overview of patent litigation in the u.s. court...

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Overview of Patent Litigation in the U.S. Court System

김주섭, 법학박사, Vice President of LGD

Nov. 2010

U.S. Patent Infringement Litigation:Topics for Presentation

IntroductionIntroductionComplaintComplaint

Service of ProcessService of ProcessAnswer / Rule 12 motionAnswer / Rule 12 motionMediation / ArbitrationMediation / Arbitration

DiscoveryDiscoveryLocal RulesLocal Rules

Claim ConstructionClaim ConstructionSummary JudgmentSummary Judgment

TrialTrial

Introduction: About U.S. Patents

The Congress shall have the Power… to promote the Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive right to their respective Writings and Discoveries

-The U.S. Constitution – Article I, Section 8

Introduction: About U.S. Patents

• A patent is presumed valid. 35 U.S.C. § 282.

• Quid Pro Quo --Limited Monopoly in Exchange for Disclosure of Invention to the Public

Introduction: The Right to Exclude

• A patent secures a negative right: the right to exclude others from making, using, selling, offering for sale, or importing the claimed invention. A patent does not give the owner the right to practice that invention.

• Damages for infringement may not be less than a reasonable royalty for the unauthorized use. 35 U.S.C. § 284.

• “Whoever without authority makes, uses, offers for sale, sells, or imports into the United States the patented invention is liable for infringement.” 35 U.S.C. § 271.

Introduction: Forums for Patent Actions

U.S. District Courts: General Jurisdiction Trial Court Availability of Appeal to Specialized

Appellate Court

U.S. Patent & Trademark Office No opposition proceedings Reexaminations are permitted

International Trade Commission Remedy: importation of infringing goods Extremely fast, often 9 months for entire

proceeding

This Presentation focuses on the procedural aspects of Patent Actions brought in U.S. District Courts

The U.S. Court System consists of one of more District Courts (trial courts) for each state, 13 Courts of Appeal, and one Supreme Court.

A patent infringement action may be brought in any U.S. District Court with jurisdiction over the claims and parties (discussed further below).

Introduction: Forums for Patent Actions

Introduction: Appeals of Patent Actions

Formed on October 1, 1982, the U.S. Court of Appeal for the Federal Circuit has exclusive nationwide appellate jurisdiction over patent cases.

Hearing appeals of all matters arising from the Patent Laws, the Federal Circuit has a special and in-depth knowledge of Patent Law and its application.


Complaint (소장)

The Complaint: Pre-filing Inquiry

“Luck is what happens when preparation meets opportunity.”- Seneca

Perform pre-filing inquiry:● Infringement ● Consider cease and desist letter● Validity ● Assess affirmative defenses● Enforceability ● Standing / Ownership● Assess damages ● Jurisdiction

The Complaint: Overview

“A civil action is commenced by filing a complaint with the court.”- Federal Rules of Civil Procedure, Rule 3.

The U.S. District Courts have exclusive civil jurisdiction of any action relating to the patent laws.

28 U.S.C. § 1338(a).

Typical Case Timeline

Claim Construction

Answer and/or Rule 12(b) Motion

Rule 26(f) discovery conference

Early Court Ordered Mediation

Begin Claim Construction and Fact Discovery

File and Serve Complaint

Summary Judgment

Trial

Conduct Expert Discovery

Court Issues Scheduling Order


The Civil CoverSheet

The Complaint Exhibits


Prior to the Federal Rules, complainants were required to plead particular facts and elements of their asserted claims. This was known as “fact pleading.”

Under the Federal Rules, a complainant is only required to plead those facts needed to place the defendant on notice of the key elements of the asserted claims. This is known as “notice pleading.”

The Complaint: Four Requirements for Patent Infringement Complaints

1. Allegation of jurisdiction & venue;

2. Statement of patent ownership;

3. Statement of patent infringement by the defendant; and

4. Demand for relief.

Requirement 1: Jurisdiction(관할권) and Venue(재판지)

Civil Complaint, LG.Philips LCD Co., Ltd vs. Chi Mei Optoelectronics, et al., CV 06-726 (D. Del. Dec. 1, 2006)

Requirement 1: Jurisdiction and Venue

Jurisdiction relates to the ability or power of a court to hear the case. There are two forms of jurisdiction:

Subject Matter Jurisdiction – the jurisdiction of the Court to make decisions on the subject matter at hand; and

Personal Jurisdiction – the jurisdiction of the Court over the Party, also known as in personam jurisdiction.

Venue concerns the proper location for the lawsuit.

In order for a patent infringement complaint to proceed, the court must be assured that it has both personal and subject matter jurisdiction.

Requirement 1: Jurisdiction and VenueSpecific Jurisdiction : Second form of Personal Jurisdiction

There is a two-part test for determining whether a non-resident is subject to specific jurisdiction:

Do the infringer’s actions fall within the applicable state long-arm statute?

Does the exercise of jurisdiction over the accused infringer comport with “due process”?

Requirement 1: Jurisdiction and Venue Jurisdiction: Summary

Jurisdiction

Subject MatterJurisdiction

28 USC § 1338(a) – Patent Claims28 USC § 2201 – Decl. Judg. Claims

PersonalJurisdiction

GeneralJurisdiction

SpecificJurisdiction

“Continuous andSystematic Contacts”

-- long arm statute-- due process

one theory: “establisheddistribution channel”

Remember: a U.S. District Courtmust have both subject matterjurisdiction over the claim and personal jurisdiction over the

defendant


Requirement 2: Statement of Patent Ownership

A patent case cannot proceed without all the patent owners joined in the case.

An “owner” includes all of the following: Patentee; Assignee; and An exclusive licensee with substantial rights in the patent.

A patent owner that cannot be found or that does not consent may be involuntarily joined. SeeFederal Rule 19(a).

Requirement 2: Statement of Patent Ownership

Requirement 3 – Statement of Patent Infringement


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Requirement 3 – Statement of Patent Infringement

Requirement 3 – the complaint must identify the alleged infringing conduct (e.g., direct infringement, inducing infringement, contributory infringement).

Direct infringement: “Except as otherwise provided in this title, 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, infringes the patent.” 35 U.S.C. § 271(a) (emphasis added).

Active Inducement: “Whoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b); see also 35 U.S.C. § 271(c) (addressing liability for contributory infringement).

Requirement 4 –Demand for Relief


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Requirement 4 – Demand for Relief

A patentee is entitled to recover damages adequate to compensate for the infringement, but in no event less than a reasonable royalty. 35 U.S.C. § 284.

Current theories of recovery: Lost profits Price erosion Reasonable royalty Entire market value rule/ convoyed sales

The complaint need not identify the specific theory or analysis supporting its claim for damages.

Requirement 4 – Demand for Relief

Injunction

U.S. District Courts have the discretion to "grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." 35 U.S.C. § 283.

Such an injunction may be sought both post-trial or upon an earlier motion for preliminary injunction.


Service of Process (송달)


Claim Construction






Summary Judgment

Trial



Service of Process

What is “Service of Process”?

Practically, “service of process” is the delivery of a copy of the complaint and a summons (issued by the Court) to the defendant.

Historically, “service of process” is the formal action by which the Court exercised jurisdiction over the defendant, “summoning” the person to appear and answer the claims.

The complaint must be served on the defendant within 120 days after filing the action or the case will be dismissed with leave to re-file.

Federal Rule 4(m).

Service of Process

“Service of Process” on a U.S. corporation can be accomplished by:

Delivery to an officer, managing agent or general agent;

Delivery to agent appointed to receive service of process;

In a manner specifically authorized by Federal Law; or Waiver, if the defendant elects to waive service

(typically in exchange for an extension of time to respond)See Federal Rule 4(h)

Service of Process: Foreign Service

For foreign defendants, service of process must be accomplished by:

internationally agreed means, e.g., the Hague Convention;

as prescribed by the law of the foreign party’s domicile;

pursuant to letter rogatory; or as ordered by the Court.

Federal Rule 4(f).

Service of Process: Hague Convention

The Hague Convention is the common method for serving parties located outside the U.S.

Federal Rule 4(f) specifically incorporates the Hague Convention as a proper method of service upon individuals in foreign countries.

If the defendant’s country does not recognize service through the Hague convention (e.g., Taiwan), request the court to issue a letters rogatory or a Letter of Request.


Answer / Rule 12 Motion


Claim Construction






Summary Judgment

Trial



What is an “Answer”?

Sample Cover Pageof

Answer


A defendant must “answer” or “respond” to the complaint within 20 days of service, unless a longer time period is agreed upon. Federal Rule 12(a)(1)(A)(i). Extensions may be granted in connection with the defendants’

agreement to waive service of process. Extensions of 30 to 45 days are also often granted as a matter of

common courtesy to the opposing party. Further, if the plaintiff declines a request for a reasonable

extension, the defendant may apply to the Court for a reasonableextension of time to answer or respond. Federal Rule 6(b).


What is an answer? See Federal Rule 8. An answer is a pleading, which provides the

party's "answer" to each allegation stated in the complaint.

The defendant commonly indicates whether the allegation is "admitted" or "denied." Federal Rule 8(b).

“A denial must fairly respond to the substance of the allegations.

Failure to deny an allegation is an admission. Federal Rule 8(b)(6).

Rule 12 Responses: Overview

The grounds for moving to dismiss under Rule 12 include: lack of subject matter jurisdiction; lack of personal jurisdiction; improper venue; improper service; insufficient service; and failure to state a claim.

Counterclaims and Crossclaims: Federal Rule 13

Counterclaims: A defendant must assert any counterclaims that “arise out

of the transaction or occurrence that is the subject matter of the opposing party’s claim.” Federal Rule 13(1)(A). Failure to plead such a claim may result in the loss of the claim.

A defendant may also assert any other claims over which the Court otherwise has jurisdiction, e.g., asserting counter-claims for patent infringement, a counterclaim for declaratory judgment that the plaintiff’s patents are invalid or not-infringed, or a counterclaim of patent misuse.

Plaintiff’s “Reply” to the answer or counterclaim is due within 20 days of service. Federal Rule 12(a)(1)(B).


Mediation / Arbitration


Claim Construction






Summary Judgment

Trial



Mediation / Arbitration Mediation(조정)

Non-binding Neutral 3rd party tries to facilitate settlement

Arbitration(중재) Binding or non-binding (usually binding unless specified) Like a trial, but no jury Typically faster, cheaper, and more flexible than litigation Reviewable by the District Court

Great deference given to the arbitrator(s) Limited grounds for appeal, whether under the Federal Arbitration

Act or the New York Convention

Mediation

In mediation, parties negotiate with each other in order to reach a settlement. A mediator assists both parties to make communication more effective.

Mediation can resolve the problem quickly.

Mediation process does not cost much.

Mediation can produce better results because resolutions are created by the involved parties.

Potential Benefits ofArbitration

Arbitrations can take less time than court actions.

Unlike district court trials (which are typically open to the public), arbitration proceedings are typically confidential.

The American Arbitration Association has established a National Panel of Patent Arbitrators, which includes "individuals having experience in patent law and/or special technical expertise.” This could result in fairer judgments.


Discovery


Claim Construction






Summary Judgment

Trial



Discovery: Overview

Discovery in the United States is unique.

In the United States, discovery is mostly performed by the litigating parties themselves, with relatively minimal judicial oversight.

Required by the U.S. Federal Rules of Civil Procedure

Applies to all parties in litigation, including foreign companies

Parties who do not comply with discovery requests can be “sanctioned” by the Court

Discovery: Overview

The Purpose of Discovery in Civil Cases

The discovery procedures set forth in the Federal Rules of Civil Procedure seek to further the interests of justice by minimizing surprise at trial and ensuring wide-ranging discovery of information.

To that end, Federal Rule 26(b)(1) permits discovery “regarding any nonprivileged matter that is relevant to any party’s claim or defense. . . . Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

Obtain evidence in support of case. Assess the strengths or weaknesses of an

opponent’s case and your own case. Narrow the issues. Perpetuate testimony and evidence. Determine whether case should be settled.

The Purpose of Discovery in Civil Cases

Common Stages of Discovery Process:Preparation for Discovery

Preservation Efforts, Internal “Litigation Hold” Letter Identifying Potentially Discoverable Data and Things

(discussed further below) Initial Collection of Potentially Discoverable Data and

Things Rule 26(f) Scheduling Conference Initial Disclosures Issue and Receive Document Requests Issue initial interrogatories, seeking information

regarding location of documents, company structure, defense, etc.

Overview of Common Issues in U.S. Federal Civil Discovery

Overview of types of discovery, e.g., document requests (also known as requests for production), interrogatories, depositions

Preservation of Evidence E-Discovery: what is discoverable? Protecting Privileged Communications

Examples of Types of Discovery

Initial Disclosures Requests for Production Interrogatories Requests for Admission Depositions Third-Party Discovery

Responses to document requests are due within thirty (30) days of service of the request. It is important to begin identifying and preserving potentially

discoverable documents before receiving discovery requests.

Although parties often agree to extensions of time for production of documents, being in a position to produce as scheduled by the Rules provides several advantages: stronger negotiating position on discovery and other issues;

better understanding of one’s own case; and

superior position in the event of opportunity to move to compel (and for recovery of costs and expenses).

Rule 34 – Requests for Production:Importance of Timing

Rule 34 – Requests for Production: What Kind of “Documents” are Discoverable?

Paper Documents files reports emails memos notes recordings etc.

Electronic data is also discoverable, as discussed further below.

Examples of Types of Discovery: Rule 30 – Party Depositions

Permissible Uses: Notices of deposition to

particular persons, e.g., company employees familiar with important facts.

Notices of deposition pursuant to Rule 30(b)(6) – corporate designees.

Rule 30 Depositions:Depositions in Personal Capacity

A party may ask for the deposition of specific company employees or agents. That deposition will be in the employee’s personal capacity.

This means the person need only testify regarding his or her personal knowledge.

Further, the answer usually will not be imputed to the company.

In addition, the person is not technically obligated to prepare for the deposition. Lack of knowledge is a fair and defensible reason for not being able to answer a question.

The 30(b)(6) Deposition:Corporate Representatives

Federal Rule 30(b)(6) Notice or Subpoena Directed to an Organization. “In its notice or subpoena, a party may name as the

deponent a public or private corporation, . . . and must describe with reasonable particularity the matters for examination.”

“The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify.”

“The persons designated must testify about information known or reasonably available to the organization.”

A party may use Rule 30(b)(6) to ask for the deposition of the company itself. The 30(b)(6) notice will identify topics on which testimony is sought.

In this case, the company is obliged to designate a person to answer questions on its behalf regarding those topics. These persons are called Rule 30(b)(6) designees.

The 30(b)(6) Deposition:Corporate Representatives

Examples of Types of Discovery: Rule 45 – Non-Party Subpoena

Can subpoena documents or testimony from non-parties.

Non-party witnesses need not be located in district where action is pending.

Non-party could seek relief from the local court.


Claim Construction






Summary Judgment

Trial



Expert Discovery: Background

A party may retain an expert witness to present testimony or opinions. Federal Rule of Evidence 702 provides that:

“If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.”

Expert Discovery: Background

In contrast to fact witnesses, an expert may provide testimony regarding the ultimate issues in the case, such as infringement, invalidity, and enforceability.

Federal Rule of Evidence 704 provides that “testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.”

Although the party is not technically bound by the admissions of its experts, as with a 30(b)(6) deponent, it is very difficult to escape admissions of unfavorable experts.

Preservation and Production: Why it is Important

Ensure superior negotiation position Avoid Sanctions Avoid Adverse Inference Instructions Avoid potential Dismissal of Claims or

Defenses

Preserving and Protecting the Attorney Client Privilege: What are the Privileges?

“Privileges” refers to the collective legal doctrines that protect the confidentiality of communications, documents, or other tangible material, specifically the “Attorney-Client Privilege” and the “Work Product Doctrine.”

Attorney-Client privileged communications are not subject to discovery, whether through document requests, interrogatories, depositions, or any other form. In contrast, privileged work product may be discoverable, if the opposing party makes a showing of significant hardship.

Avoiding Discovery Problems

Implement timely litigation holds Develop a discovery plan with counsel Develop a preservation plan with counsel Review Organizational Chart: identify

potential repositories of discoverable data Review existing retention and email policies When are documents destroyed? How often are e-mails deleted? Discuss backup tape recycling What do employees save locally?

Discovery:Conclusion

Thorough and accurate collection of discoverable information is important to the success of any litigation.

Today, discovery also includes all forms of electronic data.

Discovery can be burdensome but it also can be an extremely helpful tool in the litigation.


Local Rules

Local Procedural Rules

In addition to the Federal Rules of Civil Procedure, each district court, acting by a majority of its district judges, may adopt and amend rules governing its practice.

A local rule must be consistent with — but not duplicative of — federal statutes and rules. Federal Rule 83.

The authority to create Local Rules includes Patent Local Rules.


Claim Construction


Claim Construction






Summary Judgment

Trial



Claim Construction: Purpose

The purpose and goal of claim construction are to provide the trier of fact (usually the jury) with clear instructions for deciding whether a claim is infringed.

“Claim Construction”: the Process of Defining the Terms Used in the Patent Claims

Claim construction usually occurs at the end of fact discovery but before expert reports are due.

Local patent rules are used to structure the claims construction (Markman) process.

Claim Construction: Purpose

Considered the most important part of patent infringement litigation, because claim construction is the process by which the asserted claims are construed. A question of law Decided by judge, not jury

Appealed to the Federal Circuit for a de novoreview (which means the appellate court reviews the issue objectively, without giving any weight or preference to the decision reached by the Court below).


Summary Judgment


Claim Construction






Summary Judgment

Trial



Summary Judgment – Purpose

Summary judgment is used to resolve issues before trial. It allows the court to apply the law to undisputed facts and render a decision as a matter of law.

Any evidence that would be admissible at trial under the rules of evidence may support a motion for summary judgment.

Summary Judgment:Legal Standard

Summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

Federal Rule 56(c) (emphasis added).

Summary Judgment:Legal Standard

Summary judgment evidence and any inferences that may be drawn from the evidence are considered in the light most favorable to the non-movant.

If the movant can identify grounds that show the absence of a genuine issue of material fact, the burden shifts to the non-movant to present evidence that a genuine issue of fact does exist.

Summary Judgment:Timing

Courts have authority to control the scheduling and may incorporate summary judgment deadlines into the case management order.

Summary Judgment before a Markman ruling is possible.

Schoenhaus v. Genesco (Fed. Cir. March 15, 2006) (court affirmed a summary judgment of non-infringement where the lower court did not expressly construe claim limitations).

Summary Judgment – Potential Grounds

Infringement / Non-Infringement Literal Doctrine of Equivalents (insubstantial differences) Direct and indirect (inducement and contributory)

Invalidity High burden (clear and convincing evidence) Lack of Novelty, Obviousness and/or Insufficient disclosure

Unenforceability Inequitable conduct – failure to disclose material information or

affirmative misrepresentation Patent misuse – using the patent for improper purposes Laches – unreasonable delay and prejudice Equitable estoppel – misleading conduct, reliance and prejudice

Summary Judgment – Potential Grounds

License Defense Demonstrate that alleged infringing products are under license Reduces or eliminates damages

Lack of Standing Demonstrate the plaintiff does not have sufficient ownership interest to

assert the patents May result in dismiss of lawsuit

Patent Exhaustion Demonstrate that the alleged infringing products were made “under

authority” of the patents, thereby exhausting the plaintiff’s patent rights Reduces or eliminates damages


Trial


Claim Construction






Summary Judgment

Trial



Trial The Federal Rules, the local rules, and the Court’s pre-

trial conference will set forth specific guidelines for trial, including, for example:

The amount of time allocated each party; Rulings on requests to exclude certain evidence; The number of permitted witnesses; Potential bifurcation of the trial, for example bifurcation

of the issues of liability and damages; Limits on the deposition testimony to be played; and Rulings on summary judgment motions, which may

limit the issues to be tried.

Jury Selection

Jury Summons

美수정헌법제6조에근거하여, 18세

이상의미국시민은배심원의의무를

가진다. 배심원후보는대개선거인

명부에서선발되며, 배심원출두통지서

(Jury Summons)를받게되면다른

배심원후보들과해당법원에출두하여

배심원심사(Voir Dire)과정을거쳐서

최종배심원으로선발된다.

Jury Selection

Voir Dire (Jury Selection : 배심원선발절차)

Trial 에서 Juror는평결을결정한다.

따라서소송당사자및변호사들은

자신들에게편견을가지거나그럴

가능성이있는배심원들이배심원단에

포함되지않도록각별히주의를

기울인다. 법적절차에따라, 변호사들은

배심원후보들에게이러한사실을

확인하기위해질문을하게되는데, 이를

Voir Dire Question (Jury Selection

Question)이라고한다.

Witness Testimony

Verdict

TrialIn conclusion of this presentation, following is a 17-minute video, prepared by the Federal Judicial Center, and designed to be shown to jurors in patent jury trials. It contains background information intended to help jurors understand what patents are, why they are needed, how inventors get them, the role of the Patent and Trademark Office, and why disputes over patents arise.

This video, entitled “An Introduction to the Patent System,”was developed with the assistance of an advisory committee of district judges and patent attorneys. It is frequently played for patent juries prior to opening statements in a trial.

U.S. Patent Infringement Litigation

Conclusion, Comments, Questions