NEW YORK: An Introduction to Intellectual Property: Patent

New York: Intellectual Property: Patent 

Patents granted by the U.S. government provide exclusive rights to an invention. Federal law not only sets requirements for obtaining patents; it also provides mechanisms for patent owners to sue others for making, using, selling, and/or importing an invention without permission. In response, an accused infringer may not only contest the claim of infringement, but it may also assert (among other challenges) that a patent is invalid (that is, the U.S. Patent and Trademark Office or “USPTO” never should have issued the patent in the first place). This overview covers recent trends in patent litigation in the United States.

What Is Patent Litigation? 

Patent litigation typically involves a patent owner suing a company for infringement of one or more claims of an issued patent. In general, such a lawsuit may be brought against an accused infringer where it is incorporated, or where it has an office or other place of business, and it will assert that a product the company makes or sells is covered by claims in the patent. In order to recover damages, a patent owner must also demonstrate any monetary damages claimed as a result of the infringement. Other relief, including temporary or permanent injunctive relief, may also be available under appropriate circumstances.

Whether the patent owner itself uses the patented invention is not an impediment to filing a suit in federal district court. A patent owner who does not make or sell a product that uses its patented invention is sometimes called a Non-Practicing Entity (“NPE”), and nationwide, NPEs constitute a substantial portion of patentee plaintiffs.

In response to an assertion of infringement, an accused infringer may argue that it is not infringing the patent’s claims, that the patent is invalid, or both. A defense of patent invalidity in this context often includes the assertion that someone else developed the invention before the patent owner, or that the patent document itself falls short of meeting certain legal requirements. An accused infringer may also petition the USPTO to review the patent in parallel to the lawsuit in the district court.

If a patent owner wins its lawsuit, it may receive damages adequate to compensate for the accused infringer’s unauthorized use of the invention, generally in the form of a royalty or lost profits (as well as, in some cases, injunctive relief). Patent infringement cases are tried to a civil jury, drawn from the community where the case has been brought. Patent litigation can produce awards of hundreds of millions of dollars or more.

The Western District Of Texas And Enduring Prominence Of Other Patent Litigation Venues

In recent years, the United States District Court for the Western District of Texas became one of the most prominent districts for filing patent cases, specifically in the Waco Division of that District. In the past, the vast majority of patent cases were assigned to a single judge in the Waco Division, and those cases often moved from complaint to trial in about 18 months, which is much quicker than most other districts in the country. Additionally, that accelerated schedule often led to trial well before a final USPTO review of the asserted patents.

However, that trend is changing. In 2022, the Chief Judge of the Western District of Texas began randomly assigning all patent litigation to judges throughout that District, instead of primarily or exclusively to the Waco Division. Thus, it is now considerably more difficult to predict the speed with which the case will move to trial. Consequently, the Western District of Texas may decrease its share of newly filed patent litigation going forward.

Other district courts known for handling much of the nation’s patent caseload continue to be mainstay venues for infringement cases. Those include the District of Delaware and the Northern District of California, as well as the Eastern District of Texas, and the Central District of California. Given that the California districts are home to many of the nation’s technology companies and the District of Delaware is the place of incorporation for many of the nation’s largest companies, those districts are expected to continue to be popular venues for filing patent litigation.

Growth in International Trade Commission (“ITC”) Investigations

With the decreased availability of injunctive relief in district court litigation, ITC investigations have become an increasingly important option for patent holders. In ITC investigations, administrative law judges (“ALJs”) review allegations that products imported into the U.S. infringe U.S. patents. During such investigations, ALJs conduct an infringement trial to determine, among other things, whether an imported product is covered by the claims of a U.S. patent and if there is a domestic industry to protect. If they find infringement that constitutes a violation under section 337 of the Tariff Act, the Commission can issue an exclusion order that directs U.S. Customs and Border Protection to bar the importation of the violating product and a cease-and-desist order to prevent the sale of the infringing products already in the United States. Per that statute, ITC investigations must conclude “at the earliest practicable time,” which often entails an evidentiary hearing within 10 months of the complaint being filed and a final Commission determination within 18 months.

The ITC had a record number of active investigations in 2022 and is on pace for a second straight record year in 2023. Given that ITC investigations provide a rapid remedy to halt the importation and sale of infringing products, and are unlikely to be stayed for parallel inter partes review proceedings at the USPTO, more companies are likely to take advantage of it, which should continue the trending uptick in the number of ITC investigations.

Post-Grant Patent Proceedings Continue To Evolve

Post-grant procedures are administrative proceedings before the USPTO that were designed to be less expensive alternatives to determine the validity of patents. In practice, these post-grant proceedings are commonly filed in parallel with district court and ITC patent cases.

Three most common forms of post-grant proceedings are inter partes review (“IPRs”), post-grant reviews (“PGRs”) and ex parte reexaminations (“EPRs”). IPRs are often used by accused infringers to challenge patents based on patents and printed publications only. PGRs allow greater types of challenges but can only be raised within nine months after issuance of the patents. Both IPRs and PGRs are reviewed by administrative patent judges (“APJs”) at the Patent Trial and Appeal Board (“PTAB”). In recent years, the USPTO has also seen a consistent increase in EPRs, which are reviewed by specialized examiners at the USPTO. The number of EPRs more than doubled from 2019 to 2022, as they become a more common option to challenge patent validity.

USPTO Director Kathi Vidal has made numerous changes to the PTAB since she was confirmed in 2022. For example, Director Vidal has issued precedential opinions that largely de-emphasize former Director Iancu’s opinions that deny institution of IPR/PGR proceedings based on the overlap with parallel district court litigation. Director Vidal has also clamped down on third-party patent challengers who utilize the IPR proceedings as a means to “extort” settlement fees from patent owners who have won large verdicts, by issuing sanctions against such parties.

The PTAB is expected to undergo further changes in 2023. Director Vidal recently published a blog marking her one-year anniversary noting that “[i]f last year was about listening and gathering the input and data to make meaningful, sustainable change, 2023 (and beyond) is about action.” And these changes may even be institutional changes. For example, Director Vidal has previewed the possibility of establishing a separate review panel (from the currently established Precedential Opinion Panel) that can “separate out the error correction from where we really need to address an area of the law and provide clarity and certainty for the public.”

Desmarais LLP’s Patent Litigation Practice 

Desmarais LLP is a leader in high-stakes patent litigation, particularly cases likely to go to a jury trial, for both patent owners and accused infringers. Founded in 2010, DLLP has won numerous high-profile trials for those wrongfully accused of patent infringement, as well as vindicating the rights of numerous patent owners against infringers with substantial jury awards and judgments.