Patent Infringement Lawsuit Considerations
Patent infringement lawsuits are the primary mechanism for enforcing patent rights. A patent only has value if its owner can stop others from using the invention, and litigation (or the credible threat of it) is how that happens. Filing a lawsuit involves several strategic decisions: who to sue, where to sue, and when to sue. Each of these choices can shape the outcome of the case.
Strategic Selection of Defendants
Not every infringer is worth suing. Patent owners need to think strategically about which defendants to pursue, because litigation is expensive and time-consuming.
There are two categories of infringers to consider:
- Direct infringers make, use, sell, offer to sell, or import the patented invention without permission.
- Indirect infringers don't infringe the patent themselves but facilitate someone else's infringement. This comes in two forms:
- Contributory infringement: supplying a component of the patented invention with knowledge it will be used to infringe. For example, selling a specialized part designed specifically for a patented machine.
- Induced infringement: actively encouraging or aiding another party to infringe. For example, providing detailed instructions on how to use a product in a way that infringes the patent.
Once you've identified potential defendants, several factors guide the decision of whom to actually sue:
- Financial resources: Can the defendant pay damages if you win? A large corporation is a more worthwhile target than a startup with no assets.
- Market share: Is this defendant a major competitor eating into your sales, or a minor player with minimal impact?
- Strength of the case: Do you have clear evidence of infringement, or is it a borderline situation that could go either way?
- Settlement likelihood: Does the defendant have a history of settling patent disputes, or do they tend to fight every case to trial?
- Counterclaim risk: Could the defendant mount a strong invalidity challenge? A defendant sitting on compelling prior art could turn the case against you.
Venue Choice for Patent Lawsuits
Where you file matters. Different courts move at different speeds, have different levels of patent expertise, and may have jury pools with different tendencies.
To file in a particular court, two threshold requirements must be met:
- The court must have personal jurisdiction over the defendant.
- The court must have subject matter jurisdiction over the patent dispute (federal courts have exclusive jurisdiction over patent cases).
For venue, a patent case can typically be filed in a district where the defendant resides, has a regular and established place of business, or where the acts of infringement occurred (such as a manufacturing facility or location of infringing sales).
Beyond these legal requirements, patent owners often engage in forum shopping, which means selecting the court perceived as most favorable. Factors include:
- Docket speed: Some courts reach trial much faster than others. The Eastern District of Texas, for instance, has historically been known for fast patent trials.
- Patent expertise: Courts that handle a high volume of patent cases, like the District of Delaware, tend to have judges more experienced with the complexities of patent law.
- Jury pool: A tech-savvy jury in Silicon Valley may evaluate a software patent differently than a jury elsewhere.
- Proximity to witnesses and evidence: Having inventors, experts, and key documents nearby reduces costs and logistical headaches.
- Local rules: Some courts require mandatory mediation or have specific procedures for claim construction hearings (Markman hearings) that can affect case strategy.
Timing of Infringement Litigation
When you file can be just as important as where you file.
- Statute of limitations: Patent infringement claims must be filed within six years of the infringing activity. Filing within this window also preserves your ability to recover past damages for up to six years of infringement.
- Laches defense: Even within the six-year window, if you unreasonably delay filing and the defendant suffers prejudice as a result (for example, by making significant investments in the infringing product), the defendant may raise a laches defense to limit your recovery.
- Ongoing market harm: Every day you wait, a competitor using your patented technology may be gaining market share and customer loyalty. Delay can make it harder to recover your competitive position even if you eventually win.
- Declaratory judgment risk: If a potential defendant learns you might sue, they can file a declaratory judgment action in a court of their choosing, potentially a less favorable jurisdiction. This can take venue selection out of your hands.
- Injunctive relief: Delay can weaken your case for a preliminary injunction, which requires showing likelihood of success on the merits, irreparable harm, a balance of hardships in your favor, and that the public interest supports the injunction. Courts may question the "irreparable harm" argument if you waited months or years before seeking emergency relief.
- Changes in law or patent status: New court decisions or USPTO proceedings (like inter partes review) during a delay period could affect your patent's validity or the legal landscape.
Key Aspects of Patent Litigation
Once a case is filed, several core issues drive the litigation:
- Patent claim construction: Before the jury decides infringement, the judge interprets the scope and meaning of the patent claims in a proceeding called a Markman hearing. This step often determines the outcome of the entire case, because how broadly or narrowly the claims are interpreted directly affects whether the defendant's product falls within them.
- Damages: If infringement is proven, the patent owner is entitled to monetary compensation. This typically takes one of two forms: lost profits (the sales the patent owner would have made but for the infringement) or a reasonable royalty (the hypothetical license fee the parties would have agreed to).
- Patent invalidity: Defendants frequently challenge the validity of the asserted patent, arguing that prior art or other grounds (such as lack of novelty or obviousness) should have prevented the patent from issuing in the first place.
- Willful infringement: If the infringer acted knowingly and intentionally, the court may award enhanced damages of up to three times the compensatory amount. This is why companies sometimes avoid reading competitors' patents, though that strategy carries its own risks.