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 Patent Infringement. Patent infringement is a
civil wrong causing commercial harm. It results when someone breaches a
duty to exercise due care to avoid making, using, selling, offering for
sale, or importing a patented invention without the consent of the
patentee during the lifetime of a valid patent. Damages can be
awarded for infringement. Triple damages can be awarded when there
is willful infringement.
Willful Infringement. When someone gets a notice of another's
patent (a Notice Letter), the person notified cannot be held liable for willful infringement permitting enhanced damages unless there is
at least a showing of objective recklessness. This means that a
patentee must show by clear and convincing evidence that the infringer
acted despite an objectively high likelihood that its actions constituted
infringement of a valid patent. In re Seagate Technology, LLC,
Miscellaneous Docket No. 830 (Fed. Cir. 2007).
While there is no affirmative obligation to obtain opinion of counsel,
the Federal Circuit has stated, in an en banc holding, that opinion
counsel serves to provide an objective assessment for making informed
business decisions. In re Seagate Technology, LLC. Thus,
an opinion by independent counsel is a prudent business decision and wise
course of action to establish good faith in attempting to avoid willful
infringement.
Additionally, willful infringement must find its basis
in pre-litigation conduct. So, one should seek opinion
counsel before litigation is commenced. In the Seagate case, opinion
counsel provided an opinion after litigation was commenced and the court
observed that "the opinions of Seagate’s opinion counsel, received
after suit was commenced, appear to be of similarly marginal value. . . reliance on the opinions after litigation was commenced will
likely be of little significance."
The Seagate court said, "Although an infringer’s
reliance on favorable advice of counsel, or conversely his failure to
proffer any favorable advice, is not dispositive of the willfulness
inquiry, it is crucial to the analysis."
If a person recklessly disregards the possibility of infringement, a
penalty of up to three times the actual damages and attorneys fees may be
assessed. See the Damages page for more information on this issue and
the drug infringement
discussion for infringement issues on importing pharmaceuticals from
Canada and other countries.
Patent Infringement Representation. A Notice
Letter is often a precursor to a law suit. If you receive a notice
letter alleging infringement of someone's patent or simply bringing your
attention to an existing patent, contact Attorney Louis Ventre, Jr. to
help with your legal representation to respond, to avoid litigation
whenever possible, and to prepare an independent written opinion on
infringement.
The written opinion may be important, as noted above, because a company
should avoid treating the letter of infringement in a manner that might
show "objective recklessness." This means taking steps
that tends to negate evidence that the company dismissed the letter
despite an objectively high likelihood that its actions constituted
infringement of a valid patent. In some instances a defensive
declaratory judgment suit could be the best tactic and this Law Firm can
help you decide on that.
Sometimes a patent holder will institute suit (many times in Texas)
against a potential infringer, but not serve notice on the
defendant. This is a legal tactic that seeks to maintain future
control over where (in what jurisdiction) the litigation will
proceed. The filing of a suit does not necessarily mean that
litigation in that jurisdiction will be taken to the next step, or that
you need litigation counsel. Most probably, the plaintiff will
decide on this based on whether or not there are good reasons to believe
that you are not an infringer. So, in that case, an independent
opinion of counsel would be the means to show good faith in avoiding
infringement and could be a means to convince a plaintiff that there are
insufficient grounds of infringement and also raise the stakes by enabling
the defendant to seek of attorney fees if the plaintiff is
unsuccessful. But, if there is infringement, it can also give you an
opinion on you whether you have a legal defense that the patent is
invalid. A prudent course of action is to plan a defense in two steps by
obtaining: 1) an infringement opinion; and, (2) if infringement is
likely, then a patent validity opinion.
Independent Opinion and Advice. This Law Firm
can provide an independent opinion as to whether or not your product or
process infringes on an existing patent, or whether or not there is good
reason to believe the alleged infringed patent is invalid. A patent
validity opinion typically involves attorney fees ranging from about
$4,500 to $8,000.
According to the American Intellectual Property Law Association 2007
Economic Survey, the median charge in 2006 for a
validity/invalidity only opinion per patent is $13,000; for an
infringement/non-infringement opinion per patent is $10,000; and for a
combination validity and infringement per patent of $20,000
My Company Just Bought a Machine, I Cannot be Liable,
Can I? You may be surprised to learn that you may be liable for
infringement even if you are only using a patented invention. For example,
suppose you purchased a car and it incorporates someone else's patented
part (such as a patented convertible top) as one component of car: you are
liable to the patent owner. This is a famous Supreme Court case
involving Ford Motor Company making convertible tops for its cars without
a license from the patent owner. The court explained,
"Ford lacking
authority to make and sell, it could by its sale of the cars confer on the
purchasers no implied license to use, and their use of the patented
structures was thus "without authority" and infringing under 271
(a). Not only does that provision explicitly regard an unauthorized
user of a patented invention as an infringer, but it has often and clearly
been held that unauthorized use, without more, constitutes
infringement." Aro
Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 484 [141 USPQ 681]
(1964) (citations omitted).
When the patented feature motivates the demand for the unpatented
products, a court will award damages based on the sales price of the
entire machine, rather than on just the price of the infringing component.
In this type of situation, you may be able to pass the buck if you are
smart enough and a little lucky. Sometimes the Uniform Commercial
Code's warranty of non-infringement (§2.312(3)) applies.
Practical Advice and Fees. Attorney Louis
Ventre, Jr. will also help you deal with the letter in a practical manner,
evaluating the threat and recommending tactics to consider. In many, but
not all circumstances, it is customary for the Law Firm to acknowledge the
letter by notifying the patent owner's attorney that the matter has been
referred to Attorney Louis Ventre, Jr. for response. The Law Firm of Louis
Ventre, Jr. charges depending on the complexity of the case and will
provide an hourly or fixed-price quote upon request. Typical fees for the
full range of infringement services are $4,500 to $10,000, but can go as
high as $50,000 if the patents are complex.
Facts. Attorney Louis Ventre, Jr. will confirm
with you the facts and information concerning the accused product or
process so that these may be accurately included in a written
opinion and factored into the legal advice you are given. This is
necessary not only for an opinion that will pass muster with a judge
(e.g., summary judgment ruling) and a jury, but is important for a
credible opinion. Attorney Louis Ventre, Jr. will want to speak to your
engineers and obtain product brochures on the alleged infringing item, the
applicable web site pages, your written instructions or directions for
use, advertisements, and product packaging.
Infringement. If it is clear that the patent is
being infringed and it is not an invalid patent, Attorney Louis Ventre,
Jr. will help you find a business solution. In this case, a business
solution is preferable to a legal solution. This is so, in no small part,
because of the cost of a law suit.
The American Intellectual Property Law Association reported that the
median cost of taking a patent infringement suit through trial in 2006 was
about $1.25 million when the amount at risk was less than $1
million. This increased to about $5 million when more than $25
million was at risk.
A lawsuit, which has a likelihood of loss and an award of damages for
lost profits, reasonable royalty, and interest and costs, could be
devastating. For example, in 2003 Cordis Corp. v. Guidant Corp.
resulted in an award of $425 million.
Non-infringement Opinion. If a non-infringement
opinion is in order, Attorney Louis Ventre Jr. will consider and evaluate
the description in the patent, the claims of the patent, the file history
of the patent, and the accused product or process. Both literal
infringement and the doctrine of equivalents will be considered, as well
as the current law concerning the applicable legal doctrines. A
patent infringement/non-infringement opinion typically involves attorney
fees in a range from about $4,500 to $8,000. In comparison,
and according to the American Intellectual Property Law Association 2007
Economic Survey, the 2006 median charge for a patent
infringement/non-infringement opinion per patent is $10,000.
Invalidity Opinion. If an invalidity opinion is
in order, the description in the patent, the patent claims, and the
invalidating prior art or other
information will be considered. The invalidity opinion will address the
presumption of validity, and the current law concerning the asserted
grounds for invalidity. A patent validity opinion typically
involves attorney fees of about $8,000. In comparison and according
to the American Intellectual Property Law Association 2007 Economic
Survey, the median charge in 2006 for a validity/invalidity only opinion
per patent is $13,000.
Combination Invalidity and Non-infringement
Opinion. A combination
invalidity and non-infringement opinion will typically cost $12,000.
In comparison and according to the American Intellectual Property Law
Association 2007 Economic Survey, the median charge in 2006 for a
combination invalidity and non-infringement opinion per patent is $20,000.
Legal Standard. In either case, you will receive
a written opinion compliant with the legal standard that requires analysis
of the applicable law and "applies that law to the facts in a
rational manner, avoiding plainly incorrect or irresponsible assumptions
or judgments." Further, because the issue of willfulness may in
the first instance be determined by a jury, the opinion letter will be
written in plain English. The opinion letter will avoid unnecessary use of
technical or legal jargon that may make the opinion letter
incomprehensible to a jury or a judge.
Reacting to a Notice Letter. It used to be that
if a company did not seek an independent opinion of counsel, a finding of
willful patent infringement could be inferred. The Court of Appeals for
the Federal Circuit reversed this adverse inference (Knorr-Bremse
Systeme Fuer Nutzfdahrzeuge GmbH v. Dana Corp., Sept. 13, 2004),
ruling that the totality of the circumstances govern the
determination of willfulness of patent infringement. At a minimum,
these circumstances should include a clearance search of the patent
literature; consultation with patent counsel; an internal infringement
analysis; and identifying any evidence that no deliberate copying of the
designs and ideas was made.
A best practice would involve more. The same court observed in a
recent decision, after citing the Knorr decision, that where the
defendant actually obtained an opinion of counsel after receiving
the complaint from the plaintiff, "early receipt of legal advice
would have strengthened the defendants’ argument that they had not
willfully infringed. . . ." (Imonex Services, Inc. v. W. H.
Munzprufer Dietmar Trenner GMBH, nos. 04-122,-1290, May 23, 2005).
So, when the facts are in dispute, having an early opinion letter, i.e.,
one that is done before a lawsuit is instituted, is better than having one
prepared after receiving the complaint, and it is, therefore, inescapable
that it is better to have an early opinion letter, than not having an
opinion letter at all.
How Not to React to a Notice Letter. A February
2006 decision by the Court of Appeals for the Federal Circuit is a lesson
in how not to behave. In that case, the infringer obtained two oral
opinions in two and a half years after being notified of the patent and
his alleged infringement. The infringer wanted to avoid paying
attorney fees. The infringer told its attorney that "for 20 years or
more, the whole industry has been making things like this."
Based on that assertion, the attorney advised that there would be no
infringement. However, both oral attorney opinions were not thorough
in that they were not based on an examination of the file history of the
patent, the accused infringing product or any prior art. The trial
court found these opinions incompetent and in reckless disregard of the
patent rights. Less than good faith attempt to avoid infringement
had a devastating effect. The infringer could not simply await
further details from the patent owner on exactly what was being
infringed. The result was a finding of willful infringement, treble
damages and attorneys fees against the infringer. The case was Golden
Blount, Inc. v Robert H. Peterson Co., nos. 04-1609, 05-1141, -1202.
Why Outside Counsel? Despite the Knorr
decision, a company would be well advised not to give opposing counsel the
opportunity to argue that the company displayed objective recklessness in
the method it chose to employ in evaluating an infringement claim. A
company's technical expert might provide a first line of defense in the
evaluation of infringement and clearly, a company counsel opinion is
better than no opinion. However, the opposing counsel might well
raise the suggestion that the use of in-house technical experts and
counsel had an obvious conflict of interest and that the resulting opinion
of no patent infringement was a self-serving attempt to simply avoid a
willfulness determination.
There may be no adverse inference as a matter of law from failure to
obtain an opinion of counsel, but being able to disclose an opinion of an
independent counsel on patent infringement is one of the circumstances
that might well tip the balance for a jury.
Waiver and Strategy. As your opinion counsel,
this law firm would limit written documentation of a non-infringement
opinion to the opinion memorandum. Work with in-house and litigation
counsel would be based on refraining from writing documents on
infringement beyond the opinion letter.
The reason for this is strategic legal protection for our
clients. The Federal Circuit in an opinion on May 3, 2006 clarified
the law of waiver of attorney-client privilege and work product.
When the advice- of-counsel defense to willful infringement is asserted by
an infringer, the infringer waives his right to keep confidential all
documents from any attorney (in-house, litigation or opinion counsel)
concerning infringement. This includes not only the traditional
opinion letter, but also includes any documents in the attorney's files
that memorialize an oral communication between attorney and client
concerning whether the patent is valid, enforceable and infringed but are
not themselves communications to or from the client. The waiver does
not extend to documents analyzing the law, facts, and trial strategy that
reflect the attorney’s mental impressions but were not given to the
client. In
re EchoStar Communications Corp., Misc. No. 803 (Fed. Cir. 2006).
Why Not Litigation Counsel? Avoiding opinions by
trusted outside litigation counsel may also be prudent for two reasons:
(1) There is a potential, albeit rare, for litigation counsel being
disqualified from trying the case. To gain advantage, opposing counsel may
argue that the testimony of the trusted litigation counsel on its opinion
could be "prejudicial" to the client; or that litigation counsel
could to be called as a witness. In either case, litigation counsel could
be forced to withdraw, handicapping the company. While the legal standard
is that what is important are the objective factors concerning the opinion
itself, not the author's testimony, the potential remains and can easily
be avoided with an opinion of a completely independent counsel who will
work with the litigation counsel. The Federal Circuit stated in the
Seagate holding mentioned above that "relying on
opinion counsel’s work product does not waive work product immunity with
respect to trial counsel."
(2) An opinion letter is often needed in trial after the judge or jury has
concluded there is infringement. This means that the conclusions in the
opinion letter have already been found to be incorrect, and the issue is
whether the opinion letter nevertheless provided a reasonable basis for
concluding that the result could have gone the other way. In the
words of the Federal Circuit in the EchoStar decision: "Counsel’s
opinion is not important for its legal correctness. It is important
. . . whether it is thorough enough, as combined with other factors, to
instill a belief in the infringer that a court might reasonably hold the
patent is invalid, not infringed, or unenforceable." See
EchoStar decision above, internal quotes omitted. If trusted
litigation counsel is the author of the opinion, inevitable loss of
credibility in the minds of the judge and jury could weigh against the
position of the company.
Determining Infringement and Designing Around.
Determining whether or not there is patent infringement may be more
complicated than one might imagine. There are uncertainties that affect
the scope of a patent that should be considered. For example, the doctrine
of equivalents and reexamination.
Furthermore, if you are attempting to design around an existing patent,
there is more to it than reviewing the literal meaning of the claims.
Informed advice may be your best defense against risking your business
future. See this Firm's web page further discussing infringement
determinations and designing around existing patents.
Sending a Notice Letter. If you believe that a
business or other person is using your patent without your permission, it
is appropriate to send them a Notice Letter (sometimes this is a Cease and
Desist letter or sometimes just a notice that you have a patent and want
them to consider licensing). However, recent decisions by the
Supreme Court and the Federal Circuit essentially mean that if you send a
letter of any kind offering a license to a potential infringer, you could
face a Declaratory Judgment lawsuit seeking to invalidate your patent, or
asking for a decision that there is no infringement. [MedImmune,
Inc. v. Genentech, Inc., 549 U.S. ___, 127, S.Ct. 764 (Jan. 9, 2007)
and SanDisk
Corp. v. STMicroelectronics, Inc., 480 F.3d 1372 (Fed. Cir. March 26,
2007)]
Your invention is a valuable commodity. Do not waste your investment by
ignoring patent infringing activity. The Law Firm of Louis Ventre, Jr. can
help with your representation on dealing with a patent infringer, or at
the very least going over your options to help you make an informed
decision.
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