Patent infringement

Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial (or to have a commercial purpose) to constitute patent infringement.

The scope of the patented invention or the extent of protection[1] is defined in the claims of the granted patent. In other words, the terms of the claims inform the public of what is not allowed without the permission of the patent holder.

Patents are territorial, and infringement is only possible in a country where a patent is in force. For example, if a patent is granted in the United States, then anyone in the United States is prohibited from making, using, selling or importing the patented item, while people in other countries may be free to exploit the patented invention in their country. The scope of protection may vary from country to country, because the patent is examined -or in some countries not substantively examined- by the patent office in each country or region and may be subject to different patentability requirements.

Overview

Typically, a party (other than the patentee or licensee of the patentee) that manufactures, imports, uses, sells, or offers for sale patented technology without permission/license from the patentee, during the term of the patent and within the country that issued the patent, is considered to infringe the patent.[2]

The test varies from country to country, but in general it requires that the infringing party's product (or method, service, and so on) falls within one or more of the claims of the patent. The process employed involves "reading" a claim onto the technology of interest. If all of the claim's elements are found in the technology, the claim is said to "read on" the technology; if a single element from the claim is missing from the technology, the claim does not literally read on the technology and the technology generally does not infringe the patent with respect to that claim, except if the doctrine of equivalence is considered applicable.

In response to allegations of infringement, an accused infringing party typically asserts one or more of the following:

The parties may also resolve their dispute in a settlement, which may involve a licensing agreement, such as a cross-licensing agreement. Private settlements may not always serve the public interest, "because litigating patent disputes to completion tends to generate positive externalities, by clarifying the limits of patent protection if the patent is upheld or encouraging wider use of the innovation if the patent is invalidated".[3]

Indirect infringement

In certain jurisdictions, there is a particular case of patent infringement called "indirect infringement." Indirect infringement can occur, for instance, when a device is claimed in a patent and a third party supplies a product which can only be reasonably used to make the claimed device.[4]

Legislation

Australia

In Australia, a patent infringement occurs when a person, who is not the patentee, exploits or authorises another person to exploit the patent in question.[5]

'Exploit' in this context includes:[6]

Canada

In Canada, patents are governed by the Patent Act, and the rights of a patent holder are summarized at s. 42:

By granting the patent holder the exclusive right, privilege and liberty of making, constructing, using, and selling the invention, the Act establishes that any other person making, constructing, using, or selling the patented invention is infringing that patent. Whether there has been an infringement of a patent is usually a question of fact.[8]

Canada is considered to be more friendly for rights holders in pursuing patent claims than in the United States, due to significant differences between the two jurisdictions:[9]

  • Patents in Canada are subject to a purposive construction, which relies on reading both the claims and the specifications to determine the scope of a patent, and extrinsic evidence is not permitted, leading to the absence of prosecution history estoppel.[10]
  • While US patent trials are heard by a jury, Canadian trials are heard by a judge only, and thus the claims of a Canadian patent are construed only once as part of the trial judge's decision on the merits of the case as a whole. In that regard, the Federal Court of Appeal has ruled that Markman hearings are not allowed under Canadian law.[11]
  • In Canada, the applicant has no obligation to disclose material prior art, so patents cannot be invalidated on that basis.[12]
  • The same absence of obligation also means that the Competition Act will not come into play, unlike what occurs with antitrust law in the US.[13]
  • The Canadian discovery process is more streamlined than the US procedure, resulting in less cost and time in pursuing the lawsuit, and it also possesses an implied undertaking rule, barring use of information produced or disclosed in discovery from any purpose other than the present litigation (other than by leave of the court).
  • Canadian law allows a plaintiff to elect to claim either compensatory damages or an accounting of profits, which can either act as a deterrent on infringement or as an incentive to reach a settlement before trial.
  • The availability of costs in Canadian courts is a significant advantage to a plaintiff confident of success, but is also a deterrent to pursuing more speculative cases.
  • Treble damages are not awarded in Canadian courts, and punitive damages are less likely to be awarded.

Europe

In Europe, patent infringement of both national patents and European patents are essentially dealt upon by national courts. Although European patents are granted by the European Patent Office, these European patents lead are enforced at a national level, i.e. on a per-country basis.[14] A majority of the member states of the European Union have agreed to set up an unitary patent (formerly called Community patent) system, according to which patents would be centrally enforceable before a Unified Patent Court. However, the corresponding legal texts have not entered into force yet.

Japan

Infringement under the patent law in Japan is defined by Article 101 of Patent Act (Act No. 121 of 1959),[15] which shows the following acts shall be deemed to constitute infringement of a patent right or an exclusive license:

United Kingdom

Infringement under United Kingdom patent law is defined by Section 60 of the UK Patents Act 1977 (as amended), which sets out the following types of infringement:

United States

In United States law, an infringement may occur where the defendant has made, used, sold, offered to sell, or imported an infringing invention or its equivalent.[16] One also commits indirect infringement if he actively and knowingly induces another to infringe, and is liable for that infringement. Types of "indirect infringement" include "contributory infringement" and "induced infringement."

No infringement action may be started until the patent is issued. However, pre-grant protection is available under 35 U.S.C. § 154(d), which allows a patent owner to obtain reasonable royalty damages for certain infringing activities that occurred before patent's date of issuance. This right to obtain provisional damages requires a patent holder to show that (1) the infringing activities occurred after the publication of the patent application, (2) the patented claims are substantially identical to the claims in the published application, and (3) the infringer had "actual notice" of the published patent application.

In the US there are safe harbor provisions to use a patented invention for the purposes of gathering data for a regulatory submission.[17]

Clearance search, and clearance, validity and enforceability opinions

A clearance search, also called freedom-to-operate (FTO) search or infringement search,[18][19] is a search done on issued patents or on pending patent applications to determine if a product or process infringes any of the claims of the issued patents or pending patent applications. A clearance search may also include expired art that acts as a 'safe harbor' permitting the product or process to be used based on patents in the public domain. These searches are often performed by one or more professional patent searchers who are under the direction of one or more patent attorneys.

A clearance search can be followed by a clearance opinion, i.e. a legal opinion provided by one or more patent attorneys as to whether a given product or process infringes the claims of one or more issued patents or pending patent applications. Clearance opinions may be done in combination with a "validity and enforceability" opinion. A validity and enforceability opinion is a legal opinion as to whether a given patent is valid and/or enforceable. In other words, a validity opinion is a legal opinion or letter in which a patent attorney or patent agent analyzes an issued patent and provides an opinion on how a court might rule on its validity or enforceability.[20] Validity opinions are often sought before litigation related to a patent. The average cost of a validity opinion (according to one 2007 survey) is over $15,000, with an infringement analysis adding $13,000.[21]

The cost of these opinions for U.S. patents can run from tens to hundreds of thousands of dollars (or more) depending upon the particular patent, the number of defenses and prior art references, the length of the prosecution file history, and the complexity of the technology in question.

An exculpatory opinion (setting forth reasons the patent is not infringed, or providing other defenses such as prior use, intervening rights, or prior invention) is also possible.

Patent infringement insurance

Patent infringement insurance is an insurance policy provided by one or more insurance companies to protect either an inventor or a third party from the risks of inadvertently infringing a patent.

For inventors, patent infringement insurance covers legal costs in case they have to sue an infringer to enforce their patent.

For third parties, patent infringement insurance covers their legal costs in case they are sued for patent infringement by an inventor.

Patent infringement insurance is generally considered too expensive to be worth the cost. The premiums must be high, however, due, at least in part, to the high legal costs of patent infringement cases. A typical patent infringement case in the US costs 1 - 3 million dollars in legal fees for each side. This is despite the fact that 99% of all patent infringement cases are settled. Legal fees in pharmaceutical cases can run 30 million dollars or more, although this should be contrasted with the fact that billions of dollars may be at stake.

In June 2006, a Study for the European Commission on the feasibility of possible insurance schemes against patent litigation risks was published.[22] The report concluded that the continuation of the status quo with very little, disproportionately expensive, bespoke patent litigation insurance (PLI) would not meet any objectives for a feasible insurance scheme. Instead, only a mandatory scheme was considered to be viable in order to provide the economic and technical benefits to the EU and individual patentees which would arise from a widespread PLI scheme.

"Piracy"

Since the 1840s, the expression "patent pirate" has been used as a pejorative term to describe those that infringe a patent and refuse to acknowledge the priority of the inventor. Samuel F. B. Morse, inventor of the telegraph, for example, complained in a letter to friend in 1848[23]

I have been so constantly under the necessity of watching the movements of the most unprincipled set of pirates I have ever known, that all my time has been occupied in defense, in putting evidence into something like legal shape that I am the inventor of the Electro-Magnetic Telegraph!! Would you have believed it ten years ago that a question could be raised on that subject?

Those who accuse others of being patent pirates say that they take advantage of the high cost of enforcing a patent to willfully infringe valid patents with impunity, knowing that the average small inventor does not have the financial resources required to enforce their patent rights. In the US, for example, an inventor must budget $1 million or more in order to initiate patent litigation. They say that patent pirates also take advantage of countries where patent rights are difficult to enforce and willfully infringe in those countries.

Ironically, the term "pirate" has also been used to describe patent owners that vigorously enforce their patents.[24] (See also patent troll) Thus whether one deliberately infringes a patent or whether one vigorously enforces a patent, they may be referred to as a pirate by those that feel they are overstepping their bounds.

Threat to bring a patent infringement action

"A threat to bring a patent infringement action is highly likely to influence the commercial conduct of the person threatened, which is why the law of some countries, including the UK, provides that the making of a groundless threat to sue is, within certain carefully prescribed limits, an actionable wrong in itself."[25] This however is not the case in the United States.

See also

Notable infringement cases

References

  1. ↑ Article 69 EPC
  2. ↑ 35 U.S. Code Section 271, "Infringement of Patent"; see also Chapter 28 of the Manual of patent examination procedure, July 2010, rev.
  3. ↑ Lemley, Mark A.; Shapiro, Carl (2005). "Probabilistic Patents". Journal of Economic Perspectives, Stanford Law and Economics Olin Working Paper No. 288. 19: 75. doi:10.2139/ssrn.567883.
  4. ↑ Patents; Limelight Networks, Inc. v. Akamai Technologies, Inc., No. 12-786 Indirect Patent Infringement
  5. ↑ Patents Act 1990 (Cth) s 3(1).
  6. ↑ Ibid sch 1.
  7. ↑ "Patent Act (R.S.C., 1985, c. P-4)". s.42.
  8. ↑ Monsanto Canada Inc. v. Schmeiser 2004 SCC 34 at par. 30, [2004] 1 SCR 902 (21 May 2004)
  9. ↑ Andrew M. Shaughnessy; Andrew E. Bernstein (2005). "Patent Litigation: Choosing Between The United States and Canada" (PDF). The Metropolitan Corporate Counsel. 13 (2).
  10. ↑ Free World Trust v. Électro Santé Inc. 2000 SCC 66, [2000] 2 SCR 1024 (15 December 2000)
  11. ↑ Realsearch Inc. v. Valon Kone Brunette Ltd. 2004 FCA 5, [2004] 2 FCR 514 (9 January 2004)
  12. ↑ Flexi-Coil Ltd. v. Bourgault Industries Ltd. 1999 CanLII 7650, (1999) 86 CPR (3d) 221 (3 March 1999), Federal Court of Appeal (Canada)
  13. ↑ Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965)
  14. ↑ Article 64(3) EPC
  15. ↑ Patent Act in Japan
  16. ↑ "[F]or a court to find infringement, the plaintiff must show the presence of every element or its substantial equivalent in the accused device." Wolverine World Wide, Inc. v. Nike, Inc., 38 F.3d 1192, 1199 (Fed. Cir. 1994)
  17. ↑ Pradip K. Sahu and Shannon Mrksich. The Hatch-Waxman Act: When Is Research Exempt from Patent Infringement? ABA-IPL Newsletter 22(4) Summer 2004. Archived February 7, 2013, at the Wayback Machine.
  18. ↑ UK Intellectual Property Office, Freedom-to-operate (FTO) patent search (infringement search). Consulted on October 9, 2009.
  19. ↑ "FTO analysis: a king among patent searches" (PDF). Patent Information News. European Patent Office (1/2016): 12–13. 2016.
  20. ↑ M. John Sterba Legal opinion letters: a comprehensive guide to opinion letter practice Aspen Publishers Online, 2002
  21. ↑ AIPLA Report of the Economic Survey, 2007
  22. ↑ Patent Litigation Insurance
  23. ↑ "Samuel F. B. Morse, His Letters and Journals by Samuel F. B. Morse, Part 5 out of 9". fullbooks.com. Retrieved June 10, 2006.
  24. ↑ see Testimony by Harold C. Wegner, Professor of Law and Director, Intellectual Property Law Program, George Washington University National Law Center before the US Senate Wednesday, March 9, 1994
  25. ↑ Jeremy Phillips, From when must a threat be compensated?, IPKat, June 14, 2008. Consulted on June 15, 2008.

Further reading

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