Possible patent infringement

[ckuratz]

What is the name of your state? California

I am following an intellectual propery dispute that is still in the discovery phase. A Markman Hearing is scheduled in the near future. As is often the case, there is considerable debate about the proper definition of terms used in the claims language. If the Plaintiff fails to prevail in its broadened definition of its terms, the Defendant might find that its product does not specifically violate the patent. However, in order for the Defendant to create its publicly available product, it likely has to use most of the steps protected within the patent. In other words, here is a situation where we might have a de nova product, but its very existence depends upon trespassing the boundaries of an existing patent.

My question is whether the Defendant is still at risk of patent violation, or if the fact that it has come up with something new automatically sidesteps previously established patent territories? If the Defendant's product is accepted as not an specific infringement, but it is obvious that 95% of its existence depends on using patent-protected IP, how does this affect damages?

 

[divgradcurl]

As is often the case, there is considerable debate about the proper definition of terms used in the claims language.

That's an understatement if I ever heard one -- the "proper defintion of terms" is the WHOLE case!

If the Plaintiff fails to prevail in its broadened definition of its terms, the Defendant might find that its product does not specifically violate the patent.

Fair enough -- usually someone loses at Markman -- rarely do both sides walk away happy.

However, in order for the Defendant to create its publicly available product, it likely has to use most of the steps protected within the patent. In other words, here is a situation where we might have a de nova product, but its very existence depends upon trespassing the boundaries of an existing patent.

I don't understand this statement -- if you are not infringing, you are not infringing? What's the problem here?

My question is whether the Defendant is still at risk of patent violation, or if the fact that it has come up with something new automatically sidesteps previously established patent territories?

Again, this doesn't make much sense. However, if there is a patent for, say, A+B+C, then you invent A+B+C+D, you can obtain a patent for A+B+C+D, since you invented something new, but you cannot practice your invention without infringing on the first patent. Is that the kind of situation you are in here?

However, the main thing is, if you go to court, and the court determines that you are not infringing, then what's the problem?

One big caveat though -- even if the plaintiff loses at Markman, and you eventually prevail in your infringement suit, if the plaintiff decides to appeal to the Federal Circuit, it's a whole new ball game. Unlike most appeals, patent cases that get appealed are trials de novo -- new trials -- including a new Markman. Something like 50% of all patent cases appealed are overturned by the Federal Circuit, mainly because claim construction is done all over again with no deference to the lower court's decisions...

 

[ckuratz]

First of all, thank you for taking the time to respond to my query. I looked up your bio and see that this area is down your alley. I have absolutely no legal background, so please give me some latitude about things for which you are quite familiar. If it wasn't clear from my initial post, I am an outsider merely trying to understand the ongoing legal fisticuffs from a layman's point of view. I have gained access to Pacer and have been reading the legal maneuvers both sides have filed electronically. At first it was like reading Greek about an unfamiliar sporting event where the rules were not readily apparent. Now I have grown more comfortable about the process, but I am still at a considerable disadvantage in interpreting what is really happening.

"... if there is a patent for, say, A+B+C, then you invent A+B+C+D, you can obtain a patent for A+B+C+D, since you invented something new, but you cannot practice your invention without infringing on the first patent. Is that the kind of situation you are in here?" Yes, this is an apt description of the circumstances that I believe exist between the 2 warring parties.

However, now that you present things in this perspective, I need to ascertain something that I believe you are saying. [IF A+B+C has been patented and IF A+B+C are necessary for D to be created, THEN a patent has been automatically INFRINGED if permission for using A+B+C had not been previously arranged by the inventor for D.] Is the bracketed statement correct? If true, then it would be IMPOSSIBLE for D to exist without a patent infringement even if D is acknowledged as new by all parties...is this also correct?

Please bear with me, but before I can develop other questions, I need to understand the legal fundamentals that are in play. Thanks again for your help.

 

[divgradcurl]

Is the bracketed statement correct?

Yes. Generally it's not quite as cut-and-dried as this example, but this type of thing can and does happen.

If true, then it would be IMPOSSIBLE for D to exist without a patent infringement even if D is acknowledged as new by all parties...is this also correct?

Again, basically true. However, just because "making" A+B+C+D (or "practicing" to use the term of art) would infringe on the patent for A+B+C does not mean that an inventor is not entitled to a patent for A+B+C+D; it just means he can't practice his new patent without infringing unless he gets permission.

The ONLY rights a patent gives someone is to EXCLUDE others -- if you have a patent, you can keep someone else from practicing your patent. However, just because you have a patent doesn't mean you have the right to PRACTICE the patent. As it should be clear from the example above, the patent owner of A+B+C would be able to keep the inventor of A+B+C+D from practicing the latter invention; however, the latter inventor could obtain a patent on A+B+C+D, and although he couldn't practice the patent himself without infringing, he could keep others -- including the inventor of A+B+C -- from practicing A+B+C+D.

Using the letters makes this seem quite arcane, but its actually pretty common for one company to come up with something, then another company come up with an improvement -- then to avoid the inevitable logjam created by having patents that can't be practiced, everyone gets together (perhaps prodded by litigation) and cross-licenses everything.

Hope that clears up some of your confusion.

 

[ckuratz]

Your explanation is quite clear and it helps me immensely in appraising the merits for both sides. If I am wearing out my welcome on this board and imposing on your expertise too greatly, please tell me and I will relent. I found this resource yesterday and feel like a lad in a candy store with a lot of money to spend.

The Markman is fast approaching. From my perusal of the court documents on file, I believe the judge will establish the boundaries for the patent under dispute widely enough to capture the Defendant....at least partially, but, more likely, to a considerable extent, if not totally. Using our previous format, at least A and/or B have been infringed, more likely A+B+C. I could be wrong, but I think the arguments are really settling on whether D is new or not.

When the judge makes a ruling on the definitions for the disputed claims terms, both the Plaintiff and the Defendant should be able to assess its position more accurately with respect to the lawsuit. Do you have any knowledge or opinion as to what percentage of these IP cases settle/vacate vs. going on to trial? If it is obvious that infringement has occurred, how likely will the judge submit a summary judgment?

 

[divgradcurl]

The Markman is fast approaching. From my perusal of the court documents on file, I believe the judge will establish the boundaries for the patent under dispute widely enough to capture the Defendant

Who knows what will happen in Markman -- Markman is one of the joys (and terrors) of patent litigation...

I could be wrong, but I think the arguments are really settling on whether D is new or not.

When someone gets sued for infringement, both sides bring out any argument that they think can remotely help then -- noninfringement, inequtable conduct, unenforceability, antitrust issues (misuse of patent), and especially invalidity, which is what you are talking about here. If one side can prove that the other side's patent is invalid, then that's the end of it. Not only are there invalidity arguments to be made in court, if one side or the other thinks they have a pretty strong case (but might not be able to convince the judge), they can file a reexamination proceeding with the USPTO -- basically asking the USPTO to reexamine the patent in light of new prior art or new information that has been discovered. Again, more fun inpatent litigation.

When the judge makes a ruling on the definitions for the disputed claims terms, both the Plaintiff and the Defendant should be able to assess its position more accurately with respect to the lawsuit.

That's the whole point of Markman -- well, at least one of the points of Markman. The Markman claim construction hearing is somewhat analogous to preparing jury instructions -- once the construction of the claim terms is determined in Markman, that's what the jury will use to weigh the evidence against in the trial.

Do you have any knowledge or opinion as to what percentage of these IP cases settle/vacate vs. going on to trial?

I remember hearing a number of something like 97% of infringement cases settle before trial -- but even that number may be low. Virtually all cases settle before trial, and there are a few reasons for that. First, patent litigation is usually very high-stakes, at least financially, and there's a lot of risk involved if it goes to trial. Second, as I noted in an earlier post, Markman usually ends up putting one party or the other in a stronger position, which makes settlement more likely. Third, again as noted above, because of the trial de novo nature of patent appeals, even if you do win your trial, if there is an appeal (and an appeal of the claim construction used in the case is almost always a reason to appeal, since claim construction is a matter of law, not fact -- again, you can thank Markman v. Westview Instruments for that...) statistics show that you only have a 50-50 chance of having your verdict stand -- so even if you win, you're not done, not by a long shot. And finally, patent litigation frequently turns on a very careful parsing of language related to oftentimes extremely complex technology -- very few judges have the education or understanding to follow many of the technical arguments you see in many patent litigations, and the jury is usually even less prepared than the judge -- patent cases can be tricky to handle in front of a jury due to the complexity and frankly, a lot of the arguments presented are boring to a jury, so it's hard to keep their attention.

So, what you see is that patent litigation is mostly a law-and-motion type of activity -- very rarely do cases make it to trial. Some do, but not many.

If it is obvious that infringement has occurred, how likely will the judge submit a summary judgment?

Who knows? SJ is pretty common, at least partial SJ, in patent cases, but it will all turn on Markman and what facts both sides have in their favor.

 

[ckuratz]

"... and especially invalidity, which is what you are talking about here. If one side can prove that the other side's patent is invalid, then that's the end of it. Not only are there invalidity arguments to be made in court, if one side or the other thinks they have a pretty strong case (but might not be able to convince the judge), they can file a reexamination proceeding with the USPTO -- basically asking the USPTO to reexamine the patent in light of new prior art or new information that has been discovered."

I admit to some naivete in viewing this arena, but I have been following this case for about 2 years and I have adopted intuitions that I was previously without. With that as an intro, my view is that the patent at issue will not be struck down for invalidity. I believe it can overcome any prior art attacks and other legal maneuvers that the Defendant might have in mind. The principle battleground is scope, and that of course will be determined by the expanse permitted in the claims terms by the overseeing federal judge. As to a reexamination by the USPTO, it reminds me of the Eolas vs. Msft case where Eolas was awarded $526M only to have its patent rescinded later by the USPTO when heavyweights came to the aid of Msft. Yes, this is possible, but I believe this to be highly unlikely in this particular case.


"I remember hearing a number of something like 97% of infringement cases settle before trial -- but even that number may be low."

I suspected that the number was high, but your appraisal gives me more insight on this issue.

Thanks again for your perspectives. You have helped me immensely.

 

[Drake30]

...follow-up question on "grounds for appeal"

This posting has been extremely useful, thanks to all involved.

I have a follow-up question, basically, as you pointed out earlier:

"One big caveat though -- even if the plaintiff loses at Markman, and you eventually prevail in your infringement suit, if the plaintiff decides to appeal to the Federal Circuit, it's a whole new ball game. Unlike most appeals, patent cases that get appealed are trials de novo -- new trials -- including a new Markman. Something like 50% of all patent cases appealed are overturned by the Federal Circuit, mainly because claim construction is done all over again with no deference to the lower court's decisions..."

What are the grounds for appeal? You mention later in the post about the definition of terms from the Markman hearing being one. Can you appeal no matter what? As an example, if there is insurmountable evidence against the Defendant (who loses), and there were hefty sanctions placed against the Defendant prior to the trial (including an adverse jury instruction due to a complete destruction of all email evidence), can the Defendant still appeal? With these penalizing sanctions in place from the existing trial, would an appeal be allowed? And finally if the appeal is allowed, how would these old sanctions be viewed (or are they at all) in the new trial?

 

[divgradcurl]

Can you appeal no matter what?

As a general rule, no. Appeals are only appropriate when the lower court made a mistake or error in the application of the law to the facts. You can't appeal just because you don't like the outcome of a case -- there has to be a mistake of law.

However, because claim construction in patent cases is a matter of law, and because there aren't that many "rules" that govern how a judge must construe claims, it is almost always possible to argue that a judge made a mistake during claim contruction. And since claim construction is a matter of law, such a mistake is an appealable issue.

Therefore, you have a situation in patent cases that, because EVERY patent case goes through claim construction, every patent case is basically appealable.

As an example, if there is insurmountable evidence against the Defendant (who loses), and there were hefty sanctions placed against the Defendant prior to the trial (including an adverse jury instruction due to a complete destruction of all email evidence), can the Defendant still appeal?

Yes, if they can make a cognizant argument as to how the judge made an error in claims constuction, and how that error affected them adversly in trial.

With these penalizing sanctions in place from the existing trial, would an appeal be allowed?

An appeal is a right that exists separate from any sanctions the lower court put in place. In fact, in many cases, the sanctions the lower court put in place will be stayed pending the ruling of the appelate court.

And finally if the appeal is allowed, how would these old sanctions be viewed (or are they at all) in the new trial?

In patent cases, as I alluded to before, appeals are "trial de novo," a new trial. The court of appeals for the federal circuit (where all patent appeals go) essentially gives no deference to any findings of fact or law made by the lower court. It's trial all over again. That's why the trial court doesn't end things in a patent case (unless the loser can't afford to keep going), and its why virtually all patent cases settle out before trial.

Oh, and by the way, my 97% number was low -- it's actually about 98% of patent cases that get disposed of in some way before trial...

 

[ckuratz]

It has been 7 weeks from the Markman Hearing. Is there any rule of thumb about how long it will take for the federal judge to render an opinion?

 

[divgradcurl]

It depends on the judge, how busy the judge is, how many claims were construed, how complex the claim constructions were, how different each side was, how much evidence (intrinsic and extrinsic) each side used, how comprehensive their briefs were, how comprehensive their oral arguments were, etc.

In other words, no rule of thumb -- it all depends on everything I mentioned above (and probably more things than that)!

 

[ckuratz]

I'm curious about what sort of help federal judges usually have to lighten their work loads. This particular case is being held at the fed court in San Francisco where the judges appear to have their own courts used exclusively by themselves. I've checked out the schedule for the judge in charge and am impressed by the very full schedule that is on the docket for the next few weeks. If you know, can you give me some idea as to what sort of aides, e.g. law clerks, etc., and other work-saving devices are usually available to federal judges?

 

[divgradcurl]

Federal judges (at least in the Northern District of California) usually have one clerk, who may or may not be an attorney, who handles scheduling, communications, and various court-related tasks, but who may or may not be involved in legal analysis.

There are also usually 2-3 clerks who are usually (but not always) recent law school graduates, who may or may not have already taken the bar exam, but who have completed their JD's. These clerks generally read the full briefs filed by the parties and summarize them (brief them) for the judge, and perform legal research to check each side's arguments. These clerks also listen to the oral arguments, and usually will draft the judge's rulings. How much "influence" these clerks have depends on the judge -- some judges run the show, others let the clerks do most of the work and just give guidance (scary thought, eh?), most are somewhere in between.

Finally, most of the judges also have several externs, who are generally local second- and third-year law students, and who work either full-time or part-time at thr court while going to school part-time or full-time during the semester. The externs perform the same roles as the clerks above, but play a lesser role. In some courts, the externs essentially work for the regular clerks, in other courts (or for other judges) the externs work directly for the judge, but oftentimes on the smaller cases that pass throught the courts.

Hope that info helps...

 

[ckuratz]

Thank you. As always, your familiarity with patent law and its environs continues to provide very useful information. You are an incredible asset here and I am indebted to your for the time you have taken to answer my questions.

 

[ckuratz]

More than 2 months have transpired since the Markman and the parties continue to wait for a judgment. These legal proceedings have been ongoing for 2 1/2 years and most of the Defendants have settled out of court. During the past week the Plaintiff and one of the last remaining Defendants have agreed to have their dispute officially dismissed by the court with prejudice. Presumably, these parties have also settled, but this has not been officially announced publicly as yet. Obviously, common ground has been found at this late date on the eve of the Markman decision.

Of the original 6 Defendants only one remains standing now. The last Defendant submitted 2 counterclaims against the Plaintiff as having violated two of its patents. For multiple reasons, these 2 patents were actually conjoined to the legal proceedings and all three patents had their day in court during the Markman. Perhaps this could be the reason why this last Defendant is the only one carrying on the fight. However, in my opinion, the 2 counterclaims have little substance - I regard them as a "nuisance", but admittedly I could be wrong.

This brings me to the question that I would like to pose. Obviously the Plaintiff's patent has enough teeth to convince most of the original Defendants to settle, so would it be a proper assumption that the Plaintiff will not settle with the last Defendant prior to a Markman decision if it thinks it will gain a favorable decision? My presumption is that the Plaintiff will have a much stronger position against potential other infringers with a positive Markman decision as compared to a scenario where it settled with all of the Defendants - is this correct thinking? Supposedly the disputed patent might have hundreds of other already identified infringers and the company intends to validate and then license this technology.