had held in Festo that when any narrowing amendment was made by a
patent applicant during the patent prosecution process, there was a complete bar to the
doctrine of equivalents for the amended claim element. The Supreme Court has thus
confirmed the continued validity of the doctrine of equivalents; in brief, a patentee
who amends a patent gives up protection only for those things that were foreseeable
by those skilled in the art covered by the patent. Thus, a patent holder who could not
have foreseen that changing the description in a patent application would limit
coverage would still be able to sue those making equivalent products. The patentee
bears the burden of proof in overcoming the presumption.

18. A defendant in an infringement action can assert various defenses:

• Noninfringement. A defendant may assert that his/her acts do not constitute
infringement, either literally or under the doctrine of equivalents.
• Patent invalidity. A defendant may assert that the patent is invalid and thus
cannot be infringed. Arguments might be made that the invention is a scientific
principle, not novel, is obvious, or is not useful. Because issued patents are
presumed to be valid, invalidity must be proved by clear and convincing evidence.
A party using a patent under a licensee from the patentee may assert invalidity
even though he/she agreed in a license agreement not to assert such a defense.
• Fraud/inequitable conduct. Fraud or inequitable conduct by the applicant during
the prosecution process (such as failing to disclose relevant prior art, etc.) renders
a patent unenforceable.

Courts and Congress have been concerned over the “plague” of cases in which
defendants assert inequitable conduct in order to invalidate a patent. Thus, under
Therasense, there must be clear and convincing evidence of a deliberate intent to
deceive by withholding material information. Mere negligence does not satisfy
the intent requirement. Moreover, the accused infringer must show that “but for”
the omission, the patent would not have been issued. Moreover, under the AIA, a
patent owner may request a supplemental examination of his/her own patent. If
the patent owner affirmatively discloses information in a supplemental
examination that should have been disclosed during the patent prosecution
process, such effectively inoculates the patent from a later assertion that the patent
is unenforceable because of the patent owner’s inequitable conduct during
prosecution.

• Patent misuse. A defendant might allege that the patent owner has abused his/her
position to exploit a patent improperly and thus is precluded from asserting
infringement. For example, attempts by a patent owner to obtain royalty payments
from a licensee after a patent has expired is patent misuse.
• Best mode defense invalidated. Under the AIA, and effective September 16,
2011, an infringer can no longer assert the defense that the patent is invalid
because the patentee failed to disclose the best mode of making the invention.
• Research use. Use of a patent for research or experimental purposes is generally
not infringement (although this exception is narrowly construed and any
commercial use will defeat this defense).
• Laches. A patentee who has delayed in bringing suit, which delay materially
prejudices the defendant, is barred by laches from suing for infringement.
• Estoppel. A defendant might assert that the plaintiff’s conduct (generally, in
acquiescing to defendant’s acts) should estop or bar it from suing.
• Statute of limitations. Although there is no statute of limitations in the Patent
Act, no monetary recovery may be had for any infringement committed more than
six years before filing a claim of infringement. Injunctive relief is still available.
• First inventor/business methods defense. In actions involving business
methods, an accused infringer may assert a defense that he/she had, in good faith,
actually reduced the subject matter of the patent to practice at least one year
before the effective filing date of the patent allegedly infringed and commercially
used the subject matter before the effective filing date.
• Prior user defense under the AIA. A defendant in an infringement action may
now assert a prior user defense not only with regard to business method patents
but also with regard to all patents if the defendant shows a good faith commercial
use of any infringing device in the United States more than one year before the
earlier of the filing date of the claimed invention or the date the subject matter of
the patent was publicly disclosed by the inventor.

19. Some acts do not constitute infringement, such as use of patents relating to genetic
manipulation, use for the purpose of submitting information to federal regulatory
agencies, or use for certain medical activities.

20. A successful plaintiff in an infringement suit may recover the following:

• Injunctive relief. A court may enjoin the defendant’s wrongful infringing acts.
Under the 2006 Supreme Court case eBay v. MercExchange, the granting of
injunctive relief is no longer automatic when infringement is found. A plaintiff
must satisfy and prove the traditional four-part test in order to obtain an
injunction.
• Compensatory damages. A court may award damages adequate to compensate
for infringement. Lost profits may be recovered. If damages are difficult to prove,
the court will use a reasonable royalty rate as the measure of damages. If a
patented product is not marked with a notice of patent, no damages may be
recovered unless there is proof the infringer was notified of the infringement and
continued to infringe thereafter. Prejudgment interest can be awarded as can costs
of litigation.
• Enhanced damages. Under Halo Electronics, Inc. v. Pulse Electronics, Inc., No.
14-1513 , 2016 WL 3221515 (U.S. June 13, 2016), an award of enhanced or
punitive damages is made at the discretion of the district court, which should take
into account the particular circumstances of each case in determining whether and
in what amount such enhanced damages should be awarded. Generally, however,
such enhanced damages are reserved for egregious cases typified by willful
misconduct and not for “garden-variety” infringement.

Moreover, relying on advice of patent opinion counsel triggers a waiver of the
attorney–client privilege and work product protection for all communications on
that same subject matter (although the waiver will not ordinarily extend to
communications with trial counsel).

The AIA provides that the failure of an infringer to obtain the advice of counsel
with respect to any allegedly infringed patent, or the failure of the infringer to
present such advice in court, may not be used to prove that the accused infringer
willfully infringed the patent or intended to induce infringement. 35 U.S.C. § 298.
This statute thus preserves attorney–client privilege.

• Attorney’s fees. A court can award reasonable attorney’s fees to the prevailing
party in exceptional cases. The recent Supreme Court case Octane Fitness in 2014
clarified that the district court has discretion in awarding attorney’s fees and that
an exceptional case is one that stands out from others with respect to the strength
of a party’s litigating position or the unreasonable manner in which the case was
litigated. This case should make it easier for prevailing parties in patent
infringement cases to obtain attorney’s fees (because objective bad faith is no
longer required).
• Design patent cases. In addition to the usual remedies available for infringement,
one whose design patent has been infringed is entitled to recover all of the total
profits of the infringer.

21. Lawsuits for infringement are among the most expensive and time-consuming of all
litigation cases. The subject matter of most patents is technical so experts must often
be retained. If infringement is found, damages can be millions of dollars.

22. When a patent is infringed, the patent owner usually sends a cease and desist letter to
the accused infringer. Even if the infringer does not stop his/her activities, the letter
provides actual notice of the patent so that if the patented item is not marked with a
notice (or is not marked “virtually,” as provided for in the AIA), the patent owner
may recover for damages for infringement after the date of the letter. The parties
might now negotiate, enter into a licensing arrangement, or initiate a reexamination
proceeding before the USPTO to have the patent reexamined or reviewed through ex
parte reexamination, inter partes review, or post-grant review to determine the
validity of any claim in the patent. The USPTO or PTAB determination may spur a
settlement.

23. There is some risk to sending a cease and desist letter. In some instances, the recipient
may immediately file a declaratory judgment action in the district court in the locality
in which it is located, which would force the patent owner to assert its patent rights in
an inconvenient location. Thus, cease and desist letters must be carefully drafted.

24. If the parties cannot resolve their dispute, the plaintiff will file a patent infringement
action in federal district court. Federal courts have exclusive jurisdiction over patent
cases and will use the Federal Rules of Civil Procedure. The clerk of the court must
provide notice of the suit to the USPTO within one month after suit is filed (and must
also notify the USPTO within one month after a judgment is entered in the case).

25. Although juries determine whether infringement has occurred, per the Markman case,
the issue of claims construction is determined by the trial judge, not the jury.

26. The losing party may appeal to the Court of Appeals for the Federal Circuit,
established in 1982 to bring about consistency in patent cases and which hears
appeals from infringement cases brought in any of the federal district courts.
Thereafter, if certiorari is granted, the U.S. Supreme Court may hear the case.

27. A new development relates to the rise of patent trolls, individuals or companies who
do not practice or commercialize their patents but whose sole business is to pursue
potential infringers to obtain money through making claims of infringement.

28. There are several alternatives to patent infringement litigation in federal court:

a. ITC investigations to block offending imports;
b. Reexamination of a patent at the USPTO (which will cancel or confirm
claims);
c. Post-grant proceedings at the PTAB (post-grant review, inter partes
review, covered business method patent review), which proceedings are
conducted within 12 months and result in canceling or confirming claims;
and
d. Arbitration.