An extract from The Intellectual Property Review, 9th Edition
Enforcement of rightsi Possible venues for enforcement
There are two possible venues for enforcement of patents. First, infringement actions may be brought before the courts of the 94 federal districts that are spread throughout the United States and Puerto Rico. Second, in order to prevent importation of infringing goods, an investigation can be commenced by, and at the discretion of, the International Trade Commission (ITC), an administrative agency that sits in Washington, DC.ii Requirements for jurisdiction and venue
An infringement suit may be brought only in a federal district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business. Domestic businesses are considered to reside in their state of incorporation. Foreign defendants may be sued in any federal district so long as personal jurisdiction can be found in the United States. The ITC, on the other hand, does not depend on personal jurisdiction over the accused infringer but has in rem jurisdiction over the accused infringing goods.iii Obtaining relevant evidence of infringement and discovery
The US rules allow for significant amounts of pre-trial discovery under a broad concept of relevance. Discovery is available from the opposing party through a variety of vehicles, including mandatory disclosures, requests for documents and things, interrogatories, depositions of witnesses and expert reports. Discovery is also available from non-parties by a subpoena for documents or deposition. In ITC investigations, discovery is also available, however it is produced more quickly because of the compressed time frame of such investigations.iv Trial decision-maker
Patent infringement actions may be tried before either a federal judge or a jury. Jury trials may occur where there is a claim for monetary damages, and not where only equitable relief is sought. There are no specialised district court federal judges, and thus many judges have little experience with patent matters. In contrast, ITC investigations are typically decided by an administrative law judge who specialises in patent cases.v Structure of the trial
A patent infringement trial may occur in two phases. The first phase determines infringement, validity and unenforceability, and the second phase, if needed, addresses damages. Evidence is presented through fact and expert witnesses. The Federal Rules of Evidence determine what information can be admitted for consideration by the judge or jury.
At trial, the patentee must prove infringement by meeting the preponderance standard (i.e., more likely than not). For an accused infringer to prevail on invalidity or unenforceability, it must meet the more rigorous, clear and convincing standard because of the statutory presumption of patent validity.
Disputes regarding patent claim interpretation are typically decided by the judge prior to trial in a process called a Markman hearing. This hearing may, but does not usually, include testimony from fact or expert witnesses. Although the outcome of claim construction may be determinative, the Federal Circuit has consistently refused to review claim construction issues as an interlocutory matter.vi Infringement
Infringement may be direct or indirect. For direct infringement, all of the claim elements must be present in the accused product or method. For indirect infringement, evidence must show that there is direct infringement and that the indirect infringer is either inducing or contributing to that infringement.
Should a product not literally contain every element, the missing element may be shown by the doctrine of equivalents. This doctrine is limited to equivalents that were not foreseeable at the time the patent claim was amended, and cannot include equivalents that are described in the specification and not claimed or that were distinguished during patent prosecution.vii Defences
The most common defences to patent infringement are non-infringement, patent invalidity and inequitable conduct. Accused infringers may also assert more esoteric defences, such as unclean hands, laches and equitable estoppel. All of these defences can be brought either as affirmative defences or as counterclaims.Non-infringement
The non-infringement defence can include the lack of infringement or the existence of an express or implied licence. Accused infringers may also raise patent exhaustion or permissible repair, although those defences are less common.Prior art and inventor's grace period
Prior art is defined in Section 102 of the Patent Act, which was modified by the AIA for patents subject to that Act's first-inventor-to-file provisions. Generally speaking, the United States provides a one-year grace period in which to file an application following the inventor's own disclosure. Whereas pre-AIA a patentee could disqualify as prior art certain disclosures by others by proving an earlier invention date, disqualification under the AIA requires showing that the disclosure was made by someone who obtained the subject matter from the inventor or that the inventor had previously disclosed the invention. The AIA also expanded prior art to include public uses and sales in foreign countries, and it added a catch-all reference to inventions 'otherwise available to the public'.Patent invalidity
Invalidity defences include anticipation, obviousness and lack of enablement or written description.Inequitable conduct
Accused infringers can also assert inequitable conduct to render a patent unenforceable. The standard for inequitable conduct requires clear and convincing evidence that the patent applicant misrepresented or omitted material information during prosecution of the patent with the intent to deceive the Patent Office. Information is material only if the Patent Office would not have allowed a claim had it been aware of the undisclosed prior art or correct information.Prior commercial use
The prior commercial use defence, which was expanded by the AIA, may apply where the accused infringer shows that it commercially used the invention in the United States at least one year before the patent's effective filing date or a disclosure of the invention as described in Section 102(b). The defence may only be asserted by the person engaged in the commercial use, one controlled by or under common control with that person, or one to whom it is transferred as part of the transfer of the entire enterprise or line of business to which it relates. Further limitations include that the defence cannot be asserted against university inventions or if the subject matter was derived from the patentee.viii Time to first-level decision
For the federal district courts, the median time to trial for patent infringement actions is about two to two-and-a-half years. For a jury trial, the jury deliberates immediately after closing arguments, and renders its verdict very promptly thereafter. For a trial before a judge, typically there are post-trial briefs that will delay the district court's ruling by several months after trial is completed. Because of Section 337 and the ITC's rules, ITC investigations are significantly faster, with the time from filing a complaint to a final determination usually taking about a year to a year and a half.ix Remedies
Remedies for patent infringement include damages and injunctive relief. The patentee is entitled to actual damages, which may include lost profits and can be no less than a reasonable royalty for the infringement. A court also has discretion to award enhanced (up to treble) damages for egregious infringement, for example if the conduct was wilful. In 2016, the Supreme Court lessened the standard for enhanced damages, and since then the rates of enhanced damages awards have increased. Even so, enhanced damages still are not typical in patent cases. Additionally, a prevailing party may be awarded attorney fees in an exceptional case, but this type of relief is also discretionary and not frequently granted.
A patentee may also request a preliminary injunction pending trial or, after trial, a permanent injunction against future infringement. Injunctions are not automatic in patent cases and require the court to consider the relative harms to the patentee and the infringer as well as any public interest.
For ITC cases, the principal remedy available is an exclusion order prohibiting importation. The exclusion order may be limited to the articles named in the investigation or, if determined to be appropriate, encompass all infringing articles regardless of source.x Appellate review
The Court of Appeals for the Federal Circuit reviews all trial-level patent decisions as well as appeals from the ITC and Patent Office. Typically no new evidence is allowed. Three judges hear oral argument and issue an opinion, usually within six months.
The losing party can petition for a panel rehearing or for the entire Federal Circuit court to hear the case. Such petitions are almost never granted. The losing party may also petition the Supreme Court though a writ of certiorari, but those are granted even less frequently than en banc petitions, and generally are only granted to decide a very significant legal issue.xi Alternatives to litigation
Mediation and arbitration are available to resolve patent disputes if both parties agree to the procedure. These procedures may be less costly than litigation.
The Patent Office also has independent procedures for reviewing patent applications and issued patents, including the following.Pre-issuance submissions
Third parties may file patents, published applications or other printed publications, along with a concise statement of their relevance (limited to factual descriptions, not unpatentability arguments), for consideration by the examiner and inclusion in the prosecution record. The submitter must be identified, but the real party in interest need not be disclosed. Pre-issuance submissions must be made before a notice of allowance. Additionally, they must be made before the first rejection or six months from publication, whichever is later.Supplemental examination
A patent owner may request supplemental examination to have the Patent Office consider, reconsider or correct relevant information. If such a request is found to raise a substantial new question of patentability, the matter proceeds to ex parte re-examination. Supplemental examination can insulate a patent from being held unenforceable for inequitable conduct, but only if it was requested before inequitable conduct is alleged with particularity. Also, such insulation will not occur in an infringement suit filed before the Patent Office proceedings conclude. Thus, a patent owner seeking to avail itself of supplemental examination procedures should consider doing so well in advance of potential litigation.Post-grant review
For patents subject to the AIA (generally, those with an effective filing date on or after 16 March 2013), a third party may file a PGR petition asking the Patent Trial and Appeal Board (PTAB) to consider challenges based on any statutory requirement for patentability other than best mode. PGR petitions must be filed within nine months from the date of grant. The Patent Office may institute PGR if it finds that it is more likely than not that at least one challenged claim is unpatentable, or if the petition raises a novel or unsettled legal question that is important. The determination of whether to institute PGR is not appealable to a court.
If PGR is instituted, the petitioner must prove unpatentability by a preponderance of the evidence. The PTAB's final written decision can give rise to estoppel before the Patent Office and in civil actions and ITC proceedings. The PTAB's final written decision may be appealed to the Federal Circuit. Whereas constitutional standing is not required to petition for PGR or IPR, the Federal Circuit has held that it is required to appeal from post-grant proceedings.Inter partes review
A third party may also file an IPR petition asking the PTAB to consider anticipation or obviousness challenges based on patents or printed publications. For patents subject to the AIA, IPR petitions may be filed the later of nine months after the patent issues or termination of a PGR. For pre-AIA patents not eligible for PGR, IPR petitions may be filed following grant. If the party seeking IPR has been sued for infringement, it must file the petition within one year of being served with the infringement complaint. The Patent Office may institute IPR if it finds there is a reasonable likelihood that the petitioner will prevail in showing that at least one challenged claim is unpatentable. The determination of whether to institute IPR is not appealable to a court.
If IPR is instituted, the petitioner must prove unpatentability by a preponderance of the evidence. As with PGR, the PTAB's final written decision can give rise to estoppel, including in civil actions, and is appealable to the Federal Circuit.
In IPR proceedings, the PTAB now applies the same claim construction standard as courts, instead of its previous 'broadest reasonable interpretation' standard. The PTAB's claim construction decision is likely to precede the district court's Markman ruling in concurrent litigation, and thus may potentially influence the court's claim construction decision.
In both IPRs and PGRs, a patent owner may hedge against potential unpatentability by submitting a reasonable number of substitute (amended) claims. The petitioner bears the burden of showing that any proposed substitute claims are unpatentable. The Patent Office continues to develop its rules of practice for claim amendments and has been running a pilot programme pursuant to which a patent owner may request the PTAB's preliminary guidance and revise its motion to amend. Although the grant rate for motions to amend was reported to have increased following the Federal Circuit's Aqua Products decision, most such motions are still denied.
Last year a Federal Circuit panel agreed with a constitutional challenge to the IPR process, finding that the administrative patent judges (APJs) who presided over the challenged IPR were not appointed by the President with the advice and consent of the Senate as required by the Appointments Clause. Rather than sweep aside IPR proceedings, the panel concluded that severing a portion of the Patent Act restricting APJs' removal would remedy the constitutional problem, and it vacated the PTAB's decision and remanded for a new hearing in that case. The Patent Office is presently seeking rehearing of the panel's decision.
Since taking effect, over 10,000 IPR petitions have been filed. Approximately 13 per cent of PTAB trials (including IPRs, PGRs and CBMs) have settled before the PTAB decided whether to institute review. Of those petitions that reached an institution decision, about 66 per cent were instituted and the rest were denied. The institution rate declined from 87 per cent in the Patent Office's fiscal year 2013 to 63 per cent in 2019. The PTAB has issued over 2,900 final written decisions in cases proceeding to trial, with the majority (approximately 63 per cent) finding all claims unpatentable.Derivation actions
The AIA replaced interference practice under the previous first-to-invent system with derivation proceedings, in which a patent applicant may challenge an earlier-filed application on the basis that its named inventor derived the claimed invention from an inventor on the petitioner's application, and the earlier application was filed without authorisation. Derivation petitions must be filed within one year of the first publication of an allegedly derived claim. The effective date for the AIA's derivation provision is 16 March 2013. Earlier applications are still eligible for interference proceedings.