What is a patent?
A patent in the United States is a government grant of a property right, giving the patentee (the owner of the patent) the right to exclude others from making, using, or offering for sale the patented invention in the United States for a period of time.
One key philosophical point is that a patent is only good for the country that issues the patent. A patent issued in the United States is only good in the United States.
What is a “provisional application for patent?”
A provisional application for patent is an application for a patent filed in the United States Patent and Trademark Office (USPTO), which is not examined, but allows the applicant to establish an early effective filing date in a later filed patent application. It does not require a formal patent claim, oath or declaration, or a prior art statement. The provisional application lasts for 12 months and can’t be extended, so the applicant will have to file a non-provisional patent application before the 12 months runs out. Another option is file a petition to convert the provisional application into a non-provisional application, although this will affect the term of the patent. After filing a provisional application, applicants may use the term “Patent Pending” when describing the invention.
What does “Patent Pending” mean?
This term is used by the manufacturer or seller of an invention to inform consumers and others that a patent application has been filed with the USPTO. Although you don’t have a patent yet, being able to say “patent pending” conveys to others that you have taken steps to protect your idea, and warns them that if they try to copy your idea, they may face legal consequences.
Are there different kinds of patents in the United States?
There are three different types of patents in the United States: utility patents that protect useful inventions; design patents that protect ornamental designs; and plant patents that protect plants (e.g., a new species of a plant).
How can I figure out if what I invented has already been patented?
Inventors can perform a preliminary patent search online, at the USPTO Patent Search Facility in Alexandria, Virginia, or at one of the Patent and Trademark Depository Libraries located throughout the country.
Patent assignment records can also be searched online.
You can retain a patent law firm to conduct a complete search.
If I’m familiar with similar products to my invention, must I tell anyone?
Yes. Under U.S. law, applicants for patents, and their attorneys, have a duty to tell the Patent Office about any prior art of which they are aware, where the prior art is material to patentability. If in doubt, it is probably a good idea to disclose the information to the USPTO.
Disclosure is made by way of an Information Disclosure Statement (IDS). The IDS is due to be filed three months after filing the patent application, or by the time of mailing of the first Office Action from the Examiner, whatever occurs last.
What is the process for obtaining a patent?
The process for getting a patent can be quite complicated, and is often best handled by a qualified patent law firm.
For example, to obtain a utility patent, the USPTO advises that the following steps are involved:
Search to see if the invention has been patented.
Applicant determines what type of patent application to file (design, utility, or plant).
Applicant determines filing strategy (international or U.S. only).
Applicant determines whether to file a provision or non-provisional patent application.
Applicant considers whether an expedited examination is appropriate.
Applicant decides whether to file on their own or have a patent attorney or agent file.
Applicant prepares for electronic filing.
Applicant applies for patent using electronic filing system.
USPTO examines application.
If not allowed, applicant files replies, requests for reconsideration and appeals, as appropriate.
If allowed, applicant pays the issue and publication fees.
After the patent is granted, maintenance fees are required 3.5, 7.5 and 11.5 years after the patent is granted.
What kinds of inventions are eligible for patent protection?
Eligible subject matter for patent protection includes new and useful articles of manufacture, machines, processes and compositions of matter, and improvements of the same. In addition, patent protection is available for ornamental designs of articles of manufacture as well as for certain types of plants.
What makes an invention patentable?
What makes an invention “novel”?
In the context of a patent application, an invention is considered novel when it is different from all previous inventions (called “prior art”) in one or more of its constituent elements. When deciding whether an invention is novel, the USPTO will consider all prior art that existed as of the date the inventor files a patent application on the invention.
An invention will fail the novelty test if it was described in a published document or put to public use prior to the date the patent application was filed. The only exception is if the actual inventor-applicant created the publication and it was made up to one year before the filing date, it will not bar the application. However, it is still unwise for an inventor to publish before filing since the inventor will lose foreign filing rights and another person may see the publication and file a separate application on it before the true inventor files, thus requiring an expensive and uncertain derivation proceeding.
What does it mean for an invention to be non-obvious?
Obviousness is a question of law based on underlying factual inquiries. The factual inquiries, as enunciated by the Supreme Court, are as follows:
1. Determining the scope and content of the prior art;
2. Ascertaining the differences between the claimed invention and the prior art; and,
3. Resolving the level of ordinary skill in the pertinent art.
In addition to the above-described factual inquiries, the United States Patent and Trademark Office (USPTO) is required to evaluate objective evidence of non-obviousness when it exists. These so-called “secondary considerations” may include evidence of commercial success, long-felt but unsolved needs, failure of others, and unexpected results.
Knowing whether an invention will be considered nonobvious by the patent examiner is difficult because it is such a subjective exercise—what one patent examiner considers surprising, another may not. In addition, the examiner will usually be asked to make the nonobviousness determination well after the date of the invention, because of delays inherent in the patent process. The danger of this type of retroactive assessment is that the examiner may unconsciously be affected by the intervening technical improvements. To avoid this, the examiner generally relies only on the prior art references (documents describing previous inventions) that existed as of the date of invention.
In assessing the scope and content of the prior art, the Examiner is expected to give the claims the broadest reasonable interpretation consistent with the specification. The law also charges a hypothetical person with ordinary skill in the art with knowledge of all of the pertinent prior art known at the time of invention. Factors that may be considered in determining the level of ordinary skill in the art include: (1) Type of problems encountered in the art; (2) prior art solutions to those problems; (3) rapidity with which innovations are made; (4) sophistication of the technology; and (5) educational level of active workers in the field. In a given case, every factor may not be present, and one or more factors may predominate.
The Supreme Court and the USPTO have enunciated several different rationales upon which obviousness-type rejections may be supported. Prior art is not limited just to the references being applied, but includes the understanding of one of ordinary skill in the art. With this in mind, it should be appreciated that rejections based on obviousness cannot be sustained by mere conclusory statements; instead there must be some articulated reasoning with some rational understanding to support the legal conclusion of obviousness. These rationales may include one or more of the following:
(A) Combining prior art elements according to known methods to yield predictable results;
(B) Simple substitution of one known element for another to obtain predictable results;
(C) Use of known technique to improve similar devices (methods, or products) in the same way;
(D) Applying a known technique to a known device (method, or product) ready for improvement to yield predictable results;
(E) “Obvious to try” – choosing from a finite number of identified, predictable solutions, with a reasonable expectation of success;
(F) Known work in one field of endeavor may prompt variations of it for use in either the same field or a different one based on design incentives or other market forces if the variations would have been predictable to one of ordinary skill in the art;
(G) Some teaching, suggestion, or motivation in the prior art that would have led one of ordinary skill to modify the prior art reference or to combine prior art reference teachings to arrive at the claimed invention.
This is why the search is done in the first step of the patent application process – in order to determine if the invention is new, useful, and the potential for obviousness.
Do I need a model or prototype before I can file a patent?
You do not need a model or prototype to file for a patent application but instead only need to have enough information in order to be able to explain your invention to someone such as a manufacture that is capable of making it. As a rule of thumb if you’re able to explain to use how to make your invention and/or how your invention works then you should be able to file for a patent application.
Can I patent my software invention?
The short answer is maybe. It should, however, be noted that case law and implementing patent rules require that software or algorithmic patents also have an “inventive step” in addition to being new, novel, and non-obvious, defining different patent eligibility requirements and conditions for software-based inventions. In addition, like every patent application, the underlying invention of an application for a software patent has to fulfill basic patentability criteria.
Should I file a Provisional Application or a ‘regular’ application?
This is question that we get asked a lot and our response is that it’s a business decision that you’ll have to make based on your circumstances.
Reasons to file a provisional application over a regular application
Some of the benefits of Provisional Applications are that they are much cheaper than regular applications (usually costing about 1/3 as much) and faster to prepare than regular applications which will allow you establish your priority at the patent office faster and at a lower cost so that you can go out and discuss, build, market, sell your invention to others and/or determine whether it’s worth the investment to file the full utility/regular patent application. In short, similar to the regular application you’ll enjoy the “Patent Pending” status & secure your invention with the filing of the Provisional Applications.
Reasons to file a regular application over a provisional application
Some of the benefits of proceeding with a regular application over filing a provisional application are that if you know that you’re eventually going to file for a regular application filing for a provisional application first results in just added cost and further delays in the examining and hopefully in the issuance of your patent.
Can the public get information about my patent application while it is pending?
The USPTO advises that it keeps patent applications in strict confidence until the patent is issued or the application is published. Once the application is published, the public may request a copy of the application file. Most applications are published 18 months after the date the application was filed.
How do I check the status of my patent application?
The USPTO maintains a Patent Application Information Retrieval system, which allows users to retrieve information regarding the status of a patent application. The public system allows access to issued patents and published applications, and the private system allows access to pending application status using digital certificates. Certain requirements must be met to access the private system.
What happens during the prosecution of a patent application?
Once received by the USPTO, the application is assigned to an Examiner from an appropriate art unit who will then examine the application. The Examiner then searches and analyzes the relevant prior art and compares it to the invention as claimed to determine whether the invention is patentable. The Examiner then mails a first Office Action, which indicates whether the USPTO has accepted your application as written (which occurs very rarely), or denies your application (as is usually the case). The Examiner may allow all claims, allow some and reject some, or reject all claims. The Applicant is given a period of time to reply to the Office Action (usually 3 months, although a reply can be filed within 6 months with payment of time extension fees).
The reply may include an amendment of some or all of the claims to better distinguish over the prior art, and/or may include a request for reconsideration of the rejection. After consideration of the reply to the first Office Action, the Examiner will either issue a Notice of Allowance, or issue a second Office Action. Again, the second Office Action may include a rejection of some or all claims. At this point, the Examiner may make the rejection “final.” If this happens, the Applicant doesn’t have an absolute right to further amend the claims, although the Examiner may permit it.
When facing a final rejection with no hope of amending the claims, the Applicant can appeal to the Examiner to reconsider the final rejection. Where the Examiner rejects the appeal, the Applicant can either file a continuation application, or appeal to the Patent Trial and Appeal Board (PTAB). A continuation application is a second application for the same invention and is generally used to restart the application process. If the Patent Trial and Appeal Board rejects an Applicant’s appeal, the Applicant can appeal to the courts.
Thus, as is readily apparent, the application process is very time consuming; the time period between filing the application and receiving a first Office Action is usually 12-18 months. In addition, response times between Office Actions can vary.
Who is the patent granted to, if two people work on the invention together?
If two people share ideas to form the invention, they are joint inventors. The patent will issue to them jointly, provided the patent application is otherwise proper. If one person provided all of the ideas of the invention, and the other only followed instruction in making it, the person who provided all of the ideas is the sole inventor.
How long does a patent last? What is the term of the patent?
Presently, the term of a U.S. utility patent is 20 years measured from the date of application (prior to June 1995 the term was 17 years from the date of issue); the term of a design patent is 15 years from the date of issue; and the term of a plant patent is 20 years from the date of application.
Can I publish, publicly use, or offer my invention for sale before I apply for a patent?
Doing any of those things could immediately cause you to lose valuable foreign patent rights. In the United States, applicants have a one-year grace period to file patent applications after publication, public use or offer for sale. This is not true in all jurisdictions, so we recommend filing the patent before publishing or offering for sale the invention.
Should I tell anyone about my idea or my invention?
No. Until you have filed an application for patent, you should not disclose your idea or your invention to anyone other than your attorney. Generally, ideas are not protected and if you disclose your invention to another, you may lose or jeopardize your rights to obtain patent protection in the U.S. or foreign countries. If you must disclose your invention to others, you should do so only under the protection of a carefully drafted confidentiality agreement.
Should I rush to file a patent application?
Yes. The USPTO awards patents on a “first-to-file” basis. This means that if two inventors independently invent the same thing, and both apply for patents at different times, the USPTO will award the patent to the inventor who first files a patent application, regardless of who invented first.
Do patent owners have to do anything to maintain patent protection?
There are two important components of maintaining patent protection.
The first is routine; U.S. patent holders are required to pay maintenance fees to the U.S. government to maintain patent validity. These fees must be paid at 3.5 years, 7.5 years and 11.5 years after the patent is issued.
The second part of maintaining patent protection is to enforce your rights to stop infringement. If infringement is permitted to occur without litigation or other enforcement action to stop it, the value of a patent erodes. When requested to do so, your IP attorney can help monitor for unauthorized use of your invention. Monitoring the marketplace for illegal use of intellectual property is one of the many important responsibilities of an experienced IP attorney.
Who enforces a patent?
The U.S. Patent and Trademark Office grants a patent.
Contrary to popular belief, a patent does not give its holder the right to practice the invention, but the right to preclude others from practicing it. A patent holder can enforce this right by filing suit in a federal district court or, where the infringement includes importing a product into the United States that affects a domestic industry, the patent holder can ask that the International Trade Commission institute a proceeding to enforce the patent. A request to the ITC is often accompanied by a district court action because the ITC cannot award damages; its remedy is an exclusion order.
As we say, “There is no patent police.”
Where can a district court patent case be filed?
A patent infringement case can be filed in any district in the United States that has personal jurisdiction over the defendant, which may include those states or districts where the defendant’s products are sold but where the defendant may not have offices.
The likelihood of one party or the other prevailing in the litigation varies depending on the district in which the action is filed. The venue for a district court patent case impacts how quickly the case moves, the likelihood that it will be resolved prior to trial, and the jury composition at trial.
Patent holders thus often choose the place of the litigation based on a belief that one forum or another is generally more favorable to patent holders.
Parties accused of infringement may seek transfer of a district court patent case to their “home” district, if they can show that is the logical place to site the trial. In addition, if a patent holder has threatened a company or its customers with an infringement action, that company may be able to preemptively file suit for “declaratory judgment,” namely a judgment from the court declaring the patent invalid, unenforceable, or not infringed. Such a suit can be filed if the controversy between parties is of sufficient immediacy and reality to warrant the attention of the court.
An action for declaratory judgment may be brought in any district where there is personal jurisdiction over the patent holder. Personal jurisdiction over the patent holder is not found in the district where the declaratory judgment plaintiff resides or has a principal place of business simply because the patent holder has sent a letter there about the patent. Rather, personal jurisdiction only exists where the defendant has established “minimum contacts,” which can be established by selling products or conducting business in the forum.
What are the roles of the judge and the jury in a federal district court action?
If either party makes a timely jury trial request, the patent infringement case is largely tried to a jury, which decides such things as whether the patent is valid and infringed, whether infringement was willful, and what damages to award. A judge will usually decide prior to trial what the patent claims mean (this is often called a Markman ruling, after the core case that clarified that claims construction is a matter of law for the court rather than a fact question for the jury) and instruct the jury on their meaning.
The judge will also hear any challenge that the patent is indefinite or unenforceable and consider any equitable defenses such as laches or estoppel. The judge will also determine whether to enhance damages or assess attorneys’ fees upon a jury finding of willful infringement, or a finding that the case is otherwise an “exceptional” one. The judge will also determine whether to award preliminary or permanent injunctive relief.
What is different about an ITC proceeding?
The International Trade Commission hears patent cases involving the import of products into the United States. It is an arm of the Department of Commerce, and its proceedings conform to various international treaties, most notably the General Agreement on Trade and Tariffs (GATT).
Proceedings before the ITC are similar to, but often faster than, proceedings in the federal district courts. They follow rules for administrative proceedings instead of the Federal Rules of Civil Procedure applicable to district court cases, and there is no jury.
Another key difference between a case in district court versus before the ITC is that the ITC has discretion regarding whether to institute a formal investigation based upon a complaint that there has been infringement. A further difference is that once the ITC initiates a formal proceeding, an administrative law judge makes the initial determination about whether the imported goods infringe the patent and recommends a remedy.
The initial determination becomes a final determination of the ITC unless it is revised or reversed on administrative or judicial appeal.
Another key distinction is that damages are not recoverable in an action before the ITC. The ITC can issue either a general or limited exclusion order, which is enforced by Customs; a temporary exclusion order; and/or a cease-and-desist order, which can be enforced in federal district court and which can be the basis for civil penalties. ITC complainants often initiate a parallel district court case for damages.
Who hears appeals in patent cases?
Appeals from decisions of the federal district courts and the Patent Trial and Appeal Board are taken to the Court of Appeals for the Federal Circuit, located in Washington, D.C. Appeals from International Trade Commission proceedings are also heard by the Federal Circuit, but only after further interim administrative action. The United States Supreme Court is the court of final appeal on patent matters. However, it has discretion whether to review patent-related appellate court decisions.
What are a defendant’s responses to a patent infringement suit?
A defendant may raise a number of defenses permitted under patent law, including that it does not infringe the patent, that the patent is invalid, or that the Patent and Trademark Office was materially misled during the patent prosecution process. (These defenses are discussed in more detail below.)
A defendant may also raise other claims, such as antitrust claims and claims of unfair competition, based on the assertion of the patent. Certain antitrust claims require proof that the assertion of the patent was objectively baseless, and may be stayed pending resolution of the underlying patent action.
The Federal Trade Commission (“FTC”) may also decide to institute action when a patent holder runs afoul of the antitrust laws, such as with its actions before a standards organization relating to a patented technology or in negotiating patent licenses or settlements.
An increasing number of defendants are taking advantage of newly instituted post-grant proceedings at the Patent and Trademark Office. In particular, accused infringers are challenging the validity of patents asserted against them in inter partes reviews, post grant reviews, covered business method reviews, and ex parte reexaminations. Each of these proceedings offer a way for a party to ask that the patent office reconsider whether the patent should have been granted.
(Post-grant proceedings discussed in more detail below.) A district court has discretion to stay the action before it where there is a post-grant proceeding ongoing.
What is a post-grant proceeding?
Recent legislation introduced several new proceedings to challenge the validity of patents at the patent office, including inter partes reviews, post grant reviews, and covered business method reviews. Overseen by an appeal board at the patent office (the Patent Trial and Appeal Board, aka the PTAB), these new procedures, along with traditional ex parte reexaminations, provide additional avenues to challenge the validity of a patent. By law, any member of the public can request that the Patent and Trademark Office reexamine an issued patent via ex parte reexamination. Similarly, anyone other than the patent owner can initiate an inter partes review, covered business method review, or post grant review.
Typically, each of these proceedings is initiated and based on prior art that the patent examiner did not consider during the initial examination that makes the patent claims invalid.
Post grant reviews may be initiated within nine months of issuance of a patent having a claim with a priority date (meaning the earliest filing date for which the patent application can claim the benefit). To convince the patent office to institute a post grant review, the petitioner (the person seeking review) must prove that it is more likely than not that at least one claim of the patent is invalid, and may use any available means to prove invalidity.
Inter partes review may be initiated immediately following issuance of patents beginning nine months after the patent has issued (i.e., after the period in which a post grant review may be instituted). The petitioner’s standard of proof in an inter partes review, slightly different than the standard for post grant review, requires a reasonable likelihood that the petitioner would prevail on at least one challenged claim.
Additionally, invalidity grounds in inter partes reviews are limited to patents, published patent applications and printed publications.
Covered business method proceedings are limited to review of patents related to “financial services” and without “technological invention.” Covered business method reviews are only available to petitioners who have been charged with infringement of a covered business method patent and may only be instituted if post grant review is unavailable. The petitioner bears the burden of proving that it is more likely than not that at least one claim of the covered business method patent is unpatentable and may, similar to post grant review, use any grounds to prove invalidity.
Each of the post-grant proceedings described above offer effective mechanisms for challenging the validity of a patent. Remember, however, that with each of these post-grant proceedings—post grant review, inter partes review, and covered business method review—petitioners are estopped from later challenging the validity of the patent on grounds they raised or reasonably could have raised in the instituted post-grant proceeding.
Another option litigants may want to consider, one without an estoppel effect, is ex parte reexamination. Ex parte reexamination, however, does not permit the party seeking reexamination to do much more than submit the prior art with an explanation of the reference.
How can a company be sued if it does not do exactly what is described in the patent?
The background section of a patent (the “specification”) may describe specific devices or processes in detail. However, the actual boundaries of the patent holder’s rights are spelled out in the claims—the numbered paragraphs at the end of the patent. They may be broader than or describe alternatives to what is discussed in detail in the specification. Any disputes about the scope of these claims is decided by the judge or administrative law judge during the case. (See above.)
What does the patent holder have to prove to win an infringement suit?
The patent holder must prove by a preponderance of the evidence—that it is more likely than not—that the defendant either directly infringed a claim of the patent, contributed to another’s infringement, or induced another to infringe.
In a district court case, the patent holder must also prove the amount of damages that should be assessed for the infringement.
To prove direct infringement, the patent holder must prove that the defendant made, used, sold, offered for sale or imported the claimed invention. Direct infringement may occur literally, meaning that a claim of the patent, when compared to the accused device or process, is an exact match. Alternatively, under a theory known as the doctrine of equivalents, infringement may be found where an element of the accused device, while not literally identical to what is described in a claim of the patent, is interchangeable with what is claimed.
An accused product or process infringes under the doctrine of equivalents if the equivalent element does the same work in substantially the same way to accomplish substantially the same result as the patented product or process. This doctrine prevents would-be infringers from avoiding liability by making only trivial changes to their product.
Contributory infringement arises where a defendant supplies only a portion of the infringing product or process. To establish liability for contributory infringement, the patent holder must prove that the defendant sold, offered for sale, imported or exported a component that is a material part of a patented invention, and that the defendant knew that the component was especially made or adapted for use in the infringing product. An exception is made for sale of “staple” products—those that have a substantial noninfringing use or uses.
To prove inducement, the patent holder must prove that the defendant actively induced another to directly infringe the patent holder’s patent. This requires that the defendant knew of the patent.
What are the statutory defenses to a claim of patent infringement?
A defendant can argue one or more of the following defenses: that the patent has not been infringed, that the patent is invalid, or that the patent is unenforceable. (See above).
Because patents are presumed to be valid, a defendant in district court must establish the invalidity or unenforceability of a patent by “clear and convincing evidence,” i.e., as many districts view this, that it is “highly probable” that the patent is invalid or unenforceable. This is a more rigorous standard than the “preponderance of the evidence” standard that applies to infringement and most civil claims and defenses, but not as rigorous as the criminal law standard of “beyond a reasonable doubt.”
There are a number of statutory bases for invalidity of U.S. patents. The most common are the following:
(a) Anticipation: The same invention was first made by another or was known or used by others or publicized before the invention date. For a claim of a patent to be anticipated, each limitation of the claim must be found in a single prior art reference.
(b) Obviousness: The invention was obvious to one of “ordinary skill in the art” given the state of the art at the time that the patent application was filed, as shown by one or more prior art references.
(c) Statutory Bars: An “on sale” or “public use” bar occurs if, more than a year before the patent application was filed, the inventor, or someone other than the inventor, offered for sale or publicly used the invention. Prior art that establishes an “on sale” or “public use” bar can also be used to establish obviousness.
(d) Enablement: The patent does not describe the invention well enough to enable a person of ordinary skill in the art to make and use the patent.
(e) Indefiniteness: The terms of the claim are not sufficiently definite.
What are the equitable defenses to a claim of patent infringement?
Three equitable defenses are among those most commonly asserted.
First, a patent is unenforceable if the patent applicant or their counsel intentionally failed to disclose material information to the Patent and Trademark Office during prosecution of the patent.
Second, a patent may also be unenforceable if there is an equitable estoppel. Equitable estoppel applies where a patent holder has misled the alleged infringer into reasonably believing that the patentee no longer intends to enforce the patent against the alleged infringer, who then relies on that misleading conduct to his or her detriment.
Third, laches, which requires a showing that a patent holder unreasonably delayed in bringing a lawsuit, to the material prejudice of the alleged infringer, will bar past damages. Patent holders should recognize, however, that a recent Supreme Court decision eliminating laches as an absolute defense for copyright claims also casts doubt on the rule that laches can bar damages incurred before a patent suit is filed.
It looks like the patent is about something that has been known in the industry for a long time; why was it issued?
The United States Patent Office has access to information about other patents and about publications. The patent examiners have limited time to examine any application, and locate the most relevant prior art. In addition, the patent examiners generally do not have information about products in the marketplace. The patent’s validity may be challenged in litigation (see above), or in a post-grant proceeding.
What damages are available for patent infringement?
Where a valid and enforceable patent has been infringed, the patent holder is entitled to recover at least a reasonable royalty. Where the patent holder can prove that it lost profits, it can recover profits on the sales that it would have made, and a reasonable royalty for the remainder of the infringer’s sales. It may also be able to recover up to treble damages and attorneys’ fees for willful infringement.
Can U.S. patents reach overseas?
In some instances, yes. As a general rule, a patent is specific to the country where the patent is granted.
A patent granted in the United States only prevents parties from selling, making or using the patented technology in the United States, or importing or exporting it or a substantial component of it into or out of the United States.
Actions that take place entirely in a different country are typically not covered. However, there are some exceptions to this, such as if the alleged infringement involves a system, aspects of which take place in multiple countries but a significant part of the control and benefit of that activity takes place in the United States; or if the overseas activities induce infringement by another in the United States.
What is a reasonable royalty?
A reasonable royalty is a calculation of how much the patent holder would have received from the defendant in a hypothetical license negotiation taking place at the time the infringement began. In making this determination, the court will assume that the parties would have entered into the hypothetical negotiations as a willing buyer and a willing seller, and that the patent is assumed to be valid, enforceable and infringed.
The amount of the reasonable royalty is determined by analyzing a number of different factors, including whether there are other licenses by the patent holder, or other comparable licenses, which would tend to prove an established royalty; the established licensing policies of the patent holder; the nature and scope of the license; the commercial relationship between the licensor and licensee; the profitability of the product using the license; and the portion of the profits of the product that is due to infringing the patent versus profits from non-infringing elements of the product.
What are lost profits?
Lost profits are the profits the patent holder would have made but for the defendant’s infringement of the patent. To recover lost profits, a patent holder must show its profit margin; market demand for the patented feature; the absence of non-infringing substitutes for the invention; and that it had capacity to meet the needs of the defendant’s customers.
In a multi-player market, the patent holder can instead recover its lost profits as determined by applying its share of the market to the sales of the defendant.
Additionally, depending on the sensitivity of the market to price competition, a patent holder may be able to recover an additional amount for any price erosion that occurred as a result of the infringer pushing prices down where the patent holder made the sale.
How does patent notice or marking affect damages?
If the patent holder sells, or licenses another to sell a physical embodiment of the invention, no damages start running until the patent holder has given notice of its patent. One way to do so is to give constructive notice by marking the patent number on the physical device or thing. Another is to send actual notice to the alleged infringer, either by letter or by filing a complaint. The earlier of actual notice or marking of substantially all of the devices at issue will start damages accruing for infringement.
There is no notice or marking requirement for patent holders whose patents are not practiced, or for patents covering purely methods.
How can the patent holder get treble damages?
The court may order the infringer to pay up to three times the actual money damages (for lost profits or reasonable royalties) if the patent holder can show that the defendant’s infringement was “willful.” To determine whether the infringement was willful, the jury is allowed to consider a number of factors, including whether the defendant knew of the patent and either copied it or tried to design around it, whether the defendant has substantial defenses to the lawsuit, and whether it engaged in any litigation misconduct.
Businesses accused of patent infringement will often seek advice from an independent patent attorney as to whether the accused products infringe the patent and whether the patent is invalid or unenforceable.
The patent counsel’s opinion can be introduced into evidence and may aid the accused infringer in arguing that it was not willful because it had a good faith belief that its product did not infringe the patent or that the patent was invalid or unenforceable.
Using counsel’s opinion in this way usually results in a waiver of the attorney-client privilege that might otherwise exist between the accused infringer and their patent counsel rendering the opinion.
Can injunctions be granted in patent cases?
Yes. A patent holder who prevails at trial can ask the court to enter a permanent injunction to prevent the defendant from continuing to infringe the patent. Injunctions are usually only available where the patent holder competes with the defendant; patent holders who do not practice their patents have a difficult time meeting the standard for issuance of a permanent injunction.
In some cases, a patent owner may obtain a preliminary injunction prohibiting infringing activity by the accused infringer during the time the lawsuit is pending prior to trial. Recent decisions have found that in order to be granted a preliminary injunction, the plaintiff must, in addition to showing “irreparable harm” by the infringement, make a “clear showing” or one that is “beyond question” that it is likely to succeed at trial in proving infringement and survive any validity challenges. In deciding whether to issue a preliminary injunction, the court will then weigh the evidence of irreparable harm, the balance of the hardships to the parties if the injunction is granted or denied, and the public interest.
Can either party be awarded attorneys’ fees?
Generally, each party bears its own attorneys’ fees.
Attorneys’ fees, however, may be assessed in favor of the prevailing party in extraordinary cases.
Recently, the Supreme Court relaxed the standard for determining a case as extraordinary. While it is uncertain how lower courts will apply the Supreme Court’s relaxed standard, it is now clear that an extraordinary case is one that “stands out” from others. Specifically, district courts are now advised to analyze the substantive strength of each party’s litigating position and the manner in which the case is litigated to determine whether that manner was unreasonable. Importantly, district courts may use their own discretion in determining whether a case is extraordinary, without a precise formula or rule.