Patent Litigation: Why, Where, and What Happens

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Patent Litigation: Why, Where, and What Happens Presented by: Janine A. Carlan & Ralph Mittelberger November 8, 2007 Today 9s Topics " Purpose of Enforcing Patents " What Happens in a Patent Litigation " U.S. District Courts 3the usual forum " The ITC 3a powerful option " Benefits " Risks " Costs Purposes of Enforcing Patents " Stop an infringer from selling product (injunction) " Barrier to entry " Preserve market position " Obtain settlement " Receive $$$: Lost profits, royalties " Preserve rights Patent Litigation in the District Courts 3 Where Do You File?

" Federal District Court: Exclusive jurisdiction. 28 U.S.C. § 1338(a).

" Venue: Where the defendant resides or in any district where the defendant does business. " Factors: Speed, convenience, sophistication, jury pool (Fast courts, pro-plaintiff: EDVA, EDTX, Delaware, Central California). Patent Litigation in the District Courts 3 Before filing& " Perform pre-filing inquiry, infringement analysis required by Fed.R.Civ.

P. Rule 11, Federal Circuit. Must apply the claims of the patent to the accused device.

Antoniousv. Spalding & EvenfloCos., Inc ., 275 F.3d 1066, 1072-3 (Fed. Cir.

2002); View Engineering, Inc. v. Robotic Vision Sys., Inc ., 208 F.3d 981, 986 (Fed.

Cir. 2000). " Determine whether any obvious affirmative defenses bar ... more. less.

the case. " Consider ccease and desist dletter. Patent Litigation in the District Courts 3How Do You File? Notice pleading: " Jurisdiction " Patent(s) " Ownership (standing) " Accused product " Attach patent(s) Patent Litigation in the District Courts 3 General Procedure " Complaint, Answer/Counterclaim " Fact discovery 3documents, depositions, interrogatories, inspections " Claim construction (timing varies) " Expert discovery 3reports, depositions " Summary judgment motions " Trial Patent Litigation in the District Courts 3Not Your Usual Case " Like a foreign language " Has its own bar " Often highly technical Patent Litigation in District Courts -Claim Construction " Markman v. Westview Instruments, Inc ., 52 F.3d 976, 970 (Fed. Cir. 1995). " What the claims mean " Question of law for the court to decide " Provides the metes and bounds (like a property line) " Look to language of the claim, specification, file history " No consistent schedule among courts Patent Litigation in District Courts 3The Need for Claim Construction (Example) 1. In combination, a primary support defining thereon an enlarged upwardly facing primary work surface, said primary support defining a front edge adjacent said primarywork surface, an auxiliary shelflike support defining thereon an upwardly facing auxiliary work surface for supporting a keyboard unit thereon, and mounting means connecting said primary and auxiliary work supports together for movably supporting said auxiliary support relative to said primary support in the vicinity of said side edge, the improvement wherein said mounting means comprises: carriage means positioned under and movably mounted on the underside of said primary support for linear horizontal translation of said carriage means relative tosaid primary support along a direction which extends substantially transverse to said front edge; first means positioned under said primary support and mounted onsaid carriage means for pivotal movement relative thereto about a first substantially vertical hinge axis; second means mounted on the underside of said auxiliary support for pivotal movement relative thereto about a second substantially vertical hinge axis; vertically swingable, elongated link means having the opposite ends thereof pivotally connected to said first and second means for permitting vertical displacement of the auxiliary support relative to the primary support while maintaining said auxiliary support oriented so that the upper surface thereof retains its predetermined upwardly facing orientation, said linkmeans comprising a vertical parallelogram linkage with elongated upper and lower links having their rearward ends pivotally interconnected to said first means and their forward ends pivotally interconnected to said second means; spring means associated with said link means for exerting a biasing force tending to swing said link means upwardly to effect raising of said auxiliary support; and holding means including a manually movable actuator for preventing vertical pivotal displacement of said parallelogram linkage. Patent Litigation in District Courts 3The Need for Claim Construction Patent Litigation in the District Courts --------- -------------------Consider the Jury A study showed patent juries believe: The Patent Office knows as much about the applicant 9s business as the applicant Only the Patent Office should evaluate a patent Consumer interests are important to the case Inventors are individuals who need to be protected from copiers If the defendant has a patent covering the accused devise, thereis no infringement Independent development avoids infringement Complex subject matter-- avoid overwhelming or boring the jury. Patent Litigation in the District Courts 3 Remedies (Benefits) " Damages: Lost profits or at least a reasonable royalty 35 U.S.C. §284 " Injunction (discretionary) 35 U.S.C. §283, eBay Inc. v. MercExchange, L.L.C., 126 S.Ct. 1837 (2006) " Enhanced damages: Discretionary, 3X (willful infringement) " Attorney 9s Fees for cexceptional cases d(frivolous filings, litigation misconduct, inequitable conduct) 35 U.S.C. §285 Patent Litigation in the District Courts 3 Damages Awarded in Recent Cases " The largest patent award in history on Feb. 22, 2007--San Diego jury hits Microsoft with a $1.52 billion patent judgment in favor of Alcatel-Lucent (later reversed). " Mobile phone chip company, Qualcomm must pay $39m to rival Broadcom in a patent dispute. (2007). " TiVowon $74 Million in Patent Suit Against EchoStar (2006). " In 2005 the median damages award was $6,000,000. ( PricewaterhouseCoopers LLP 2007 Patent and Trademark Damages Study ). Patent Litigation in the District Courts 3 Settlements in the News 2006: only 3.1% went to trial ( Prof. Paul Janike, Univ., Houston presentation to IPO Damages Conference 2007 ) " Blackberry case (settled for $612.5 million). (2006). " Sprint v. Vonage (one-time cash settlement of $80 million). (2007). " Gateway paid Hewlett-Packard $47 million to settle patent litigation between the two companies. (2006). " Microsoft paid InterTrust$440 Million to settle its patent infringement disputes with the company. (2004). Patent Litigation in the District Courts 3 Costs of Patent Litigation (Risks) According to an article in Patent World (Sept. 2004), a 2003 survey of the American Intellectual Property Lawyers Association found that cthe average cost of bringing a patent litigation is almost $2 million. American Intellectual Property Law Association (AIPLA) 2005 survey: >$5 million when >$25 million is at stake. AIPLA: The average litigation cost was $769,000 per party in cases where less than $1 million was at risk. That figure more than tripled to over $2.6 million where $1 million or more was at risk. In the Northern District of California ... a good rule of thumb is to expect $3 million in fees for the first patent in suit and $1 million for each additional patent to be litigated. Genetic Engineering & Biotechnology News, BiobusinessChannel:Apr 1 2006 (Vol. 26, No. 7). ALSO: Consider cdisruption costs, d(document gathering, ce-discovery, depositions, settlement conferences, trial). Patent Litigation in the District Courts 3 Patent Vulnerability (Risks) " Patent Found Invalid (any or all claims) " Patent Found Unenforceable 3applies to all claims " Inequitable conduct, cfraud on the Patent Office d--failure to disclose material information to the Patent Office with an intent to deceive. KingsdownMed. Consultants, Ltd. v. Hollister, Inc. , 863 F.2d 867 (Fed. Cir. 1988) ( en banc in relevant part)). Patent Litigation at the ITC Section 337 of the Tariff Act of 1930 (19 U.S.C §1337). FORUM: The International Trade Commission, Washington, DC JUDGE: An Administrative Law Judge USE: When infringing product is coming into the U.S. from a foreign country. cIn REM djurisdiction. SPEED: Often the evidentiary hearing is held eight months after case is instituted. POWERFUL REMEDY: Not $, but cexclusion order. dGeneral exclusion orders direct the U.S. Customs Service to exclude all infringingarticles, without regard to source . Cease and desist orders direct the respondent to 8cease 9its unfair acts, including selling out of its U.S. inventory. Patent Litigation 3Appeals " Federal Circuit 3 formed in 1983 " 28 U.S.C. §§1295(a)(1) and 1338(a) " Applies its own law, not the law of the regional circuit, for patent issues " Supreme Court of the United States NOTE: In the first twelve years of the existence of the Federal Circuit, the Supreme Court heard only four patent cases. In the following ten years, the Supreme Court heard about three times that amount. KSR International Co. v. Teleflex Inc ., No. 04-1350, 550 U.S. ----(2007); Microsoft Corp. v. AT&T Corp ., No. 05-1056, 550 U.S. ----(2007); MedImmune, Inc. v. Genentech, Inc . , 127 S.Ct. 764 (2007) Janine A. CarlanRalph Mittelberger 202-715-8506 202-857-6303 carlan.janine@arentfox.com mittelbr@arentfox.com Arent Fox LLP 1050 Connecticut Ave., N.W. Washington, DC 20036 Contact Information: Janine Carlan PH: 202-715-8506 carlan.janine@arentfox.com Arent Fox LLP 1050 Connecticut Ave., N.W. Washington, DC 20036 Contact Information: Ralph Mittelberger PH: 202-857-6303 mittelbr@arentfox.com Arent Fox LLP 1050 Connecticut Ave., N.W. Washington, DC 20036

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