22 Oct
2020

United States

Haley Guiliano LLP

Q: How can patent owners best enforce their rights in your jurisdiction?

United States patents are litigated, often simultaneously, in multiple venues, including in federal district courts, before the International Trade Commission (ITC) and at the PTAB. Successful enforcement of patents requires extensive preparation to navigate these multiple venues, and to prevent patent infringers from taking pre-emptive action at the PTAB to attack patent rights or in the district courts to obtain a venue in perceived infringer-friendly jurisdictions. In some instances, it may be desirable for a patentee to return to the patent office for re-examination or supplemental examination to affirm the validity of patents over prior art before filing a lawsuit. For high-stakes disputes involving technologies that are imported into the United States, perhaps the strongest available remedy is a fast-track action at the ITC to block the importation of infringing products.

Q: Are mediation and arbitration realistic alternatives to litigation?

Yes. A strong bench of experienced former patent judges and litigators are available to serve as arbitrators or mediators. Mediation is almost always required during district court litigation.

Q: Who hears patent cases – for example, individual judges, a panel of judges, a mix of judges and technical experts, judges and juries?

This depends on the venue and the issue. At the PTAB, which only decides challenges to patent validity, all issues are heard by three-judge panels of administrative patent judges. These are typically experienced former private practitioners or patent examiners with a background in the relevant technology and in patent law. Cases at the ITC are handled by administrative law judges with the assistance of staff attorneys who play a quasi-advocate role. The administrative law judges and staff attorneys are not patent specialists like administrative patent judges. They do, however, handle many high-stakes patent disputes and are typically well versed in patent law and technology. District court litigation is conducted by generalist federal judges, and is the only venue where juries make decisions in patent cases. Decision making in the district courts is split between judges and juries, with judges deciding issues of law such as claim construction, juries deciding issues of fact such as infringement and damages, and many issues such as invalidity that are a mix of fact and law. Typically, the parties are assisted by professional, testifying technical and damages experts. Occasionally, the district court judges will engage a technical adviser to assist in particularly difficult technical issues.

Q: What level of expertise can litigants expect from courts?

PTAB and ITC judges have a high degree of sophistication when it comes to patent law and technology. Most district court judges have only a small percentage of their dockets dedicated to patent cases and, as such, are relatively inexperienced with patent law and have minimal training in science and technology. A limited number of jurisdictions handle most district court patent cases and are more predictable than other jurisdictions. Judges in these jurisdictions utilise local patent rules and are experienced with certain technology areas.

Q: Are validity and infringement dealt with together in proceedings?

PTAB proceedings decide validity only and can be filed with or without a related infringement action. District court litigations almost always decide both validity and infringement, but cases are often stayed while the PTAB decides validity. ITC actions decide both validity and infringement and are not stayed even if a parallel PTAB action is filed to challenge the patents at issue – although ITC remedies can be collaterally attacked in view of successful PTAB challenges.

Q: Who may represent parties engaged in a dispute?

An attorney for a district court case must be admitted in the federal district court where the case is being heard, which typically requires membership in the local state bar. The PTAB requires attorneys appearing before it to be admitted to the USPTO, which in turn requires a suitable science or technology degree and to have passed a patent bar exam. Attorneys who are not admitted in a district court or to the USPTO may appear pro hac vice. ITC admission is available to qualified US attorneys.

Q: To what extent is forum selection possible in your jurisdiction?

Within the federal district court system, lawsuits can be filed in any district court venue where the accused infringer is either incorporated or has a ‘regular and established place of business’. This latter phrase is the subject of many disputes but appears to require some employees and a bricks-and-mortar presence. Even if the venue is proper, the accused infringer may still seek to move the case to another jurisdiction based on factors such as the location of witnesses and other related cases. Venue is often hotly disputed, because some venues are considered favourable to patent owners, while others are considered favourable to accused infringers. Accused infringers often try to secure their favoured venue by filing declaratory judgment actions. It is commonplace for accused infringers to file a validity challenge in the PTAB. Although invalidation rates have recently seen a slight drop, the PTAB is still considered more welcoming of invalidity arguments than district courts. Timing is often key to whether a PTAB challenge will be effective or will even be heard. Some district courts will not stay their cases if a PTAB challenge does not shortly follow an accusation of infringement, and the PTAB may also decline to hear cases that are running well behind parallel infringement proceedings. There are also relatively strict requirements to file PTAB cases within a year after a lawsuit against an accused infringer.

Because ITC proceedings are procedurally intensive and operate on a fast track, district court cases are stayed while the ITC case is resolved. Although PTAB cases are not typically stayed, due to the similar time to decision of ITC cases and PTAB cases, and the fact that an ITC accusation of infringement typically precedes a PTAB challenge to validity, an ITC complainant (ie, the patent owner) can often obtain a favourable ITC decision prior to resolution of the accused infringer’s PTAB validity challenge.

Q: To what extent is pre-trial discovery permitted?

Pre-trial discovery is freely allowed on relevant subjects and is generally quite burdensome in both district court and ITC proceedings. The strict timetables of ITC cases significantly increase the net discovery burden in the ITC. Discovery rules require disclosure of even highly confidential information, although critical technical data such as schematics, source code and clinical data are often available only in protected environments. Both the district courts and the ITC employ protective orders to allow for free exchange of information between the attorneys acting for the litigants.

Discovery in the PTAB is limited, with document discovery allowed only under special circumstances.

Q: To what extent is evidence written and oral at proceedings?

District court and ITC cases typically conduct full trials with live witnesses, often taking a week or more. There are also extensive opportunities for pre-trial decisions at summary judgment (district court) or summary determination (ITC), typically based on documents uncovered during discovery and deposition testimony.

PTAB cases are decided almost entirely on the papers. Witnesses appear only on rare occasions, and the PTAB ‘trial’ is a brief oral argument by the attorneys.

Q: What role, if any, can expert witnesses play?

Expert witnesses are critical to patent cases on all issues of fact, such as infringement, invalidity, and damages. Expert witness fees are typically a substantial factor in the expense of patent litigation.

Q: Is the doctrine of equivalents applied by courts in your jurisdiction and, if so, what form does it take?

While available, the doctrine of equivalents is applied sparingly due to limiting doctrines such as prosecution history estoppel.

Q: Are there problems in enforcing certain types of patent relating to, for example, biotechnology, business methods or software?

Under the Mayo/Alice framework, many issued patents are subject to challenge as not being directed to ‘patentable subject matter’. Issues often arise for patents that automate business processes, software patents and medical diagnostic patents. The outcomes of patentable subject-matter challenges are often unpredictable, and some venues tend to be more pro-patent or anti-patent when applying this framework.

Q: To what extent are courts obliged to consider previous cases that have covered issues similar to those pertaining to a dispute?

In general, courts and other tribunals are required to apply only rulings from previous cases that were between the same parties and involve the same issues as the current proceeding. Nonetheless, prior rulings are often persuasive even if not binding on a party.

Q: To what extent are courts willing to consider the way in which the same or similar cases have been dealt with in other jurisdictions? Are decisions from some jurisdictions more persuasive than those from others?

The various types of United States patent tribunal – district courts, the ITC and the PTAB – are not bound by rulings from other these bodies unless affirmed on appeal. Rulings from foreign jurisdictions typically have little persuasive value unless the issues under consideration are virtually identical, such as invalidity of identical claims in view of the same prior art.

Q: What realistic options are available to defendants seeking to delay a case? How might a plaintiff counter these?

Defendants will typically file a declaratory judgment action for non-infringement in a perceived favourable district court venue and then promptly file a challenge to the patents in the PTAB. This often affords a stay of any infringement litigation while the PTAB adjudicates invalidity over approximately 18 months. Other options include other challenges at the USPTO, such as petitions for ex parte re-examination.

Q: Under what circumstances, if any, will a court consider granting a preliminary injunction? How often does this happen?

Preliminary injunctions are relatively rare because the patentee must not only show a strong likelihood of success on the merits, but also that the infringement cannot be remedied by money damages. A preliminary injunction outside of a direct competitor environment is extraordinarily rare.

Q: What is the realistic timescale to get a decision at first instance from the initiation of proceedings?

The ITC and PTAB operate on an approximately 18-month timetable to reach a decision at the first instance, while district courts range from 18 to 36 months.

Q: How much should a litigant budget for in order to take a case through to a decision at first instance?

A litigant should budget as follows:

  • for each patent at the PTAB – $250,000 to $750,000;
  • for a ‘typical’ district court litigation – $2.5 million to $5 million; and
  • for a ‘typical’ ITC case – $3.5 million to $7.5 million.

Q: To what extent are the winning party’s costs recoverable from the losing party?

While costs are freely granted to the prevailing party, these only cover relatively small ministerial amounts. Attorney and expert fees are the main cost of litigation and are granted only in egregious cases involving particularly weak claims or defences, or improper litigation conduct.

Q: What remedies are available to a successful plaintiff?

In the ITC, the only remedy is an exclusion order prohibiting the importation of certain products (a limited exclusion order) or classes of products (a general exclusion order) into the United States. This remedy is almost always granted to a successful patent owner, although enforcement at Customs can be complicated.

In the PTAB, a successful patent owner maintains its patents.

Damages are awarded in district courts for up to six years of past infringement (from the date that the complaint was filed), provided that the infringer was on notice of the patent. Damages can be enhanced up to three times of the underlying damages award if the infringement is wilful – with knowledge or a wanton disregard of the infringement. District courts are permitted to grant permanent injunctions, but these are difficult to obtain under the governing eBay standard.

Q: How are damages awards calculated?

Damages are calculated under a ‘reasonable royalty’ or a ‘lost profits’ framework. Lost profits may provide a larger recovery, but this methodology is used only if the patentee can show that it could have made those profits but for the infringement. A reasonable royalty looks at what sort of payment the parties would have come to under a multi-factor ‘hypothetical negotiation’ framework at the date of the start of infringement.

Q: Under what circumstances will courts grant permanent injunctions?

Under the US Supreme Court’s eBay decision, permanent injunctions are not usually available for patent infringement. That is, although a patent is supposed to provide a right to exclude others from practising the invention, the remedy of exclusion is available only under rare circumstances, particularly in cases involving multi-component electrical or mechanical products or software. The most difficult hurdle to overcome is the requirement that money damages are inadequate.

Q: Does the losing party at first instance have an automatic right of appeal?

Whether at the PTAB, ITC or in district courts, the losing party has a right to appeal a final decision to the United States Court of Appeals for the Federal Circuit, which is the sole appellate court for issues involving patents.

Q: How long does it typically take for the appellate decision to be handed down?

For the appellate decision to be handed down, it typically takes between 12 and 18 months from filing.

Q: Is it possible to take cases beyond the second instance?

The United States Supreme Court is the only court that can review decisions of the Court of Appeals for the Federal Circuit. Review is discretionary by writ of certiorari and is granted on only one or two patent cases a year.

Q: To what extent do the courts in your jurisdiction have a reputation for being pro-patentee?

The PTAB had a reputation as being anti-patentee, but that reputation has become less true over the past couple of years.

The ITC is considered an even-handed tribunal, although the strict timetable is considered burdensome to accused infringers.

District courts have varying reputations, with the Eastern and Western Districts of Texas considered pro-patentee, the Northern District of California considered pro-infringer, and the Districts of Delaware, New Jersey and Massachusetts, the Central District of California, the Southern District of New York and the Northern District of Illinois considered knowledgeable of patent cases and neither pro-patentee or pro-infringer.

Q: Are there other fora outside the court system in which it is possible to assert patents in your jurisdiction? If so, under what circumstances might it be appropriate to use them?

The ITC is the primary alternative forum for patent infringement litigation.

Q: Are there any other issues relating to the enforcement system in your country that you would like to raise?

The United States does not have the same kind of requirements that Europe does around SEPs. There are limitations around remedies associated with SEPs in the United States, but the process around pre-suit negotiation is different from that in Europe.

The covid-19 pandemic has generally delayed litigation by a few months. Courts and litigants have begun to adjust to remote depositions, hearings and even trials. Difficult issues have arisen relating to the review of technical documents.

Haley Guiliano LLP

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Gregory J Lundell

Partner

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Greg Lundell is a partner in Haley Guiliano’s Silicon Valley office. His practice reflects his unique mix of outside counsel trial experience and a decade of leading corporate IP groups as inside counsel. Before joining Haley Guiliano, Mr Lundell served as vice president of IP strategy and licensing at two global, public technology companies. In these roles he led IP departments though both routine IP activities and long-term complex IP objectives, such as patent monetisation. His experience includes successful litigations in the United States, Asia, Europe and Latin America; in-bound and out-bound technology licensing; evaluating businesses and IP portfolios for M&A activity; and driving innovation as chief patent counsel.

Richard T McCaulley

Partner

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Rick McCaulley brings more than 20 years’ experience in complex patent, trade secret and antitrust disputes, serving as lead counsel in trials in US federal courts and the PTAB, and advising in international courts. With a degree in biomedical engineering, Mr McCaulley is well suited for both life sciences and high-tech disputes. As co-founder of a medical device company, he understands the strategic value of intellectual property and how to protect it. As a result, clients call on Mr McCaulley for matters of the highest strategic importance. He brings the perspective of a seasoned trial lawyer and business owner to those disputes and has a world-class reputation for delivering business-centric results.

James F Haley Jr

Partner

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Joshua Van Hoven

Partner

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With 25 years of engineering experience and 15 years in private legal practice, Josh Van Hoven works with technology companies and patent owners on litigation and strategic technology acquisitions. He successfully protects patents against inter partes review challenges. His degrees in electrical and mechanical engineering, as well as his industry experience at automotive and medical device companies, provide a solid foundation for matters involving electrical and electronic hardware, robotics, autonomous vehicles, augmented reality and virtual reality, industrial Internet of Things and advanced medical devices. Mr Van Hoven represents clients in patent disputes throughout the United States, including in key patent law venues such as the PTAB, the ITC, the Eastern District of Texas and federal district courts throughout California