Overview of Patent Litigation in the United States

Overview of Patent Litigation in

the United States

Knobbe Europe Practice Series

February 3, 2022

Jon Gurka

[email protected]

Mauricio Uribe

[email protected]om

ANATOMY OF PATENT INFRINGEMENT SUIT

Key Case Milestones

Complaint

Answer

Infringement

and Invalidity

Contentions

Fact

Discovery

Claim

Construction

Expert

Discovery

Summary

Judgment

Motions

Pretrial Trial

Post-Trial

and

Appeal

AVERAGE TIMELINE FOR KEY CASE MILESTONES

Case Event Typical Timing After Complaint

Complaint

Answer + 1 month

Infringement and Invalidity Contentions + 2-3 months; + 4-5 months

Fact Discovery

• Document production

• Written discovery

• Depositions

+ 10-14 months

Claim Construction + 5 months

Expert Discovery + 16 months

Summary Judgment Motions + 10-18 months

Pretrial + 18-22 months

Trial + 18-24 months

Post-Trial and Appeal

+12-18 months after final judgment

VERY FEW U.S. PATENT CASES GO TO TRIAL

Patent Trials

• Less than 3% of all civil cases filed in the United States result in a trial

VERY FEW U.S. PATENT CASES GO TO TRIAL

• Reasons:

o Settlement

o Summary judgment

o Expense

o Explosion of NPE litigation

o Recent § 101 (patentable subject matter) decisions

o Venue restrictions limiting cases in pro-trial forums

o Parallel proceedings – Patent Trademark and Appeal Board

(PTAB)

DISCUSSION OF PATENT LITIGATION PHASES

THE COMPLAINT

• Must be based on thorough pre-suit investigation and good-faith

belief of infringement

• Contains high-level description of the infringing product and

infringing activity

• Must identify the type of infringement (direct, indirect) and the

remedy sought (damages, injunction, enhanced damages/fees)

• Does not need to contain specific evidence of infringement or

amount of damages

SERVICE OF COMPLAINT

• Must be personally “served” on the named defendant(s)

• For foreign defendants, service must comply with foreign law (e.g.

Hague Convention)

• Court will occasionally order alternative service methods (e.g.

through a U.S. subsidiary or its counsel)

THE ANSWER

• Usually due 21 days after service of the complaint (often

extended 30 days or more)

• Admits or denies allegations in the complaint

• Asserts defenses and counterclaims (e.g., invalidity, inequitable

conduct)

CONTENTIONS – PLAINTIFF’S INFRINGEMENT CLAIMS

• Direct and Indirect Infringement

o Direct – the accused party makes, sells, uses the accused product or

performs all steps of a claimed method

o Indirect – the accused party causes others to perform the claimed method

or contributes to the infringing by a third party by providing components of

the claimed apparatus without non-infringing use

• Literal infringement and the doctrine of equivalents

o Literal – accused product or method meets every word of the claim

o Equivalents – accused product or method has an element that performs

the same function, in the same way and achieves the same result as any

missing claim limitation

CONTENTIONS – DEFENDANT’S INVALIDITY CLAIMS

• Basis for Invalidity Position

o Inappropriate Subject Matter (Section 101)

o Defect in Specification or Claims (Section 112)

o Prior Art – Printed Publications and Use/Sales

o Others – Improper Inventorship

• IPR Estoppel – Limits to Invalidity Assertions in District Court

o Applies to grounds that a party “raised or reasonably could have raised”

during the subject IPR

o No IPR Estoppel for Non-Instituted IPR Petitions

CLAIM CONSTRUCTION OR “MARKMAN” HEARING

• Process by which the court interprets the terms of the claims and

provides definitions that will govern the case

• Claim construction basics:

o terms generally given their ordinary meaning to someone of skill in the art

in light of the patent specification

o terms can vary from ordinary meaning if special meaning provided in the

patent specification or prosecution history

o meaning of a term can come from patent documents (intrinsic evidence)

or from dictionaries, books, treatises, articles and expert testimony

(extrinsic evidence)

• Timing – usually before or during fact discovery, but can be after

expert discovery in rare cases

FACT DISCOVERY

• Process through which parties in litigation can request and obtain

relevant documents and testimony

• Discoverable materials include:

o paper documents

o electronic records

o e-mails

o other records

• Failure to follow discovery rules can result in penalties, including:

o monetary fines

o loss of rights

o adverse rulings

FACT DISCOVERY

• Requests for Production

o Written requests for documents, electronically stored information, tangible

objects, or inspection of physical locations

• Interrogatories

o Written questions requiring written answers

• Requests for Admission

o Written statements asking a party to admit that each statement is true

• Depositions

o Out-of-court proceedings during which a witness responds under oath to

questions presented by an attorney

EXPERT DISCOVERY

• Experts

o Paid witnesses hired by each party to explain the facts of the case to the jury

and provide opinions based on their expertise concerning the issues that the

jury must decide

• Technical Expert

o Engineers or scientists with expertise in technical field (e.g., mechanical

engineering)

o Will testify about noninfringement and invalidity issues

• Damages Expert

o Typically economists or accountants

o Calculate lost profits and reasonable royalty rates

SUMMARY JUDGMENT

• Can dispose of a single issue or entire case without a trial if:

o Moving party entitled to judgment based on undisputed facts

• Usually filed after close of fact discovery

• Frequently denied if other party can show a dispute of a fact material to the

issue

• Typical examples:

o Summary judgment of non-infringement possible if no dispute over the operation

of the accused products

o Summary judgment of invalidity possible if no dispute over the disclosure of the

prior art

PRE-TRIAL

• Court resolves objections to the admissibility of evidence:

o Objections to witnesses

o Objections to exhibits and demonstratives

o Limits on expert testimony

• Court also issues (in limine) rulings regarding the admissibility of evidence or

conduct at trial

• Examples:

o Patentee cannot compare its product to the accused product to show

infringement

o Defendant not permitted to call patentee a “troll”

o Patentee may not refer to total sales of the defendant

TRIAL

• Jury (members of public decide) or Bench Trial (judge decides)

• Jury selection – process of choosing jurors to decide facts

• Opening statement: lead counsel discusses evidence and shows how they

intend to prove their case

• Presentation of evidence: exhibits, witnesses, deposition testimony

• Closing argument: lead counsel argues why the jury/judge should find in their

favor based on the evidence presented

• Verdict – decision of jury/judge on issues presented

APPEAL – COURT OF APPEALS FOR THE FEDERAL CIRCUIT

• May raise the following issues on appeal:

o Legal errors (claim construction)

o Fact errors (infringement, validity, damages)

o Equitable and procedural errors (inequitable conduct, evidentiary rulings)

• Three standards of review on appeal:

o Legal issues: de novo

o Fact issues decided by the court: clear error

o Fact issues decided by the jury: substantial evidence

o Equitable issues decided by the court: abuse of discretion

REMEDIES

• Possibilities in patent cases:

o Lost profits - profits patent owner would have received absent

infringement

o Reasonable Royalty – amount reasonable patent owner and

infringer would have agreed to if negotiated prior to

infringement

o Injunction – court order halting continued sales of the

infringing product

o Lost profits and injunction generally not available to NPEs

DAMAGES PERIOD

• Up to six years prior to filing suit, but only if patentee gives

“notice” of infringement through:

o Actual notice (letter or other communication identifying patent and

alleged infringement)

o Constructive notice (marking patented products made or licensed by

patent owner)

o Does not apply to NPEs since they have no products

ENHANCED DAMAGES

• U.S. rule – attorney’s fees are not automatic to prevailing party

• Available only in “exceptional cases” involving willful infringement

or other egregious conduct (e.g., litigation misconduct or frivolous

allegations)

• Available to plaintiff or defendant

• If court finds case exceptional it may increase damages 3x

and/or award attorney fees to the prevailing party

INJUNCTIONS

• Court order to stop selling infringing products

• Only available to parties that can show:

1. that they have suffered an irreparable injury

2. monetary damages, are inadequate to compensate for that

injury

3. the balance of hardships between the plaintiff and

defendant favor an injunction

4. the public interest furthered by a permanent injunction

• NPEs are rarely able to make above showing

DISTRICT AND ANY PATENT LOCAL RULES MATTER

• Northern District of California: generally pro defendant due to experienced

judges; local rules that require early disclosure of infringement theories by

plaintiff; high possibility of summary judgment and juries that often have

technically trained members.

• Eastern District of Texas: generally pro plaintiff due to a single judge that

prefers jury trials and frequently denies motions for summary judgment, and

refuses to stay cases for PTAB proceedings. Also has a pro plaintiff jury pool

that may be biased against foreign defendants.

o Patent local rules are balanced but require early disclosures

DISTRICT AND ANY PATENT LOCAL RULES MATTER

• Western District of Texas:

o New #1 forum for patent cases primarily based on NPE filings

o Nearly 12% of all patent cases filed since January 2019 have been

assigned to Judge Alan Albright

o Generally pro plaintiff due to a single judge that prefers jury trials, almost

always denies summary judgment, and refuses to stay cases in favor of

PTAB proceedings

o A default scheduling order calling for an early Markman hearing, usually

within 6 months of the case management conference, followed by fact

and expert discovery.

o Average time to trial is a little over one year – incredibly fast!

FEES AND COSTS

MEDIAN FEES OF PATENT LITIGATION THROUGH TRIAL AND APPEAL

• Varies greatly on district court

• Varies greatly on litigation conduct of parties

AMOUNT AT STAKE MEAN FEES

$1-10M

$1.9M

$10-25M

$3.1M

>$25M

$5.2M

AMOUNT AT STAKE 75% - THIRD QUARTILE

$1-10M

$3.5M

$10-25M

$6.0M

>$25M

$9.0M

APPENDIX

KEY MILESTONES IN U.S. PATENT LITIGATION IN FEDERAL COURT

PRE-TRIAL

SUBMISSIONS

TRO

PRELIMINARY

INJUNCTION

APPEAL

ANSWER

(COUNTERCLAIMS)

REPLY TO

COUNTERCLAIMS

STATUS

CONFERENCE

INITIAL

DISCLOSURES

FACT

DISCOVERY

SETTLEMENT

CONFERENCE

COMPLAINT

MOTION TO

DISMISS

EXPERT

DISCOVERY

SETTLEMENT

CONFERENCE

CLAIM

CONSTRUCTION

MARKMAN HEARING

SUMMARY

JUDGMENT

MOTIONS

PRE-TRIAL

CONFERENCE

MOTIONS IN

LIMINE

TRIAL APPEAL

POST-TRIAL

MOTIONS