The ultimate effect of the Halo decision is likely to be frequent willfulness challenges that survive summary judgment and are submitted to a jury.
In light of the recent Alice decision and patent-eligibility, patent validity, and patent reform, there are several important issues involving post-Halo cases and functional claiming that need attention.
Rachel Elsby, an attorney in Akin Gump’s intellectual property practice sat down with IPWatchdog to discuss the issues involving post-Halo cases. In her career, Elsby focuses on complex patent litigation, IP counseling and IP transactions, with an emphasis on biological and chemical technologies.
By removing the requirement that patentees show an infringer acted with objective recklessness and lowering the evidentiary burden placed on patentees to prove willfulness, the Supreme Court’s Halo decision relaxed the standards for patentees to make a case for enhanced damages. Specifically, the decision increased the range of behavior for which willfulness may be found, provided greater discretion to district court judges to award enhanced damages, and simplified the applicable appellate standard of review to abuse of discretion. Additionally, the Supreme Court rejected the notion that defenses developed during litigation can negate willful behavior.
“The ultimate effect of the Halo decision is likely to be more frequent willfulness challenges that survive summary judgment and are submitted to a jury,” explained Elsby. “As a result, patentees are being forced to rethink litigation strategies to ensure that willfulness is addressed at the pleading stage and to ensure that sufficient evidence is obtained through discovery to prove that the infringer engaged in egregious misconduct.”
At a minimum, according to Elsby, patentees should have a reasonable basis for pleading that an accused infringer possessed pre-suit knowledge of the patent, and will be able to identify facts indicating the accused infringer’s conduct went beyond typical infringement. Due to the renewed emphasis on pre-suit knowledge of the patents, patentees need to consider whether they are adequately putting competitors on notice of their patents through marking, correspondence to the patents in published materials or through other methods.
Not to mention, parties who may be subject to infringement suits must consider how to best defend themselves against accusations of willfulness in advance of litigation, per Elsby. One impact the Halo decision may have on accused infringers is a renewed emphasis on seeking opinions of counsel to counter accusations of egregious conduct. So, they must weigh the benefits of getting an opinion of counsel against the potential impact an opinion of counsel may have on the attorney-client privilege.
Today, willful infringement and functional claiming are two very different issues. In fact, section 284 of the Patent Act provides that a court may increase damages awarded for infringement up to three times the amount found or assessed. Long ago, the Federal Circuit held that awards of enhanced damages require a showing of willful infringement. According to Elsby, in its en banc decision in re Seagate, the Federal Circuit reaffirmed that requirement, and established a two-part test for willfulness that required an objective showing of recklessness and a subjective showing that the infringer knew or should have known of the risk of infringement.
“One way in which claims may contain functional limitations is when they include means-plus-function limitations,” she explained. “Means-plus-function limitations are expressly provided for in Section 112(f), which provides that an element in a claim for a combination may be expressed a s a means or step for performing a specified function without the recital of structure…”
In addition, section 112(f) provides that such a claim be construed to cover the structure, material, or acts described in the specification and equivalents thereof, meaning that claim limitations using means-plus-function language are construed to cover those structures which are disclosed in the patent.
“The use of functional claim language that falls outside the strict disclosure requirements of Section 112(f) has the benefit of creating potentially broader coverage because those claims can cover multiple structures so long as the structures are configured to perform the claimed functions,” Elsby said. “The downside to broad functional claiming is the heightened susceptibility to invalidity challenges. The most common challenges to this sort of functional claiming arise under Section 112.”
Right now, there are several key issues involving functional claiming post-Alice that are of great concern to inside counsel. In fact, the Supreme Court’s decision in Alice, and its predecessor cases such as Benson and Flook, highlighted the difficulties associated with functional claiming, particularly in the software arts. The recent Alice decision confirmed that claims drawn to mathematical algorithms constitute patent ineligible, abstract ideas.
“Meanwhile, the Federal Circuit has held that functional claims involving computer-implemented inventions require the disclosure of an algorithm to satisfy the indefiniteness requirement when the structure that performs the function is a general-purpose computer or microprocessor,” she said. “Thus, patent applicants must take care to disclose sufficient ‘structure’ under the requirements of Section 112, while also distinguishing the limitations of the claim from routine or conventional uses of the internet to meet the requirements of Section 101.”
The Federal Circuit’s 2015 decision in Williamson increased the likelihood that functional claims will be subject to invalidity challenges in litigation. In that decision, the en banc Federal Circuit overruled prior precedent and held that functional claims that omit the word “means” would no longer be entitled to a strong presumption that Section 112, paragraph 6, now Section 112(f) does not apply. So, the immediate effect of the Williamson decision is likely to be a period of uncertainty for patentees, per Elsby. As for patents that were already issued under prior precedent, it is too late for the patentee to go back and add structure to the specification to comply with Section 112(f) or to rewrite claims.
Elsby added, “Looking ahead, uncertainty is also a concern. By removing the import of the word ‘means,’ the Williamson decision creates an environment in which it may be difficult for patentees to determine whether claims will be construed under Section 112(f) going forward.”