PATENT INFRINGEMENT: JUST HOW COMMON IS IT?

Information may not be reliable

In one word: very!

It is often said that “great minds think alike.” While that may prove innocuous in a general sense, it can easily lead to unlawful infringement in the patent world. Whether intentional or accidental, patent infringement is a common occurrence, and infringement litigation has been steadily increasing over the past five years. To grasp how commonly infringement occurs, it is necessary to understand what infringement is, and how it happens.

INFRINGEMENT: THE LAW

Patents in the United States are governed by Title 35 of the Code of Laws of the United States, more commonly known as the U.S. Code. According to chapter 28, section 271, patent infringement occurs when one who, without authority, makes, uses, offers to sell or sells any patent invention within the United States or imports into the United States any patent invention during the term of the patent. Any person who does so is liable as a patent infringer. 

INTENTIONAL INFRINGEMENT

There are two main types of infringement: Intentional Infringement and Unintentional infringement. Intentional infringement, also known as willful infringement, as the name implies, occurs when someone deliberately and intentionally copies a claimed invention with the knowledge that a patent for that product or process exists. For example, if a company that manufactures cell phones knowingly copies an existing patent for a cell phone screen that cannot be cracked, and manufactures phones containing that screen, a willful infringement occurs. If the patent holder proves infringement, they will be awarded reasonable damages based on sales of the infringing product. If the patent holder proves the infringer willfully committed infringement, substantial punitive damages may be awarded. However, proving willful infringement is very difficult.

UNINTENTIONAL INFRINGEMENT

Unlike willful patent infringement, unintentional patent infringement occurs when a product or process has been developed that infringes on an existing patent, but the developer lacked knowledge of the patent’s existence. You may be thinking, “how could someone come up with the same idea as another inventor? It must be extremely rare.” Interestingly, unintentional infringement occurs with great frequency. As the global economic market became more interconnected over the second half of the twentieth century, businesses providing the same products and services began competing against each other.

Using the same cell phone example, a cell phone manufacturer in China spends several years developing a new type of indestructible cell phone screen and places the product into the international marketplace for sale in Europe and North America. Unbeknownst to the Chinese manufacturer, two years earlier, a German mobile company had the same idea and developed its own screen containing the same composite materials and manufacturing process. The German company applied for and received a patent for its product one year before the Chinese manufacturer patenting its product in China. The Chinese manufacturer has unintentionally infringed on the German patent. 

Examples of this kind can occur frequently with companies engaged in the same type of product development. If you consider the process of developing technology for market, it isn’t that surprising. Two international manufacturers of cell phone technology employ scientists and engineers in their own research and development departments. These technocrats possess similar degrees and professional backgrounds, and they utilize similar processes to identify a common problem in the mobile industry: easily cracked screens. Using their expertise, these experts identified the same material and manufacturing process to solve the problem. 

A prudent company should seek a “freedom to operate” opinion from a patent attorney before bringing a new product to market. However, in reality the rush to get new products to market often takes precedence over ensuring the patentability of a product. Seeking to capitalize on a void in the marketplace, many companies adopt an attitude of “get the product on the shelves, and let the lawyers sort out the consequences.” Despite the accidental nature of the example infringement, the Chinese company will be required to pay damages, though punitive damages are not applicable.

CONTRIBUTORY INFRINGEMENT

Contributory infringement involves actions that contribute, or potentially contribute, to someone infringing on a patent, even if those actions do not directly infringe upon the patent. Importantly, the infringer must have knowledge of the patent to be liable for contributory infringement. Generally, there are three categories of contributory infringement:

(1) supplying a product for which the only reasonable use is an infringing use;

(2) supplying a product that is not a “staple commercial product” and the supplier had reason to believe the product would be used as part of an infringing use, and

(3) the supplied product includes instructions or an advertisement that suggests an infringing use for the product.

For example, a person would be guilty of contributory infringement for supplying a component for a cell phone camera that has no other reasonable use except for in a process that is patented by Apple for its iPhones.

INDUCEMENT

Section 271(b) of the Code provides that “whoever actively induces the infringement of a patent shall be liable as an infringer.”  The Code defines “induce” as leading on, influencing, to prevail upon, or to move by persuasion or influence. To prove inducement, a patent owner must show that the accused infringer actively encouraged the infringement, with knowledge that the acts they induced infringed upon a patent. To prove infringement by inducement, the patent holder must show that the defendant knew the intended induced acts were infringing upon a patent.

DOCTRINE OF EQUIVALENTS

Under the Doctrine of Equivalents, an accused product or process may be found to infringe on an existing patent, even if it does not literally infringe on the patent. To determine infringement under this theory, the courts will consider whether the accused product or process contains elements identical or equivalent to each claimed element in a patented invention. The purpose of the Doctrine is to prevent an infringer from stealing the benefit of a patented invention by making minor or insubstantial changes to the claimed invention while retaining key components or characteristics that are central to the patented function.

INFRINGEMENT: OTHER TYPES

UNKNOWN INFRINGEMENT

Unknown infringement occurs when a patent holder is unaware that one of its patents is being infringed. To enforce a patent, the burden is on the patent holder to identify infringing products. Unknown infringement most often occurs when an inventor provides access to his invention to a prospective buyer, who declines to purchase the patent, but subsequently brings a new product to market utilizing the patent. 

UNVIABLE INFRINGEMENT

Unviable infringement occurs when a known infringement occurs, but it is not worth the financial cost to litigate the issue because the patent is not valuable enough to justify the cost. Unviable infringement occurs more frequently than unknown infringement.

UNENFORCEABLE INFRINGEMENT

United States patent laws only have effect within the United States. Thus, when a foreign corporation introduces a product or process that infringes on a U.S.-held patent, the patent owner has no recourse unless the invention was also patented in the country where the product was sold.

LEGAL INFRINGEMENT

Using the example of the Chinese manufacturer, the company could have avoided infringing on the German patent if they would have obtained a license to use the patent from the German company. A licensing agreement allows a manufacturer to utilize the patented information in exchange for a royalty based on sales of the product or a set fee. This is a form of legal infringement.

FINAL THOUGHTS

Though it takes many forms, patent infringement is a surprisingly common occurrence. As a result, a patent holder would be wise to remain vigilant in watching for potential infringers and would do well to file patents in other jurisdictions where it appears their patent could be useful. 

The core team of patent consultants at Vitek IP, LLC have analyzed over 20,000 patents, while managing hundreds of buy-side and sell-side transactions for some of the world’s largest companies. Vitek’s founders have over five decades of experience in IP and tech and have developed sophisticated patent sales and patent acquisitions strategies for some of the world’s largest companies. Vitek’s patent consultancy, brokerage group, and research organization provide clients exceptional guidance navigating the patent landscape. For more information, visit www.vitek-ip.com.