1 Legal framework
1.1 What are the sources of patent law in your jurisdiction?
The primary sources of patent law in the United States are the US Constitution, federal statutes and regulations and case law. Article I, Section 8, Clause 8 of the US Constitution grants Congress the power "[t]o promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries".
Pursuant to this grant, Congress has enacted statutes that govern different aspects of patent law, including patentable subject matter, conditions for patentability and remedies for infringement. These statutes are primarily codified in Title 35 of the United States Code. The US Patent and Trademark Office (USPTO) administers the patent laws as they relate to the granting of patents and has passed federal regulations governing its operations, which are codified in Title 37 of the Code of Federal Regulations.
Lastly, US district courts and the US International Trade Commission (ITC) also interpret patent statutes and regulations. The US Court of Appeals for the Federal Circuit has exclusive appellate jurisdiction for patent cases, and its decisions are binding on all US federal district courts and the US ITC. The Supreme Court will occasionally hear appeals from the Federal Circuit and its decisions are binding on the Federal Circuit, the US district courts and the ITC.
1.2 Who can register a patent?
Only the inventor, co-inventors or a party to which the inventor has assigned the invention may apply for a patent (35 USC § 118). An inventor must be a human (35 USC § 100(f)), but an assignee may be either a person or a non-human entity, such as a university or corporation. Inventors or assignees can apply for a patent themselves or engage a licensed patent agent or patent attorney to represent them before the USPTO.
If the inventor is unable to apply for a patent – for example, if the inventor is deceased or legally incapacitated – a legal representative may apply for a patent on behalf of the inventor (35 USC § 117).
Officers and employees of the USPTO cannot apply for or acquire the rights to any patents "during the period of their appointments and for one year thereafter" (35 USC § 4).
2.1 What rights are obtained when a patent is registered?
A patent is "a grant to the patentee, his heirs, and assigns, of the right to exclude others from making, using, offering for sale, or selling the invention in the United States or importing the invention into the United States, and if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof" (35 USC § 154(a)).
In the case of a plant patent, "the grant shall include the right to exclude others from asexually reproducing the plant, and from using, offering for sale, or selling the plant so reproduced, or any of its parts, throughout the United States, or from importing the plant so reproduced, or any parts thereof, into the United States" (35 USC § 163).
2.2 How can a patent owner enforce its rights?
Once a patent is issued by the US Patent and Trademark Office (USPTO), the patent owner can enforce its right to exclude others through litigation, either in a federal court or at the US International Trade Commission (ITC).
US district courts have original jurisdiction to litigate all civil claims relating to patents (28 USC §§ 1331, 1338(a)). The ITC's jurisdiction is narrower. Under Section 337 of the Tariff Act of 1930, the ITC has jurisdiction to hear cases involving the import of articles that would infringe a US patent or the import of articles made by a process covered by a US patent (19 USC § 1337).
A patent owner may appeal a final district court or ITC decision to the US Court of Appeals for the Federal Circuit (28 USC § 1295). Federal Circuit decisions can be further appealed to the US Supreme Court by a petition for writ of certiorari (US Const art 3, § 2; 28 USC § 1254).
2.3 For how long are patents enforceable?
Subject to the payment of maintenance fees, utility and plant patents expire 20 years after the earliest effective filing date (35 USC § 154(a)(2)). Patents are not usually enforceable for 20 years, however, because the USPTO must issue the patent before it becomes enforceable. Thus, patents are enforceable from the time they issue until 20 years after the earliest effective filing date.
US design patents resulting from applications filed on or after 13 May 2015 have a 15-year term from the date of grant. Design patents issued from applications filed before 13 May 2015 have a 14-year term from the date of grant (35 USC § 173).
See question 3.6 for a discussion of patent term adjustment and extension, which may be available for qualifying patents.
3 Obtaining a patent
3.1 Which governing body controls the registration procedure?
In the United States, patents are filed with, and prosecuted before, the US Patent and Trademark Office (USPTO).
3.2 What is the cost of registration?
The United States has a patent examination system, as opposed to a registration system. Applicants seeking a patent (utility, design or plant) file an application requesting examination by the USPTO. Except for provisional applications, for which only a filing fee is required, each application for a patent requires payment of a basic filing application fee, plus the appropriate search and examination fees and an issue fee. Additional claim fees are also due based on the number of claims presented (more than three independent claims and more than 20 total claims) and whether multiple dependent claims are presented. Up-to-date information on filing fees may be found at www.uspto.gov/learning-and-resources/fees-and-payment/uspto-fee-schedule. If the applicant qualifies as a small entity (37 CFR § 1.27) or micro entity (37 CFR § 1.29), any fees are subject to reduction as set forth in the USPTO fee schedule.
3.3 What are the grounds to reject a patent application?
The USPTO may reject utility patent application claims for:
- failing to meet utility requirements or recite patentable subject matter (35 USC § 101);
- being anticipated by the prior art (or lacking novelty) (35 USC § 102);
- being obvious in view of the prior art (or lacking inventiveness) (35 USC § 103); or
- failing to meet the written description support, enablement and definiteness requirements (35 USC § 112).
The USPTO can also reject an application for failure to disclose the best mode (35 USC § 112), although this is no longer a basis on which any claim may be cancelled or held invalid or otherwise unenforceable in patent validity or infringement proceedings.
In addition to these statutory grounds, a patent application can be rejected on double patenting grounds. There are generally two types of double patenting rejections. One is a ‘same invention' type double patenting rejection based on 35 USC § 101, where the USPTO can reject a claim that is identical to a claim in a previously issued patent or pending application. The second is a ‘non-statutory-type' double patenting (ODP) rejection, where the USPTO can reject a claim that, while not identical, is also not patentably distinguishable from a claim in a previously issued patent or pending application. ODP is a judicially created doctrine that "is designed to prevent an inventor from securing a second, later expiring patent for the same invention" (AbbVie Inc v Mathilda & Terence Kennedy Inst of Rheumatology Tr, 764 F3d 1366, 1373 (Fed Cir 2014)). An ODP rejection can be overcome by filing a terminal disclaimer. For double patenting to apply, the patents or applications identified in the rejection must have at least one common inventor or common applicant, and/or be commonly assigned or owned, or non-commonly assigned or owned but subject to a joint research agreement.
3.4 What programmes or initiatives are available to accelerate or fast track examination of patent applications?
The USPTO takes part in the Patent Prosecution Highway programme, whereby an applicant may request fast-track examination of US claims corresponding to claims allowed by a participating patent office in another country.
Other ways to accelerate or fast track examination patent applications include:
- a petition to make special;
- the Accelerated Examination programme; and
- the Prioritised Examination (Track 1) programme.
A ‘petition to make special' may be filed at any time during the pendency of a patent application in order to have the application examined sooner than a regular filed patent application. The goal of the USPTO is to examine and reach a final disposition (ie, allowance, final rejection or abandonment) of a patent application made special within one year of filing. Petitions based on the following grounds may be made without a fee:
- the age of the inventor (65 or older);
- the inventor's failing health; or
- inventions associated with environmental protection, energy conservation, superconductive materials or counterterrorism.
Other applications can be subject to a petition to make special upon payment of a fee, including the following:
- The invention relates to DNA research, diagnosis, treatment or prevention of HIV, AIDS or cancer;
- The applicant has a prospective manufacturer that is prepared to begin manufacturing the invention, but will not manufacture unless it is certain that a patent will be granted;
- There is an infringing device or product on the market; or
- A small entity is filing a biotechnology application.
The Accelerated Examination programme allows for the examination of a patent application in an expedited manner and provides for a final disposition (ie, allowance, final rejection or abandonment) of a patent application within 12 months of the filing date of the patent application. To qualify for the Accelerated Examination programme, a patent applicant must file:
- a petition;
- the petition fee;
- a pre‑examination search document; and
- an accelerated examination support document.
There is a limit of three independent claims and 20 total claims in an Accelerated Examination programme application.
The Prioritized Examination (Track 1) programme allows for a patent applicant to reach final disposition (ie, allowance, final rejection or abandonment) of a patent application within 12 months of the filing date of the patent application. To qualify for this programme, a patent applicant must file:
- a petition;
- the petition fee at the time of filing the patent application;
- the USPTO publication fee; and
- the other publication processing fee.
There is a limit of four independent claims and 30 total claims in a Prioritized Examination programme application. One of the benefits of the Prioritized Examination programme versus the Accelerated Examination programme is that the former does not require a pre-examination search document or an accelerated examination support document.
3.5 Are there any types of claims or claiming formats that are not permissible in your jurisdiction (eg, medical method claims)?
In the United States, applicants may claim any new and useful process, machine, manufacture or composition of matter (35 USC § 101). Claim formats may also include product-by-process claims, means-plus-function claims and improvement or Jepson-type claims. For pharmaceutical or medical inventions, methods of treatment claims are typically used in the United States, as Swiss-type claims are not permitted.
With regard to claim substance, as discussed in more detail in question 3.7, inventions directed to scientific theories, mathematical methods, business methods and mental acts are patent ineligible. In addition, no patent may issue on a claim directed to or encompassing a human organism (America Invents Act, § 33). Section 33 applies to any application that is pending on, or filed on or after, 16 September 2011.
3.6 Are any procedural or legal mechanisms available to extend patent term (eg, adjustments for patent office delays, pharmaceutical patent term extension or supplementary protection certificates)?
The USPTO automatically calculates and awards patent term adjustment (35 USC § 154(b)) to compensate for delays in examination. If the patentee disagrees with the USPTO's calculation, it may request correction of the term. The additional patent term granted is printed on the patent or certificate of correction, as appropriate.
For pharmaceuticals and medical devices, US law (35 USC § 156) provides for a patent term extension (PTE) for a patent which claims a product, a method of using a product or a method of manufacturing a product that has been subject to pre-market regulatory review before it is approved for commercial marketing in the United States. PTE extends the patent term to compensate for commercialisation delays due to regulatory review. However, only one patent may be extended for the same regulatory review period for any product. Products potentially eligible for PTE include:
- new drugs, antibiotic drugs and human biological products;
- new animal drugs or veterinary biological products which are not primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology or other processes involving site-specific genetic manipulation techniques; and
- any medical device, food additive or colour additive subject to regulation under the Federal Food, Drug and Cosmetic Act.
3.7 What subject matter is patent eligible?
To qualify as patentable subject matter under US law (35 USC § 101), an invention must satisfy two criteria: one statutory, one judicial. First, the subject matter of the invention must fall into the category of a process, machine, manufacture or composition of matter. Second, that subject matter cannot fall within a patent-ineligible exception recognised by the courts – namely, laws of nature, physical phenomena and abstract ideas.
3.8 If the patent office does not grant a patent, is an appeal available and to whom?
Final rejections from an examiner may be appealed to the Patent Trial and Appeal Board (PTAB). A decision from the PTAB may be appealed to the US Court of Appeals for the Federal Circuit. The decision from the Federal Circuit may in turn be appealed to the US Supreme Court.
Instead of appealing to the Federal Circuit, an applicant dissatisfied with a decision of the PTAB regarding a final rejection from an examiner may also file a civil action within 60 days of the PTAB's decision in the US District Court for the Eastern District of Virginia (35 USC § 145).
4 Validity/post-grant review and/or opposition procedures
4.1 Where can the validity of an issued patent be challenged?
A patent's validity can be challenged in post-grant proceedings before the US Patent and Trademark Office (USPTO) or in district court.
The USPTO provides three mechanisms to challenge the validity of an issued patent and petition for its review:
- ex parte re-examinations;
- inter partes review (IPR); and
- post-grant review (PGR) (35 USC §§ 301 et seq).
In addition to these USPTO proceedings, validity may be challenged in district court affirmatively as a declaratory judgment action or as a defence to a claim of infringement (35 USC § 282(b); 28 USC § 2201). A party may also raise an invalidity defence at the US International Trade Commission (ITC).
4.2 How can the validity of an issued patent be challenged?
As mentioned in question 4.1, the USPTO provides three post-grant proceedings for a party to challenge the validity of an issued patent:
- An ex parte re-examination petition may be filed at any time during a patent's enforcement period (35 USC § 302). The petitioner, which has the option of remaining anonymous, asserts patents or printed publications that raise "a substantial new question of patentability" (35 USC §§ 301, 303). Unlike in IPRs and PGRs, however, the petitioner is not involved in re-examination, which is between only the patentee and the USPTO.
- A petition for IPR is limited to anticipation and obviousness challenges under 35 USC §§ 102 and 103, and the petitioner may only assert patents or printed publications as prior art references (35 USC § 311(b)). The Patent Trial and Appeal Board (PTAB) will institute this proceeding if there is a "reasonable likelihood" that one of the challenged claims is unpatentable (35 USC § 314(a)).
- A petition for PGR can raise any ground for patent invalidity, except failure to comply with the best mode requirement (35 USC § 321(b)). The PTAB will institute this proceeding if it is "more likely than not" that one of the challenged claims is unpatentable (35 USC § 324(a)).
In addition to these USPTO proceedings, validity may be challenged in district court affirmatively as a declaratory judgment action or as a defence to a claim of infringement (35 USC § 282(b)). A party may also raise an invalidity defence at the ITC.
4.3 What are the grounds to invalidate an issued patent?
In district court, at the ITC and in PGRs before the PTAB, a patent's validity can be challenged on any ground except a failure to satisfy the best mode requirement (35 USC §§ 282(b), 321(b)). That is, a patent can be challenged as to novelty, obviousness, statutory subject matter, written description, enablement or definiteness (id).
In ex parte re-examinations and IPRs, a patent's validity can be challenged only on novelty and obviousness grounds, and the asserted prior art references are limited to patents and printed publications (35 USC §§ 301(a), 311(b)).
4.4 What is the evidentiary standard to invalidate an issued patent?
The evidentiary standard to challenge an issued patent depends on the forum. In district court, patents are presumed valid and a challenger must prove invalidity by clear and convincing evidence (35 USC § 282; Microsoft Corp v i4i Ltd, 564 US 91, 95 (2011)). In contrast, in any post-grant proceeding before the USPTO, there is no presumption of validity and the challenger must establish unpatentability by the lesser preponderance of the evidence standard (Cuozzo Speed Techs, LLC v Lee, 136 S Ct 2131, 2144 (2016); 35 USC § 316(e); 35 USC § 326(e)).
4.5 What post-grant review or opposition procedures are available for third parties to challenge the validity of a patent?
Third parties may challenge the validity of an issued patent before the USPTO through any of the three post-grant proceedings – ex parte re-examination, IPR and PGR.
In a PGR, a petitioner can raise any ground of invalidity available under 35 USC § 282(b), including novelty, obviousness, statutory subject matter, written description, enablement or definiteness (35 USC § 321(b)). In an IPR or ex parte re-examination, the petitioner's invalidity challenges are limited to novelty and obviousness based on patents or printed publications (35 USC §§ 301(a), 311(b)).
4.6 Who can oppose a granted patent?
Under the America Invents Act, "any person" may file a petition for ex parte re-examination (35 USC § 302), and "a person who is not the owner of [the] patent" may file a petition for an IPR or a PGR (35 USC §§ 311(a), 321(a)).
4.7 What are the timing requirements for filing an opposition or post-grant review petition?
The timing to request review varies with the type of proceeding. While requests for re-examination may be filed "at any time" (35 USC § 302), petitions for PGRs and IPRs have strict timing requirements. Petitions for PGRs must be filed "not later than the date that is 9 months after the date of the grant of the patent or of the issuance of a reissue patent (as the case may be)" (35 USC § 321(c)). A petition for an IPR can be filed only at the later of nine months after the patent's issuance or termination of any PGR (35 USC § 311(c)).
Importantly, IPRs and PGRs cannot be instituted if the petitioner filed a civil action challenging the patent's validity prior to filing its petitions (35 USC §§ 315(a)(1), 325(a)(1)). A counterclaim for invalidity, notably, does not qualify as a civil action challenging validity (35 USC §§ 315(a)(3), 325(a)(3)). A petition for an IPR is additionally time barred if the petitioner was served with a complaint for infringement of the patent more than one year prior to the date the petition was filed (35 USC § 315(b)).
4.8 What are the grounds to file an opposition?
As with district court litigation, PGRs may raise any ground of unpatentability available under 35 USC § 282(b), including novelty, obviousness, statutory subject matter, written description, enablement or definiteness (35 USC § 321(b)). As set forth in § 282(b), an alleged failure to satisfy the best mode requirement is not available as an asserted ground of invalidity.
IPRs and ex parte re-examinations are more limited. Under these proceedings, a patent's validity may be challenged only as to novelty and obviousness, and only patents and printed publications may serve as asserted prior art references (35 USC §§ 301(a), 311(b)).
4.9 What are the possible outcomes when an opposition is filed?
Upon the filing of any petition for post-grant examination, the USPTO will first determine whether to conduct the requested review. Ex parte re-examinations will be instituted if a "substantial new question of patentability" is presented (35 USC § 303). Institution of IPRs requires there to be a "reasonable likelihood" that the petitioner would prevail in establishing that at least one challenged claim is unpatentable (35 USC § 314(a)). For institution of a PGR, it must be "more likely than not" that at least one challenged claim will be found unpatentable (35 USC § 324(a)). If the petition does not meet the applicable standard, then the requested re-examination will not be instituted and the challenged patent will remain in effect.
If a post-grant examination of an issued patent is instituted, the claims could be:
- determined unpatentable and cancelled;
- confirmed; or
- amended and determined patentable (35 USC §§ 307, 318, 328).
4.10 What legal standards will the tribunal apply to resolve the opposition or challenge, and which party bears the burden of proof?
In district court and the ITC, patents are presumed valid and a challenger must prove invalidity by clear and convincing evidence (35 USC § 282; Microsoft Corp v i4i Ltd, 564 US 91, 95 (2011)). If the challenger does not meet this burden, the court will not find the patent valid – just that the challenger "did not carry the burden of establishing invalidity in the particular case before the court" (In re Baxter Int'l, Inc, 678 F3d 1357, 1364 (Fed Cir 2012) (quotations and alterations omitted)).
In contrast, in any post-grant proceeding before the USPTO, there is no presumption of validity and the challenger must establish unpatentability by the lesser preponderance of the evidence standard (Cuozzo Speed Techs, LLC v Lee, 136 S Ct 2131, 2144 (2016); 35 USC § 316(e); 35 USC § 326(e)).
4.11 Can a post-grant review decision be appealed and what are the grounds to appeal?
The decision on whether to institute USPTO re-examination proceedings, including IPRs and PGRs, is not appealable (35 USC §§ 303(c), 314(d), 324(e)).
If, however, the PTAB institutes an IPR or PGR, "any party" to that proceeding "dissatisfied with the final written decision of the [PTAB] … shall have the right to be a party to the appeal" to the Federal Circuit (35 USC §§ 319, 329). Importantly, the party seeking Federal Circuit review must meet the constitutional standing requirements of Article III to pursue an appeal (Phigenix, Inc v Immunogen, Inc., 845 F3d 1168 (Fed Cir 2017)). That is, the appealing party must have suffered some actual or threatened injury, which is fairly traceable to the non-appealing party and can be redressed by a favourable decision (Lujan v Defs of Wildlife, 504 US 555, 560-61 (1992)). This means that while any third party may file a petition for an IPR or PGR, only those that satisfy Article III standing may appeal an unfavourable PTAB decision to the Federal Circuit.
Ex parte re-examinations, on the other hand, are first decided by the USPTO's Central Re-examination Unit and can be appealed to the PTAB. A patent owner may then appeal the PTAB's decision to the Federal Circuit (35 USC § 306).
5 Patent enforceability
5.1 What makes a patent unenforceable?
Patent applicants and individuals associated with the filing and prosecution of an application have a duty of candour and good faith to the US Patent and Trademark Office (USPTO) (37 CFR § 1.56(a)). Breaching this duty of candour and good faith may constitute inequitable conduct that can render all claims of a patent unenforceable. Furthermore, subsequent patents – including continuations, divisionals or continuation-in-parts – that rely on the unenforceable patent may also be rendered unenforceable.
Persons having a duty of candour and good faith include:
- each inventor named in the application;
- each attorney or agent who prepares or prosecutes the application; and
- every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, the applicant, an assignee or anyone to whom there is an obligation to assign the application (37 CFR § 1.56(c)).
5.2 What are the inequitable conduct standards?
A breach of the duty of candour and good faith to the USPTO occurs when the applicant or its representative makes an affirmative misrepresentation of a material fact or omits material information, such as failing to disclose a material prior art reference or submitting false material information, with an intent to deceive the USPTO (Therasense, Inc v Becton, Dickinson and Co, 649 F 3d 1276, 1287 (Fed Cir 2011)). Proving inequitable conduct requires showing "intent" and "materiality" elements separately by clear and convincing evidence (id). A court should not use a "sliding scale" approach, meaning that a strong showing of materiality cannot overcome a weak showing of intent, or vice versa, to find inequitable conduct (id at 1290). To the contrary, "to meet the clear and convincing evidence standard, the specific intent must be single most reasonable inference able to be drawn from the evidence" (id (internal quotations omitted)). "When the two elements are satisfied, the court then weighs equities to determine whether rendering the entire patent unenforceable is warranted under the circumstances" (id).
A clear and convincing showing of an intent to deceive the USPTO requires that "the applicant made a deliberate decision to withhold a known material reference" (id at 1290). An undisclosed reference is material if the USPTO "would not have allowed a claim if it had been aware of the undisclosed prior art" (id at 1291). In determining a reference's materiality, the court applies a preponderance of evidence standard and gives the patent claims their broadest reasonable construction (id at 1291-92).
5.3 What duty of candour is required of the patent office?
The duty of candour requires an applicant and anyone associated with the preparation and prosecution of an application (see question 5.1) to "disclose to the Office all information known to that individual to be material to patentability" (37 CFR § 1.56(a)). This duty "exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration, or the application becomes abandoned" (id).
6 Patent infringement
6.1 What Constitutes Patent Infringement?
The Patent Act (35 USC § 271(a)) provides that "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, [directly] infringes the patent".
Additional acts – such as inducing or contributing to infringement; supplying or causing to be supplied all or a substantial portion of the components of a patented invention; or importing products, made overseas, which are made by a process patented in the United States – may also constitute infringement (35 USC §§ 271(b)-(g)).
Patent infringement requires only that a single valid and enforceable claim of the patent be infringed (Grober v Mako Prods, Inc, 686 F3d 1335, 1344 (Fed Cir 2012)).
6.2 Does your jurisdiction apply the doctrine of equivalents?
Yes, US courts generally recognise two types of infringement: literal infringement and infringement under the doctrine of equivalents. Literal infringement requires that the accused product meet every limitation of the infringed claim exactly (General Mills, Inc v Hunt-Wesson, Inc, 103 F3d 978, 981 (Fed Cir 1997)).
Infringement under the doctrine of equivalents generally occurs where the accused product does not infringe every literal detail or limitation of the infringed claim, but nevertheless contains elements that are insubstantially different from one or more elements of the claimed invention and retain the essential functionality (Warner-Jenkinson Co v Hilton Davis Chem Co, 520 US 17, 29-30 (1997)).
6.3 Can a party be liable if the patent infringement takes place outside the jurisdiction?
The territorial reach of Section 271(a) of the Patent Act is limited. It provides that direct infringement occurs only when someone "makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention" (35 USC § 271(a) (emphases added)). Thus, "[i]t is the general rule under United States patent law that no [direct] infringement occurs when a patented product is made and sold in another country" (Microsoft Corp v AT & T Corp, 127 S Ct 1746, 1747 (2007)).
Unlike 35 USC § 271(a), however, Section 271(b) does not contain a territorial restriction. "[L]iability for induced infringement under § 271(b) can be imposed based on extraterritorial acts, provided that the patentee proves the defendant possessed the requisite knowledge and specific intent to induce direct infringement in the United States" (Enplas Display Device Corp v Seoul Semiconductor Co, Ltd, 909 F3d 398, 408 (Fed Cir 2018)).
The US International Trade Commission (ITC), however, will consider extraterritorial activity when determining whether a violation of Section 337 has occurred because its jurisdiction lies with respect to an imported article, and not necessarily with an accused infringer. Therefore, the ITC will investigate when an act of unfair competition occurs outside the United States relating to an infringing article sold for importation into the United States, imported into the United States or sold in the United States after importation.
6.4 What are the standards for wilful infringement?
The Patent Act (35 USC § 284) provides district courts with the discretion to "increase the damages up to three times the amount found or assessed". The Supreme Court held that, while district courts are given discretion to award enhanced damages, such damages "should generally be reserved for egregious cases typified by willful misconduct" (Halo Elecs, Inc v Pulse Elecs, Inc, 136 S Ct 1923, 1934 (2016)). "The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate" (id).
After Halo, egregiousness is the touchstone of the wilfulness inquiry. Some courts have turned for guidance to the Federal Circuit's enumerated factors in Read Corp v Portec, Inc to determine the egregiousness of a defendant's conduct (970 F2d 816, 827 (Fed Cir 1992)). These factors include:
- whether the infringer deliberately copied the ideas or design of another;
- whether the infringer, when it knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed;
- the infringer's behaviour as a party to the litigation;
- the defendant's size and financial condition;
- the closeness of the case;
- the duration of the defendant's misconduct;
- remedial action by the defendant;
- the defendant's motivation for harm; and
- whether the defendant attempted to conceal its misconduct.
A patentee need only show by a preponderance of the evidence the facts that support a finding of wilful infringement (Halo, 136 S Ct at 1934).
6.5 Which parties can bring an infringement action?
Standing to sue is a threshold requirement in every federal action (Sicom Sys, Ltd v Agilent Techs, Inc, 427 F3d 971, 975-76 (Fed Cir 2005)). This applies to patent infringement actions under Section 281 of the Patent Act.
In general, only a patentee can sue for patent infringement (35 USC § 281). The Patent Act defines ‘patentee' to include not only the patentee to which the patent was issued, but also its successors in interest (ie, an assignee) (35 USC § 100(d)). Thus, an assignee as the successor in interest can sue for infringement alone. An exclusive licensee, on the other hand, may have the ability to enforce the patent, but will need to do so jointly with the patent owner. A non-exclusive licensee does not have constitutional standing to bring an infringement suit (Mars, Inc v Coin Acceptors, Inc, 527 F3d 1359, 1367 (Fed Cir 2008)).
6.6 How soon after learning of infringing activity must an infringement action be brought?
Section 286 of the Patent Act provides: "Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action" (35 USC § 286). The Supreme Court has inferred that "this provision represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of a claim" (SCA Hygiene Prod Aktiebolag v First Quality Baby Prod, LLC, 137 S Ct 954, 961 (2017)).
6.7 What are the pleading standards to initiate a suit?
A pleading that states a claim for relief must contain:
- a short and plain statement of the grounds for the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support;
- a short and plain statement of the claim showing that the pleader is entitled to relief; and
- a demand for the relief sought, which may include relief in the alternative or different types of relief (Federal Rule of Civil Procedure 8).
To successfully plead patent infringement, a party's complaint must contain enough factual matter to state a plausible claim to relief. While a party need not prove its case at the pleading stage, the complaint must put the alleged infringer on notice as to what activity is being accused of infringement. If fraud or mistake is alleged, the pleading standards are slightly higher, as a party must state with particularity the circumstances constituting fraud or mistake (Federal Rule of Civil Procedure 9(b)).
6.8 In which venues may a patent infringement action be brought?
Federal district courts, located throughout the United States, retain original jurisdiction for civil actions alleging patent infringement (28 USC § 1331; 28 USC § 1338(a)).
Parties may also enforce their patent rights at the ITC. The ITC is a federal administrative agency that hears claims of patent infringement for imported goods accused of infringing US patent rights, among other things. In the ITC, however, the only remedy available is an exclusion order limiting the importation of infringing goods. Damages are not available.
6.9 What are the jurisdictional requirements for each venue?
In federal district court, there are three issues related to jurisdiction:
- The court must have subject-matter jurisdiction, which is not waivable as a defence;
- The court must have personal jurisdiction over the parties, which is waivable as a defence; and
- The court must be the appropriate venue, which is waivable as a defence.
First, because patent cases are considered cases "arising under the Constitution", federal district courts have subject-matter jurisdiction to adjudicate those cases (28 USC §§ 1331, 1338).
Second, as to personal jurisdiction, there are two kinds – general and specific jurisdiction. Generally speaking, individuals and organisations are subject to the general jurisdiction of their ‘home' state. A district court can also exercise personal jurisdiction over an out-of-state defendant pursuant to either general or specific jurisdiction. Under general jurisdiction, a district court can hear all claims against out-of-state defendants when their affiliations with the state are so "continuous and systematic" as to render them essentially at home in the forum state. Specific jurisdiction instead focuses on the relationship among the defendant, the forum and the litigation. To comport with due process, the out-of-state defendant must have "minimum contacts" with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice" (Int'l Shoe Co v Washington, 326 US 310, 316 (1945)). To determine whether specific jurisdiction exists, courts apply a three-part test, determining whether:
- the defendant purposefully directed its activities to the forum state;
- the claim arises out of or relates to those activities; and
- the assertion of jurisdiction is reasonable and fair.
Third, as to appropriateness of venue, an action for patent infringement may be "brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business" (28 USC § 1400(b)). A corporate defendant ‘resides' only in the state of incorporation for purposes of the patent venue statute (TC Heartland LLC v Kraft Foods Grp Brands LLC, 137 S Ct 1514, 1517 (2017)). Three inquiries govern where a corporation has a ‘regular and established place of business':
- There must be a physical place in the district;
- It must be a regular and established place of business; and
- It must be the place of the defendant (In re Cray Inc, 871 F3d 1355, 1360 (Fed Cir 2017)).
In the ITC, jurisdiction is premised on the ITC's ability to exclude infringing items from entry into the country. Accordingly, owners of US IP rights may file complaints against foreign importers. A complainant at the ITC must, however, demonstrate that there is a domestic industry protected by the IP rights at issue in order to secure relief at the ITC.
6.10 Who is the fact finder in an infringement action?
In district court, in a traditional patent infringement action seeking monetary damages, the parties have a right to a jury to determine the factual question of infringement. The parties can waive the right to a jury and request that a judge act as the fact finder. In types of cases where only injunctive relief is being sought – for example, certain cases brought under Hatch-Waxman Act (see 35 USC § 271(1)(2)) – the parties do not have a right to a jury trial and the presiding judge is automatically the fact finder.
In the ITC, an administrative law judge acts as the fact finder.
6.11 Does the fact finder change based on venue?
The options as to who can act as a fact finder (jury or judge) will not change from district court to district court, but the jury pool will be selected from residents of the district in which a court sits.
There is only one venue for the ITC.
6.12 What are the steps leading up to a trial?
Pre-trial procedure specifics can vary from court to court and from judge to judge. Some courts and judges have specific rules and procedures governing patent cases. Generally, the first phase includes an exchange of pleadings (eg, complaint, answer and counterclaims). A scheduling order is then issued.
The parties next engage in fact discovery, which includes, among other disclosures, the production of relevant documents and the deposition of witnesses. Some courts may also require that infringement, invalidity or unenforceability contentions be exchanged. Often, the scope of discovery is disputed, requiring the court to resolve disputes; and, if necessary, a party may move to compel the production of documents and information and witness testimony. Generally, fact discovery is followed by expert discovery on technical and/or damages issues; this period includes exchange of expert reports and deposition of expert witnesses.
Federal district courts are required, as a matter of law, to resolve the meaning of disputed patent claim terms. Claim construction proceedings often include significant briefing and a hearing (‘Markman hearing') before the judge. This practice is not required at the ITC, though it does occur in some investigations.
Once discovery ends, summary judgment motions and motions to limit the evidence available at trial, including motions to exclude expert witnesses, may be filed.
Before trial, litigants exchange pre-trial statements that identify witnesses and exhibits to be introduced at trial, and objections to the same. Failure to disclose an exhibit or objection may waive a party's right to use or object to the exhibit or witness at trial. Proposed jury instructions for the court to consider may also be submitted.
6.13 What remedies are available for patent infringement?
In district courts, parties may request monetary damages as well as injunctive relief.
Regarding monetary damages, a party is entitled to adequate damages for infringement, which at a minimum would account for a reasonable royalty for the use of invention (35 USC § 284). In certain cases, district courts have discretionary power to award enhanced damages (35 USC § 284).
In district court, the ability to obtain injunctive relief is narrower than monetary damages. In order to obtain injunctive relief (ie, stop an infringer from continuing its infringing behaviour), a party must satisfy a four-factor test, as follows:
- It has suffered an irreparable injury;
- Remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
- Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
- The public interest would not be disserved by a permanent injunction (eBay Inc v MercExchange, LLC, 547 US 388, 391 (2006)).
At the ITC, only injunctive relief in the form of an order excluding articles from importation or cease and desist order preventing a party from selling the excluded goods in the United States is allowed.
6.14 Is an appeal available and what are the grounds to appeal?
The US Court of Appeals for the Federal Circuit has exclusive jurisdiction over all patent-related appeals (28 USC § 1295). If a party raised an issue during proceedings at the district court or ITC, the judgment of that decision may generally be appealed to the Federal Circuit. Parties dissatisfied with the Federal Circuit's opinion may petition for the full Federal Circuit to hear the case (called an en banc rehearing), which the Federal Circuit grants on a discretionary basis. Additionally, parties may petition the US Supreme Court for a writ of certiorari to hear a case.
7.1 Is discovery available during litigation?
Discovery is available during patent litigation at the court's discretion pursuant to Rule 26 of the Federal Rules of Civil Procedure (FRCP). A court has broad discretion to manage the discovery process in a patent dispute (Univ of W Virginia Bd of Trustees v VanVoorhies, 278 F3d 1288, 1304 (Fed Cir 2002)).
7.2 What kinds of discovery are available?
Generally, fact discovery and expert discovery are available in a patent dispute. Fact discovery can include:
- requests for responses to written interrogatories and requests for admission;
- the production of relevant documents and other physical objects;
- the inspection of facilities; and
- the testimony of fact witnesses through depositions.
Expert discovery includes obtaining the identity of any expert witness a party may rely on at trial, a written report from any expert witness who is retained to provide expert testimony and deposition testimony of any expert witness whose opinions may be presented at trial (FRCP Rule 26(a)(2)).
7.3 Are there any limitations to the amount of discovery allowed?
FRCP Rule 26 governs the limits on the amount of discovery in a patent dispute. Discovery is limited to any non-privileged matter that is relevant to any party's claim or defence and proportional to the needs of the case, considering the following factors:
- the importance of the issues at stake in the action;
- the amount in controversy;
- the parties' relative access to relevant information;
- the parties' resources;
- the importance of the discovery in resolving the issues; and
- whether the burden or expense of the proposed discovery outweighs its likely benefit.
Federal Circuit law applies to determine whether the requested discovery is relevant to a party's claim or defence bearing on substantive patent law issues, such as infringement, validity and unenforceability (Advanced Cardiovascular Sys, Inc v Medtronic, Inc, 265 F3d 1294, 1307-08 (Fed Cir 2001)).
In addition, a court may further limit the frequency or extent of discovery if it determines that:
- the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome or less expensive;
- the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or
- the proposed discovery is outside the scope permitted by FRCP Rule 26(b)(1).
8 Claim construction
8.1 When during a patent infringement action are claim terms defined by the tribunal?
The timing of a claim construction decision is a procedural matter that is generally within the trial court's discretion (CytoLogix Corp v Ventana Med Sys, Inc, 424 F3d 1168, 1172 (Fed Cir 2005)). Often, the court's local rules set forth the timing and procedure for claim construction proceedings.
8.2 What is the legal standard used to define claim terms?
A patent claim term should generally be given its "ordinary and customary meaning" – that is, the meaning that the term would have to a person of ordinary skill in the art at the time of the invention (Phillips v AWH Corp, 415 F3d 1303, 1312-13 (Fed Cir 2005) (en banc)). The meaning of a claim term should be determined in the context of the entire patent, including the specification and the prosecution history (id. at 1313). If the specification or prosecution history clearly recites a special definition given to a claim term by the inventor, then the inventor's lexicography governs, even if that definition differs from the term's ordinary and customary meaning (Vitronics Corp v Conceptronic, Inc, 90 F3d 1576, 1582 (Fed Cir 1996)).
8.3 What evidence does the tribunal consider in defining claim terms?
The evidence considered during a claim construction proceeding can be classified into two categories: intrinsic and extrinsic. Intrinsic evidence includes the claim language, specification and prosecution history. If an analysis of the intrinsic evidence alone will remove any ambiguity in the disputed claim term's meaning, the court should not consider any extrinsic evidence (Vitronics Corp v Conceptronic, Inc, 90 F.3d 1576, 1583 (Fed Cir 1996). Extrinsic evidence consists of all evidence external to the patent and prosecution history, and includes, for example, expert testimony and opinions and any outside sources, such as dictionaries, textbooks and articles. However, courts may rely on extrinsic evidence only so long as it does not contradict the meaning of the claim terms expressed in the intrinsic evidence (Pitney Bowes, Inc v Hewlett-Packard Co, 182 F3d 1298, 1308 (Fed Cir 1999)).
9.1 Are injunctions available?
Under 35 USC § 283, courts "may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by a patent, on such terms as the court deems reasonable". The Patent Act provides courts with "broad discretion in determining whether the facts of a situation warrant an injunction" (Amstar Corp v Envirotech Corp, 823 F2d 1538, 1548 (Fed Cir 1987)). A patent injunction preserves the right of the patentee to exclusive use of the patented invention and can compel a patent infringer to stop making, using or selling infringing products. "[P]ersons subject to an injunctive order issued by a court with jurisdiction are expected to obey that decree until it is modified or reversed, even if they have proper grounds to object to the order" (GTE Sylvania, Inc v Consumers Union of US, Inc, 445 US 375, 386–87 (1980)). Generally, there are two types of injunctions available in patent infringement litigation: preliminary injunctions and permanent injunctions. A preliminary injunction is requested during the pendency of a case to prevent further infringement of the patent during the litigation. A permanent injunction, on the other hand, is sought after patent infringement and validity have been adjudicated.
At the US International Trade Commission (ITC), a complainant may argue for a limited exclusion order or a general exclusion order. A limited exclusion order only applies to the named respondents, and their agents, in an investigation. A general exclusion order applies to all products found to violate Section 337, regardless of whether the party that sells for importation, imports or sells after importation is a named respondent.
9.2 What is the standard to obtain an injunction?
In eBay Inc v MercExchange, LLC, 547 US 388 (2006), the Supreme Court found that injunctive relief in patent cases is similar to injunctive relief awarded in non-patent cases, and that to obtain a permanent injunction, a patentee must demonstrate the traditional four factors:
- It has suffered an irreparable injury;
- Remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
- Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
- The public interest would not be disserved by a permanent injunction.
All factors must be considered. A patent injunction is not automatically issued following a finding of patent infringement and, at the same time, an injunction is not automatically denied where the patentee does not use the patented invention (id at 391-94). District courts retain broad discretion in issuing injunctive relief and appellate review of the grant or denial of an injunction is conducted under the abuse of discretion standard (Presidio Components, Inc v Am Tech Ceramics Corp, 875 F3d 1369, 1383 (Fed Cir 2017)).
At the ITC, a finding of a violation of Section 337 will invoke a limited exclusion order or a general exclusion order.
9.3 Are damages available?
"Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer" (35 USC § 284 (emphasis added)). Damages accrue for infringement occurring after a patent has issued from the US Patent and Trademark Office until the date the patent expires. However, damages cannot be recovered for infringement that occurred more than six years prior to the filing of a complaint or counterclaim initiating a patent infringement claim (35 USC § 286). In addition, if a patentee makes, offers for sale, sells or imports in the United States a product covered by a patent, the patentee is required to mark the product with the patent number (35 USC § 287). Failure to mark a product covered by a patent can bar the patentee from recovering infringement damages unless the patentee can prove the infringer was notified of the infringement and continued to infringe thereafter (id).
Damages are not available at the ITC.
9.4 What types of damages are available?
The Patent Act describes recoverable damages broadly as "damages adequate to compensate for the infringement" (35 USC § 284). There are primarily two methods used to calculate the amount of damages in most cases: reasonable royalty or lost profits. To determine a reasonable royalty, a court will commonly consider the outcome of a "hypothetical negotiation" between a "willing licensor" (the patentee) and a "willing licensee" (the accused infringer) on the eve of infringement. The Federal Circuit has approved of the methodology explained in Georgia-Pacific Corp v United States Plywood Corp, 318 F. Supp. 1116 (SDNY 1970), which describes 15 factors to be considered in this hypothetical negotiation.
Alternatively, a patentee may be able to recover lost profit damages. A "useful, but non-exclusive" method to establish an entitlement to lost profit damages is the test articulated in Panduit Corp v Stahlin Bros Fibre Works, Inc, 575 F2d 1152 (6th Cir 1978), where a patentee is entitled to lost profit damages if it can establish:
- demand for the patented product;
- absence of acceptable non-infringing alternatives;
- manufacturing and marketing capability to exploit the demand; and
- the amount of profit it would have made.
A patentee cannot recover both lost profits and a reasonable royalty for the same acts of infringement.
9.5 What is the standard to obtain certain types of injunctions?
The purpose of a preliminary injunction is to preserve the status quo during the pendency of litigation (Cordis Corp v Medtronic, Inc, 780 F2d 991, 994 (Fed Cir 1985) ("It is well settled that the purpose of an interlocutory injunction is to preserve the status quo and to protect the respective rights of the parties pending a determination on the merits"). Accordingly, courts focus on the patentee's ability to demonstrate the likelihood of success on the merits in the litigation to determine whether a preliminary injunction is appropriate. Courts require demonstration of four factors:
- The patentee is likely to succeed on the merits;
- The patentee is likely to suffer irreparable harm in the absence of preliminary relief;
- The balance of equities tips in favour of the patentee; and
- An injunction is in the public interest (see Titan Tire Corp v Case New Holland, Inc, 566 F3d 1372, 1375–76 (Fed Cir 2009) (citing Winter v Nat Res Def Council, Inc, 555 US 7 (2008)).
All four factors must be considered and no one factor is dispositive (Chrysler Motors Corp. v. Auto Body Panels of Ohio, Inc,908 F2d 951, 953 (Fed Cir 1990) ("Our rule regarding whether a preliminary injunction should be granted or denied is that the trial court should weigh and measure each of the four factors against the other factors and against the magnitude of the relief requested… Under this rule, no one factor, taken individually, is necessarily dispositive"). District courts carefully consider the effect of a preliminary injunction on both parties (Doran v Salem Inn, Inc, 422 US 922, 931 (1975) ("[A] district court must weigh carefully the interests on both sides"). Additionally, Federal Rule of Civil Procedure 65(c) requires a security bond when a preliminary injunction is entered in the event that the enjoined ultimately prevails in the litigation.
9.6 Is it possible to increase or multiply damages due to a party's actions?
The Patent Act permits enhanced damages in cases where the infringer has committed willful infringement. Under 35 USC § 284, "the court may increase the damages up to three times the amount found or assessed". Thus, the maximum amount of damages available is three times the basic compensatory damages award (eg, the determined lost profits or reasonable royalty) (Signtech USA, Ltd v Vutek, Inc, 174 F3d 1352, 1358 (Fed Cir 1999)). "When willful infringement or bad faith has been found, the remedy of enhancement of damages not only serves its primary punitive/deterrent role, but in so doing it has the secondary benefit of quantifying the equities as between patentee and infringer" (SRI Int'l, Inc v Advanced Tech Labs, Inc, 127 F3d 1462, 1468 (Fed Cir 1997)). However, because willful infringement depends on the bad-faith actions of the infringer, damages cannot be enhanced where the court simply finds that the compensatory award was insufficient (Beatrice Foods Co v New England Printing & Lithographing Co, 923 F2d 1576, 1579 (Fed Cir 1991)). The Supreme Court has established a flexible standard for determining what circumstances give rise to enhanced damages employed by district courts exercising their sound discretion (Halo Elecs, Inc v Pulse Elecs, Inc, 136 S Ct 1923, 1933 (2016)). "The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate…. District courts enjoy discretion in deciding whether to award enhanced damages, and in what amount" (id).
9.7 Are sanctions available?
Although there are no sanctions that are specific to patent law, many of the same types of sanctions that arise under the Federal Rules of Civil Procedure (FRCP) – including sanctions under Rule 11 and Rule 37 – are equally applicable in patent cases and can arise during patent litigation.
9.8 What kinds of sanctions are available?
The FRCP provide that "whether by signing, filing, submitting, or later advocating" a pleading, written motion, or other paper to the court, the attorney certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
- it is not being presented for any improper purpose;
- the claims, defences and other legal contentions therein are warranted by law;
- the allegations and other factual contentions have evidentiary support; and
- the denials of factual contentions are warranted on the evidence (FRCP Rule 11(b)).
In patent cases, FRCP Rule 11 requires that counsel for the patentee conduct a reasonable investigation into the merits of the claim of infringement, including examination of the accused product, analysis of the patent claims and claim constructions, and a comparison of the claims to the accused product (View Eng'g, Inc v Robotic Vision Sys, Inc, 208 F3d 981, 986 (Fed Cir 2000)). A Rule 11 violation based on inadequate pre-suit investigation may result in sanctions against that patentee, its counsel or both (Phonometrics, Inc v Econ Inns of Am, 349 F3d 1356 (Fed Cir 2003)).
Another sanction that may arise during patent litigation is exclusion of infringement or invalidity theories not disclosed during discovery. Many district courts have adopted ‘Patent Local Rules', which often require parties to exchange patent infringement and invalidity contentions early in the case. Failure to disclose infringement or invalidity theories in those disclosures can result in the undisclosed theories being excluded at trial (O2 Micro Int'l Ltd v Monolithic Power Sys, Inc, 467 F3d 1355, 1365 (Fed Cir 2006)).
Additionally, under Rule 37, a court may sanction a party if the party fails to comply with a discovery court order. Rule 37 sanctions may include, for example:
- directing that the matters embraced in the order or other designed facts be taken as established as the prevailing party claims;
- preventing the disobedient party from introducing evidence;
- striking pleadings in whole or part; or
- dismissing the action in whole or part (FRCP Rule 37(b)(2)(A)(i)-(vii)).
9.9 Can a party obtain attorneys' fees?
"The court in exceptional cases may award reasonable attorney fees to the prevailing party" (35 USC § 285). "[T]he award of attorney fees is not automatic, even for the extraordinary case" (Nat'l Presto Indus, Inc v W Bend Co, 76 F3d 1185, 1197 (Fed Cir 1996)). Appellate review of attorneys' fees awarded under Section 285 are considered under the abuse of discretion standard (Highmark Inc v Allcare Health Mgmt Sys, Inc, 572 US 559, 563 (2014)).
9.10 What is the standard to obtain attorneys' fees?
The Supreme Court has explained that "[A]n ‘exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances" (Octane Fitness, LLC v ICON Health & Fitness, Inc, 572 US 545, 554 (2014).
Accordingly, district courts are afforded discretion in determining the availability or amount of attorneys' fees under the exceptional case standard.
10.1 What patent rights can a party obtain through a licence?
A US patent grants the holder the right to exclude anyone from making, selling, using, offering for sale or importing into the United States the patented invention (35 USC § 261). A US patent is considered the personal property of the patent holder and a patentee may therefore separately license any of the exclusionary rights of its patents to another party (35 USC § 261). A patent licence is essentially a permission, memorialised by a contractual promise not to sue, to perform acts that would be considered acts of infringement in the absence of the licence.
Patent licences can be exclusive or non-exclusive. An exclusive licence grants a licence to a party regarding one or more specific exclusionary rights of the patent and promises not to grant any further licences to third parties regarding those rights. A non-exclusive licence grants the licensee a right to make, use, sell or offer to sell the patented invention, but reserves the licensor's right to practise the invention and to grant any other licensee the right to perform any of those activities.
10.2 What limits can a patent owner impose on a licence?
A patent owner can impose a number of limitations on a licence. For example, a patent owner can offer an exclusive licence or a non-exclusive licence. Under an exclusive licence, the licensor grants a party one or more specific exclusionary rights of the patent, and promises not to grant any further licences to third parties regarding those rights. Under a non-exclusive licence, the licensor grants the holder a right to make, use, sell or offer to sell the patented invention, but reserves its right to practise the invention and to grant any other licensee the right to perform any of those activities. If a patentee grants an exclusive licence to another without reserving for itself the right to practise the invention, it can be found liable to the licensee for patent infringement (US Valves, Inc v Dray, 212 F3d 1368, 1373-75 (Fed Cir 2000)). Patent owners can also restrict the licensee's right to sub-license the patent to a third party.
Patentees may also use ‘field of use' provisions, which grant rights limited to specific uses of the patented technology but withhold permissions to use the patent technology for other uses (Monsanto Co v Scruggs, 459 F3d 1328, 1338 (Fed Cir 2006)). Patent licences may also be limited to a territory or to a period less than the life of the patent.
11.1 Are there any limits on patent protection due to antitrust laws?
Section 2 of the Sherman Act makes it an offence to "monopolize, or attempt to monopolize or combine or conspire with any other person or person, to monopolize any part of the trade or commerce among the several States" (15 USC § 2). To establish an antitrust violation, a plaintiff must prove "(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly" (Spectrum Sports, Inc v McQuillan, 506 US 447, 456 (1993)). Antitrust issues can sometimes arise in a patent context.
For example, if a patentee with market power changes the design of a product covered by an issued patent for predatory anti-competitive reasons, the patentee may be subjected to antitrust liability (CR Bard, Inc v M3 Sys, Inc, 157 F.3d 1340 (Fed Cir 1998)). Joining patent pools may also lead to antitrust liability if it is done to further an anti-competitive scheme (ABS Global, Inc v Inguran, LLC, 2016 WL 3963246 (WD Wis 21 July 2016). It is also possible for a patentee's refusal to sell or license its patent to raise antitrust scrutiny.
Patent owners should also be conscious of antitrust laws when settling patent disputes. For example, a settlement may raise antitrust issues if it provides relief beyond that afforded by the patent laws. This issue sometimes appears in cases involving pharmaceutical patents where one party agrees to delay entry of its product into the market for a specific time (FTC v Actavis, Inc, 570 US 136 (2013)).
Co-authors: Anthony Berlenbach, Collette Corser, Benjamin Hemmelgarn, Matthew Hlinka, Clara Jimenez, Samhitha Medatia, Jeffrey Smyth, and Christina Ji-Hye Yang.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.