A patentee that wishes to most effectively enforce its portfolio can often choose from forums across the United States and worldwide. This chapter briefly addresses the major components of a successful litigation strategy and how attempts to execute each of those components might be aided or hindered by a patentee’s chosen enforcement venue.
Enforcement strategy goals
Damages: According to black-letter US patent law, damages for infringement should be “in no event less than a reasonable royalty” (28 USC Section 284) – but results diverge from there. When choosing from among potential US courts, it pays to have considered likely damages methodologies before filing a suit, and to then carefully research the district’s typical approach to Daubert motions directed towards damages experts. One court may exclude a methodology that another court has previously deemed to be reliable. Similarly, if the patentee markets its own product and intends to pursue lost-profits damages from a competitor infringer under the Panduit factors, what level of evidentiary support has the court typically required to survive Daubert? It also pays to investigate ‘what’s next’ after a successful Daubert motion: do courts in that district allow for further expert-report supplementation, or is the patentee typically limited to whatever is left of the expert’s initial report?
The same approach holds true for patent litigation outside the United States. Many jurisdictions offer some form of monetary damages as relief for patent infringement, but the nuances of each jurisdiction can differ substantially. In France, for example, the court considers three factors when calculating damages, including the negative economic consequences to the patentee, the moral prejudice caused by the infringement and the profits made by the infringer (Article L. 615-7 of the IP Code). Alternatively, French courts may award a lump sum that is greater than the amount of royalties that the infringer would have paid had it taken a licence (id). China takes a similar approach to calculating damages, but also provides a statutory damages scheme where damages are difficult to determine (see, eg, the decision of the Standing Committee of the National People’s Congress on amending China’s Patent Law (17 October 2020)). Article 71 of the Patent Law was recently amended to allow successful patent owners to recover up to five times punitive damages in certain circumstances (id).
Injunction: If obtaining an injunction is important to a patent owner, a US District Court action is not the ideal forum. In the wake of the US Supreme Court’s 2006 ruling in eBay v MercExchange, “the inexorable result was a substantial reduction in injunctions issuing to stop ongoing patent infringement” (Adam Mossoff, “The Injunction Function: How and Why Courts Secure Property Rights in Patents”, 96 ND Law Rev 1581, 1593 (2021) (citing, inter alia, Kirti Gupta & Jay P Kesan, “Studying the Impact of eBay on Injunctive Relief in Patent Cases”, University of Illinois College of Law Legal Studies Research Paper 17-03 (1 August 2016), (“all entities – practicing and non-practicing – are less likely to file for a motion of an injunction after eBay”)). The US venue in which injunctive-type relief remains readily available is, of course, the International Trade Commission (ITC).
Jurisdictions outside the United States provide injunction as a remedy to infringement. Germany, France, the United Kingdom, China and the Netherlands, among others, all allow for successful plaintiffs to obtain some form of injunctive relief upon a finding of infringement. In addition, injunction is a default remedy in some jurisdictions such as Germany, France and the Netherlands, meaning that patent owners do not necessarily need to make a special showing to obtain that relief (see, eg, “Patent Litigation in the Netherlands: Final Remedies”, Thomson Reuters, Practical Law, 1 July 2020).
Aside from injunctions, certain countries also have unusual remedies such as recall and destruction. Section 140a of the German Patent Act allows the patent owner to request the infringer to destroy all infringing products in its possession unless destruction is unreasonable. This also applies in the case of products that have been produced directly by means of a process that is the subject matter of the patent.
Time to relief
In the United States, how quickly a patentee can get to trial varies both between and within districts. At the faster end, all courts in the Eastern District of Texas apply uniform local patent rules – in recently commenced cases the judges have been setting trial dates of as little as 12 months from filing. In the Western District of Texas, Judge Albright’s Waco Division applies a unique Order Governing Proceedings that sets out a default time to trial of approximately 18 months. Other jurisdictions take longer, from the Northern District of California’s 28 months to the District of Delaware’s 30 months or more, and to even longer times in the District of New Jersey. Reliable recent figures for the District of New Jersey – a popular venue for Hatch-Waxman suits given its many resident pharmaceutical companies – are not readily available, but the district’s bench is currently 25% vacant even after the recent confirmation of two judges, and its judges are all handling well above the national average caseload. These figures are based on historical trends, but the covid-19 pandemic has not been uniform in its disruptions.
Courts outside the United States similarly have varying time to relief. Understandably, those jurisdictions without traditional discovery processes tend to have faster time to relief than jurisdictions with more robust discovery proceedings. Germany and China, for instance, have some of the fastest average times to relief, and have no traditional discovery. China averages six to 18 months in the first-instance court, while Germany averages 14 months, depending on the regional court in which the case is pending (see the WIPO, “An overview of patent litigation systems across jurisdictions”, 2018). France, on the other hand, is another jurisdiction that does not have extensive discovery, but still averages 18 to 24 months for the first instance (id).
Discovery – extent and timing
Availability of proof
No forum worldwide offers the same array of available discovery as the United States. A lesser-known fact is that US law even provides for domestic discovery in support of overseas litigation (see, 28 USC Section 1782; see also, “Disclosure Issues in International IP Arbitration”, IAM 11 March 2021; “Despite 2nd Circ. Ruling, Discovery Statute’s Reach Grows”, Law360 20 July 2020). But even within the United States, discovery in any given case may vary by venue.
Several jurisdictions now provide that email is no longer to be included within the default scope of document production, or otherwise set out strict default limits (see, eg, “Default Standard for Discovery”).
Quickest off the mark are certain Eastern District of Texas judges who do not require that document requests be served, and instead provide that “all documents… that are relevant to the pleaded claims or defenses involved in this action” be produced automatically. Other jurisdictions follow the default under the Federal Rules of Civil Procedure and allow discovery to commence immediately after the Rule 26(f) conference. Finally, certain district courts in, for example, the Western District of Texas institute an automatic stay of most discovery until following the Markman hearing. However, Judge Albright’s Waco Division allows early discovery relating to claim construction, proper venue and time-consuming third-party practice.
When required disclosures must be served – and how easily they can be updated – often varies with length of time to trial (ie, the faster to trial, the earlier that infringement and invalidity contentions must be served, and the higher the bar to later modify those contentions). For instance, the Eastern District of Texas requires service of initial infringement contentions before the initial case management conference, with the major factor justifying subsequent revision being the outcome of claim construction (Eastern District of Texas LPR 3-6). Other courts maintain their own idiosyncratic disclosure regimes (eg, the Northern District of California’s damages contentions (Northern District of California LPR 3-8)).
Outside the United States, discovery is quite varied. Some jurisdictions, such as Germany for example, have no traditional fact discovery that one might expect to find in the United States. Instead, the plaintiff is expected to have enough information to substantiate their claims before filing. This lack of a pre-trial discovery phase makes German infringement proceedings significantly less costly and time-consuming than, for example, proceedings in the United States. China is another jurisdiction that lacks US-style discovery. Instead, plaintiffs are expected to provide evidence themselves. Limited procedures exist to preserve or request information (see, Articles 61 and 81, Civ Proc L of the People’s Republic of China, Rev 2017). But these fall short in scope, and require a higher showing than discovery requests in the United States.
Other jurisdictions take a middle-ground approach. Litigation in the United Kingdom includes the disclosure and inspection of documents, which is like US discovery, but tends to be more limited (“Patent litigation in the UK (England and Wales): Procedure in civil courts”, Thomson Reuters, Practical Law, 1 July 2020). For example, production by the alleged infringer is generally limited to a description of the allegedly infringing product or process. Fact witness evidence is also more limited and there are typically no depositions. Instead, witness evidence is adduced via a written witness statement and the witness may be cross-examined at trial (id).
Counterclaims: Counterclaims assertable in US patent litigation run from the standard declaratory-judgment counterclaims for non-infringement and invalidity, to the more exotic. For example, if the asserted patents were obtained by a member of a standard-setting organisation, the accused infringer may allege breach of contract relating to FRAND commitments. Or if the patentee and infringer are commercial competitors, the accused infringer may allege any of several business torts (eg, unfair competition and tortious interference). Whether the counterclaims are tried with the main infringement case, the patentee must still devote resources to pre-trial discovery.
Myriad counterclaims are available in jurisdictions outside the United States, and covering them all would be beyond the scope of this chapter. Most jurisdictions have counterclaims that resemble those often seen in US litigation. While not actual counterclaims, countersuits have become more common in cases involving SEPs. These generally take two forms:
- seeking declaratory relief relating to FRAND licensing rates; and
- seeking injunctive relief to prevent a party from pursuing litigation in a different jurisdiction.
Both may become more popular as FRAND litigation proliferates, and certain jurisdictions purport to have authority to set worldwide FRAND licensing rates (“Dealing with unavoidable uncertainty: UK Supreme Court rules UK courts can set global FRAND rates for SEPs”, 31 August 2020).
PTAB: Parallel proceedings in the United States occur most commonly via the PTAB’s inter partes review – pursued nearly universally by accused infringers. It behoves both the patentee and the accused infringer to closely assess which courts tend to stay parallel proceedings should an inter partes review be opened – including whether the court’s approach differs based on how early in the district court case the accused infringer files its petition.
ITC: The ITC remains a popular venue that patentees may pursue on its own or in combination with a district court litigation. The ITC’s primary appeal is twofold:
- proceedings are extremely fast; and
- it holds the authority to enter an exclusion order barring import of infringing articles (19 USC Section 1337(d)).
However, two cautions apply:
- To pursue relief with the ITC, the patentee must be able to demonstrate that related “domestic industry exists or is in the process of being established”; and
- Because the ITC is not an Article III Court, an exclusion order issued by the ITC may be summarily overridden by the Executive Branch, as occurred in 2013 following Samsung’s success in obtaining an order excluding imports of some Apple devices (19 CFR Section 210.12(a)(6); “Obama administration overturns ban on some iPad, iPhones”, 3 August 2013).
Court of Federal Claims: If the US government is a major customer of the primary infringer, to obtain full recovery the patentee may have to launch a separate action in the Court of Federal Claims (see 28 USC Section 1498).
Outside the United States: Like the PTAB in the United States, administrative bodies in other jurisdictions can make determinations relevant to patent litigation. The Chinese Patent Re-examination Board has authority to invalidate Chinese patents involved in litigation. Similarly, the EPO provides an opposition procedure that is a post-grant, contentious administrative procedure intended to allow any European patent to be centrally opposed. Opposition must be filed within nine months of the publication of the European patent grant. The opposition applies to all states designated in the European patent (EPO “Oppositions”).
Bifurcation and severance
Before selecting a venue, it is advisable to comprehensively research individual judges’ practices. Some courts see no problem in conducting one comprehensive trial proceeding (eg, allowing two competitor patentees to try reciprocal infringement cases to the same jury). Other courts – particularly those that implement strict trial-time limits – may tend to conduct separate trials, including splitting off counterclaims to be presented to a separate jury. Some courts also bifurcate damages determinations from infringement and validity – which allows for a separate interlocutory appeal to the Federal Circuit under 28 USC Section 1292(c)(2) – but this practice is less common than it once was.
Many jurisdictions outside the United States bifurcate infringement and validity proceedings. In Germany, the first-instance regional courts hear infringement cases, while the German Federal Patent Court separately determines patent validity. Similarly, Chinese first-instance courts will make an infringement determination, while validity is reserved for the Patent Re-examination Board. But this pattern is not true for all foreign jurisdictions: first-instance courts in France, for example, determine both infringement and validity.
Specialised procedures for SEPs
While substantive FRAND law is beyond the scope of this chapter, FRAND-related considerations play a role in selecting an appropriate jurisdiction. Certain jurisdictions have developed specialised procedures for FRAND-related cases. In Germany, the Munich Regional Court recently published guidelines for parties asserting FRAND-related defences in patent litigation. The Munich court is among the first to set out such specific guidelines (see “New guidelines for the FRAND defence in patent infringement proceedings by the Munich District Court I”, 3 March 2020). Similarly, UK courts have one of the more developed bodies of FRAND law, and the Supreme Court recently upheld a lower-court decision finding that UK courts can determine worldwide FRAND licensing rates. It seems likely that additional jurisdictions will develop similar procedures over the coming years as SEP litigation continues to increase. Knowing which jurisdictions have specific FRAND-related procedures is key to efficiently resolving patent disputes.
Practice points regarding selecting from available forums:
- Observe TC Heartland – an accused infringer may be sued only in its state of incorporation or where acts of infringement have occurred and the accused infringer maintains a regular and established place of business (see 28 USC Section 1400).
- In determining whether an accused infringer operates a “regular and established place of business”, follow the Federal Circuit’s guidance in In re Cray Inc, 871 F.3d 1355 (Fed Cir 2017) and In re Google LLC, 949 F.3d 1338 (Fed Cir 2020).
- As per the Federal Circuit’s recent opinion in In re Samsung Electronics Co, 21-139, 2021 US App LEXIS 19522 (Fed Cir, 30 June 2021), artificially limiting venue via finely parsing assignment of patent rights will be disregarded.
- Even if the venue is proper, be alert to a convenience transfer under 28 USC Section 1404(a) – a topic that has been addressed in more than 20 Federal Circuit proceedings relating to the Waco Division of Western District of Texas dating from December 2019. These determinations are fact-specific, but the prepared patentee should conduct a robust pre-suit investigation regarding locations of documentary and witness-related sources of proof (this may not be publicly evident, depending on the accused infringer’s confidentiality practices). The WacoWatch blog has a useful survey of recent transfer-related mandamus decisions; and the Federal Circuit has since issued several additional such orders (see In re Volkswagen Grp of Am Inc, 21-149 (29 June 2021); In re Samsung Elecs Co, 21-139 (30 June 2021); In re Uber Techs Inc, 21-150 (8 July 2021); In re TCO AS 21-158 (13 July 2021).