Although the recently enacted America Invents Act (AIA) significantly alters the ground rules for obtaining patents, it has a smaller—but still noticeable— impact on patent litigation. The adjustments are modest, but patent owners and potential defendants should be aware of what the AIA does and does not change about the enforcement process. In particular, four litigation-related aspects of the AIA are worth considering when deciding how to enforce patent rights or defend against patent claims.
1. The Anti-Joinder rule
Nothing in the AIA changes the fact that patents are property rights that can be enforced against infringers in federal court in any state where the accused products are sold.
The AIA does take one tool out of the arsenal of patent plaintiffs, a tool often favored by non-practicing entities: the ability to join multiple unrelated defendants together in the same suit. The AIA’s anti-joinder provision forces patent owners to file a separate case and pay a separate $350 filing fee against each accused infringer. However, courts can still consolidate these cases together for discovery and other pretrial purposes, so most patentees will still be able to sue multiple targets at the same time.
2. Advice of counsel still matters
The AIA prohibits patent owners from relying on a defendant’s failure to obtain a legal opinion about an asserted patent as proof the defendant infringed willfully. Companies accused of infringement or aware of a potential claim should nevertheless consult experienced patent counsel, because such advice can still offer significant protections.
First, failure to obtain a legal opinion might still be construed as a factor the jury can consider, as long as it is not the sole basis for a finding of willful infringement. An earlier draft of the AIA would have ruled the lack of an opinion out even as a factor. The final language, however, is not as clear.
Second, defendants will still benefit at times from introducing legal opinions even though no inference can be taken from their absence. Jurors may feel that any infringement was inadvertent if a competent legal opinion letter was obtained before the company rolled out the disputed product.
Third, even if a jury finds willfulness, a well-reasoned opinion of counsel can still persuade the judge not to impose sanctions. Judges have discretion to increase damages awards up to three times and require the willful infringer to pay plaintiff’s legal fees, but they often don’t, particularly if the defendant shows it relied on competent legal advice. Nothing in the AIA changes the judge’s discretion on this issue.
Fourth, recent case law makes opinions an important shield against claims of inducing infringement—a common theory for plaintiffs asserting patents that cover methods rather than products.
Finally, getting advice from experienced counsel can often help companies avoid patent litigation in the first place. For example, patent attorneys can suggest ways to design around the patent. Courts have long endorsed such patent avoidance steps as socially desirable in enhancing competition and nothing in the AIA changes that principle.
3. Inter partes re-examination: An evolving defense strategy
Re-examination is a way to challenge a patent in the Patent and Trademark Office (PTO) by showing, based on prior art, that the patent should never have been issued. It can be done ex parte, with the challenger having no input apart from filing the initial request, or inter partes, where the challenger participates throughout the process, calling attention to flaws in the patent owner’s arguments.
Inter partes re-examination can be more effective. Statistics show a higher rate of patent cancellations and a higher number of stays in which patent litigation is put on hold for a couple of years while the PTO decides the re-examination. But it can also complicate settlement negotiations, because the challenge cannot easily be withdrawn.
In September 2012, the AIA will replace inter partes re-examination with something called inter partes review, which is designed to remedy this and other limitations. However, inter partes review will not be an option for defendants seeking to challenge patents that had been asserted against them before the AIA became law on Sept. 16.
In the meantime, inter partes re-exam remains an important defense tool. If brought promptly after (or better yet, before) a suit is filed, a re-exam request can sometimes result in a stay of the litigation, allowing a defendant to challenge the patent first in the PTO before going back, if necessary, to court.
Note that the AIA will bar parties that file declaratory judgment (DJ) complaints from later filing for inter partes review of those same patents. It will likewise allow patent owners to stay DJ actions filed after an inter partes review request. No such restrictions apply to inter partes re-examination.
4. The AIA creates a limited prior commercial use defense
Under the AIA, a defendant can rebut certain infringement claims by showing it had been using the accused technology before the patent owner, even if that activity did not technically qualify as prior art. While this prior commercial use defense could prove strategically important, its value is constrained by numerous exceptions and caveats. For instance:
- The prior use must have been in the U.S. or connected to a sale in the U.S.
- The prior use must have been more than one year before the effective filing date of the patent application
- The defense will only apply to patents issued after the AIA’s enactment
- The defense will not apply to patents originally owned by universities
- The defendant must provide “clear and convincing evidence” documenting the prior use
With so many restrictions, in-house counsel should closely scrutinize any suggestion from litigation counsel that they intend to rely heavily on a prior commercial use defense.
Still, similar prior use evidence can bolster the case that the claims are invalid as obvious even though the prior use may not itself technically qualify as prior art. While defendants must prove obviousness by clear and convincing evidence, the other caveats above generally do not apply. Thus, this existing strategy may prove preferable to the new defense the AIA creates.