Patent litigation refers to the legal battleground revolving around the protection of intellectual property, specifically patents. The methods used during patent litigation, however, can also be used in trademark or copyright litigation. Patents play a pivotal role in fostering innovation by granting inventors exclusive rights to their creations that serve as a shield in the competitive business marketplace. When the shield of patent protection does not serve as a strong enough deterrent, patent litigation becomes the mechanism through which these rights are enforced or defended.
There are two types of laws that influence patent litigation: federal laws enacted by Congress (U.S.C. Title 35) and state laws. For the most part, patent litigation primarily deals with federal laws. When it comes to patents, states typically are only concerned with contractual law and patent ownership. The order of precedence of law in patent litigation is:
- U.S. Constitution
- Federal Regulations and Statutes
- Case Law
Patent Litigation Triggers
There are a few different reasons as to why a dispute may arise regarding a patent. The following are all possible causes to the initiation of patent litigation that are commonly seen.
Allegations of Patent Infringement
Patent infringement occurs when a party utilizes, makes, sells, or imports a patented invention without the patent holder’s permission, knowingly or unknowingly. Sometimes infringement occurs due to differences in the interpretation of the scope of patent claims. Scope of protection disputes are seen when a patent owner and alleged infringer disagree about whether a particular product or process falls within the protected territory of a patent. In scope of protection disputes, both parties believe they are within their rights, leading to almost a definite need for some sort of patent litigation.
In our “What Does Infringement Mean?” article, you can find more information on patent infringement and the different types.
Assertion of Patent Ownership
When writing a patent application, it is possible to list more than one individual as the inventor of the innovation in the application, making them co-inventors or joint inventors. Each co-inventor or joint inventor MUST have contributed to the “conceiving” of the invention, however, their contributions do not have to be equal. Even if the joint inventors or co-inventors have contributed unequally to the conception of the invention, all joint and co-inventors will fully own and share in the patent.
If joint/co-inventors disagree on their respective contributions to an invention, disputes over ownership and rights will likely lead to the need for some sort of patent litigation. It is a far easier and less messy process to simply agree to the naming of inventors at the outset of the patent application process than to have it later corrected by the courts. There are two processes that can occur to have inventorship amended: cooperative correction (when all parties agree) or adverse correction (when parties do not come to an agreement).
Challenges to Patent Validity
Challenging patent validity typically involves allegations that the granted patent is not valid due to a number of possible reasons. Issues related to novelty or obviousness are common triggers for questioning the validity of an issued patent. If there are allegations that a patented invention is not novel (new) and has been disclosed in prior art before the filing date, one may request an inter partes reexamination proceeding. In an inter partes reexamination proceeding, the requester has the right to participate in the reexamination process, where the burden of proof falls on them to prove that one or more claims of the challenged patent can be invalidated.
Check out our article on questioning patent validity to read more about inter partes reexamination proceedings as well as ex parte reexamination proceedings.
In addition to being novel, an invention must also be non-obvious to a person skilled in the relevant field at the time of invention. This means that the invention should not be an obvious combination or modification of existing knowledge or technology. An inter partes reexamination proceeding can also be requested for this claim of invalidity.
Competitive Business Strategies
As companies seek to protect their market positions, innovations, and intellectual property rights, patent litigation can be used as a competitive business strategy. There are multiple different driving forces behind the use of patent litigation as a competitive business strategy. Patent litigation can be initiated to delay or prevent the launch of a competitor’s product in order to assert market dominance.
On the other hand, patent litigation is more often used to combat the competitive business strategies used by companies. Companies may build a patent portfolio that strategically blocks competitors from entering a particular market. Competitors are within their rights to challenge the validity of these blocking patents, arguing that they impede fair competition. In fast-paced industries, companies engage in innovation races to be the first to market with groundbreaking technologies. Disputes may arise when competitors claim that a patented innovation was not genuinely novel or was derived from their prior work, leading to legal challenges over ownership and validity that may result in a form of patent litigation.
Enforcement of Licensing Agreements
Disputes may arise when one party accuses the other of failing to comply with the terms and conditions of a licensing agreement involving a patent, such as failing to pay royalties or exceeding the agreed-upon scope. Litigation may be initiated to compel compliance, seek damages, or terminate the licensing agreement. Read more information on licensing agreements in our articles licensing agreement types and licensing agreement advantages and disadvantages.
Patent Trolling
Patent trolling refers to the practice of acquiring patents not for the purpose of using or commercializing the inventions but rather with the intent to enforce the patents aggressively through litigation. Patent trolls, also known as non-practicing entities (NPEs) or patent assertion entities (PAEs), often target other companies by accusing them of patent infringement. Their goal is to monetize their patents by forcing companies to pay licensing fees or through settlements gained in patent litigation. Read more about the effects of patent trolling in our article “What is a Patent Troll?“
Technological Advancements and Overlapping Patents
Continuous advancements in technology drives the creation of new inventions and intellectual property. Innovations may be incremental (building upon existing technologies) or disruptive (introducing entirely new concepts). In industries with rapid technological progression, these advances in technology can lead to overlaps and conflicts between existing patents that may require a form of patent litigation. Companies in rapidly evolving industries frequently pursue incremental innovations to enhance existing products or processes. Patent holders may file additional patents to cover these improvements. As companies file patents for incremental improvements, the potential for overlapping patents arises, especially in fields where multiple entities are working on similar technological advancements.
Companies may engage in licensing or cross-licensing agreements to access each other’s patented technologies. Overlapping patents can complicate negotiations that may require patent litigation for a resolution.
Defensive Litigation
Defensive litigation in the context of patent disputes refers to legal actions initiated by a party with the primary goal of defending against or responding to a perceived threat of patent infringement. Companies may initiate litigation defensively to challenge the validity of a competitor’s patent or to seek a declaration that their products do not infringe a particular patent. Defensive litigation is often a preemptive strategy aimed at gaining a favorable legal position, deterring the patent holder from pursuing infringement claims, and affirming the company’s right to continue its business activities.
International Disputes
When companies are operating globally, disputes may arise involving patents granted in different jurisdictions, leading to complex international patent litigation. International disputes add complexity to patent litigation due to the different legal systems, languages, and cultural factors that come into play. Patent laws and regulations vary significantly from one country to another, impacting the interpretation and enforcement of patent rights.
Regulatory Challenges
In industries where products and technologies are subject to various regulations and standards prior to entering the market, such as pharmaceuticals or medical devices, patent litigation can be influenced by the status of regulatory approval. Disagreements over the validity or enforcement of patents may arise in the context of seeking regulatory approvals for new products. Courts may consider the regulatory landscape when determining the enforceability or validity of a patent.
How to Deal with Patent Infringement and Lawsuits
Patent infringement is one of the leading triggers for patent litigation. Owning intellectual property (patents, trademarks, and copyrights) sometimes means others will infringe. Property laws provide legal protection for intellectual property that can be used to enforce ownership. Because owning a patent does not necessarily protect against infringement, patent owners sometimes have to take measures to ensure their intellectual property is being respected.
Under patent litigation, there are several different methods of resolving the infringement. There are license agreements, take down notices, cease and desist letters, and infringement suits. Each method will likely be costly and time consuming for both parties. If infringement is occurring and take down notices and cease and desist letters do not work, patent litigation may be vital to preserving a business’s earnings and market status.
First, Consider a Licensing Agreement Instead of a Fight
The ideal solution to an infringement matter is almost always a licensing arrangement. In fact, when the infringer is able to make the patented device well, it can be a boon to both parties. Instead of filing a take down notice and/or cease and desist letter, the patent owner contacts the infringer to work out a licensing deal. The patent owner can do this themselves, however, it is often more efficient and effective for an attorney to help. Regular attorneys can do this, but like with all things related to patents, your best bet may be a patent attorney. Read more about licensing in our article about licensing agreement types.
Important Tip: Only patent attorneys (and patent agents) have the extra license to practice with patents before the United States Patent and Trademark Office (USPTO).
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Second, Will a Take Down Notice Stop the Infringement?
If a licensing agreement is not an option, before filing a litigation lawsuit, some notice to the infringer must occur. This can take the form of a taken down notice and/or a cease and desist letter. A take down notice might be submitted as a first step in an attempt to stop infringement. Although not always the most effective method of stopping infringement, a take down notice can halt or disable access to illegal content being sold or uploaded online without the permission of the intellectual property owner. If a take down notice is not effective in stopping infringement from occurring, a cease an desist letter would be the next step.
Third, Use a Cease and Desist Letter Before Filing a Lawsuit
Cease and desist letters are notices sent from an intellectual property owner (or their attorney) to the infringer telling them to stop making, using, and selling the protected property. The cease and desist letter will also usually inform the infringer that filing an infringement suit will occur if they do not stop making, using, and selling the protected property. While a patent attorney may be the most qualified to write and send a cease and desist letter, regular attorneys (those without the extra license to practice with patents) are less expensive and may be able to help.
If sending a take down notice and/or a cease and desist letter is not effective in stopping the infringement, it may be time to file a patent infringement lawsuit. There are several solutions/tools available that are used to resolve patent lawsuits other than the court room. Importantly, all of these solutions can also be used without filing the lawsuit. It is recommended to seek and use the services of an experienced attorney when filing a patent infringement lawsuit. Infringement suits are notorious for being very expensive, thus there are several means to resolve an open patent infringement lawsuit outside of the court room.
Patent Lawsuit Resolution Tools
There are several tools used to resolve patent lawsuits. Note that most of these tools can also be used without actually filing the lawsuit. There are four kinds of alternate dispute resolution (ADR) methods and two kinds of patent actions that can be used to resolve a patent dispute. The ADR methods are negotiation, mediation, arbitration, and conciliation. Both the two patent actions and the ADR methods can be used without filing a lawsuit. However, arbitration and conciliation are tools used typically after a lawsuit is filed. Check out our article on the different alternative dispute resolutions to read more in-depth information on each process. The two patent actions are ex parte reexamination and inter partes reexamination.
Negotiation Before or Instead of a Patent Lawsuit
Negotiated settlements are the most common result of patent litigation. Negotiation is a strategic discussion between two parties that attempts to settle a dispute with a resolution where both parties are content with the final decision. This ADR method requires give and take by both parties, which is often difficult to achieve. In comparison to the other methods of resolving patent litigation, negotiation is much less expensive and time consuming. If both parties are open to compromise, negotiation can occur rather quickly.
Mediation Before or Instead of a Patent Lawsuit
Mediation is another method to resolve a patent infringement issue. Mediation requires an impartial third party, known as a mediator, to assist in the negotiation communication. This neutral third party will facilitate and control the direction of the negotiations between the parties. Mediators cannot provide advice to either party, such as “you should…” or “I think it is best if…” because they are neutrals. Mediation is focused on the solution and how parties can compromise to reach said solution.
Arbitration and Conciliation After Filing a Patent Lawsuit
Arbitration and conciliation are dispute resolution methods that can be implemented without first filing a lawsuit but are generally used afterwards. Arbitration and conciliation are processes by which a neutral party listens to both sides’ arguments and renders a binding decision both parties must follow.
Patent Actions to Invalidate an Issued Patent
Once a patent is issued, it is considered valid, because the USPTO has approved its patentability. Patentability refers to the combination of the following criteria: patent eligible subject matter, usefulness, novelty, and non-obviousness. To read more about whether or not an invention is patentable, take a look at our article “What Does Patentability Mean?”
There are two tools available through the USPTO to potentially invalidate an issued patent. If the patent was issued less than nine months earlier, it is possible to file an inter partes reexamination. Additionally, anytime during the enforcement period of an issued patent, you can file an ex parte reexamination. In the United States, if a person or another business wishes to challenge the patentability of an already issued patent, they have the right to. Read more about invalidating patents in our questioning patent validity article.
Ex Parte Reexamination to Invalidate an Issued Patent
An ex parte reexamination is a request to the USPTO to reexamine an already issued patent. This method of determining a patent’s validity can be much quicker and easier than other patent litigation processes. Available since 1981, this method of questioning a patent is still available under the America Invents Act (AIA). Ex parte reexamination does not include active participation in a suit by either the filer or the patent owner.
An ex parte reexamination can occur at any point after the patent has been officially issued. The requester is required to provide all proof of invalidity using prior art from publications or previous patents to establish a substantial and new question of patentability. This proof must be dated and available prior to a patent’s effective filing date in order to be considered valid.
Inter Partes Reexamination to Invalidate an Issued Patent
An inter partes reexamination is another form of resolving patent infringement. Inter partes reexamination is similar to ex parte reexamination except that in inter partes reexaminations, the parties have the right to participate in the reexamination process. Like the ex parte reexamination, the requester must provide reasoned proof that one or more claims of the challenged patent are not valid. However, as with the ex parte reexamination, the prior art allowed to be considered during reexamination is limited to prior patents, patent applications, or printed publications.
Although similar, there are some differences between an inter partes reexamination and an ex parte reexamination. One key difference has to do with who facilitates the reexamination of a patent. In an inter partes reexamination, members of the Patent Trials and Appeals Board (PTAB) who work as administrative patent judges reexamine the issued patents. Inter partes reexamination can only be sought within the first 9 months after the issuance of a patent.
Patent Litigation Penalties
The parties involved in patent lawsuits may be issued a penalty. The different kinds of penalties a court can issue depend on many factors. One penalty is actual damages. If a party is ordered to pay for actual damages, the court is referring to the profits lost due to the infringement. Another penalty is royalties for unauthorized use. The use of royalties depends on the remaining time of validity of the patent, the type of product, and other royalty and licensing arrangements. A court may issue a party to pay the legal costs of the other party. These costs can include court filing fees, litigation expenses, and attorney’s fees.
One penalty can even occur at the beginning of patent litigation. A permanent or preliminary injunction can be requested to prevent the alleged infringer from producing more of the product in question. Preliminary injunctions are rarely granted, however, if there is a prior case that proved patent validity, the request will likely be permitted.
The following circumstances must be met in order to grant a preliminary injunction:
- The plaintiff shows a high probability of winning the case based on the evidence;
- The patent holder proves financial hardship if the infringing product continues to be made; and
- There is no harm to public interest or opinion.
Important Note: Injunctions do not provide monetary settlements to plaintiffs.
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Patent Litigation Insurance
Patent litigation can be costly and time-consuming, involving legal fees, damages, and potential settlements. For this reason, there is patent litigation insurance, also known as intellectual property (IP) litigation insurance or patent infringement insurance. This insurance is designed to protect investors and businesses from the financial risks associated with patent infringement lawsuits. Patent infringement insurance typically covers legal costs derived from defending allegations such as attorney fees and court costs, as well as damages or settlements that the insured party becomes legally obligated to pay. The cost of patent litigation insurance is influenced by factors such as the industry, the nature of the technology involved, the history of patent litigation for the insured party, and the coverage limits selected.
There are two angles of coverage: first-party and third-party. First party coverage involves enforcing or defending the insured’s own patents against infringement by third parties. On the other hand, third-party coverage is designed to cover claims brought by third parties asserting patent infringement against the insured.
Patent litigation insurance policies, like any other type of insurance, has some exclusions and limitations. Policy exclusions typically deal with intentional infringement, prior known acts of infringement, or infringement related to certain technologies or industries. Insurance policies are also known to have coverage limits, specifying the maximum amount the insurer will pay for defense costs, damages, or settlements.
Important Note: Patent litigation insurance may also involve deductibles or self-insured retentions.
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Patent Attorney Assistance in Patent Litigation
If involved in a case of patent litigation, regular attorneys may able to guide you and represent you through the process. However, patent attorneys are additionally licensed for patents and may be able to offer more comprehensive services and/or more options for resolution. Contact us with any further questions or schedule a free patent consult with our patent attorney Greg Carson. Click each button below to learn about the differences between the types of patent practitioners and the services they provide.
