Recent Developments in Patent Law

April 06, 2017

Changes in patent law have made patent infringement cases more favorable to defendants.

…First, the America Invents Act (AIA) makes post-grant review proceedings available to challenge the validity of patents at a fraction of what it would cost to defend an infringement action in federal court. While a challenger must pay a significant fee to institute IPR proceedings (up to $30,000), post-grant review proceedings are fast and generally required to be completed within one year of commencement. Moreover, unlike conventional reexaminations, post-grant review can be sought on any grounds that can be used to challenge the validity of a patent, with the exception of failure to disclose the best mode. Thus, post-grant review can challenge validity based on evidence of public use, on-sale activity, and lack of compliance of written description, enablement or patent eligibility requirements.

…Second, recent Supreme Court decisions have made it harder for plaintiffs to win patent cases.  Historically, plaintiffs could prove inducement of infringement if one defendant performed at least one of the steps protected by a patent while another defendant or entity (encouraged or instructed by the first) performs the rest of the steps. In Limelight Networks v. Akamai Technologies, however, the Supreme Court rejected this “joint infringement” theory. Now, no company can be liable for inducement if no party has directly infringed at least one claim of the patent.

…Third, the Supreme Court has made it easier for prevailing parties to recover their attorney fees in patent cases. By statute, courts can award attorneys’ fees in “exceptional cases,” but until recently, that standard could only be met if the case was both “objectively baseless” and brought in subjective bad faith; i.e., so unreasonable that no reasonable litigant could believe it would succeed. Parties also had to prove misconduct by “clear and convincing evidence.” In 2014, however, the Supreme Court rejected this dual requirement. Now, an “exceptional case” is simply one that “stands out from the others with respect to the substantive strength of a party’s litigating position considering both the governing law and the facts of the case.” In addition, a court need not determine that the misconduct be independently sanctionable under any rule or standard in order to award fees.

…Finally, under current Federal Circuit authority, the general venue statute, 28 U.S.C. §1391(c), applies to patent cases and, thus, venue in patent cases is appropriate wherever the accused infringer is subject to personal jurisdiction at the time the action is commenced. However, this historical position is in jeopardy and is currently under review by the Supreme Court in TC Heartland LLC v. Kraft Food Brands Group LLC, 196 L. Ed. 2d 490 (Dec. 14, 2016).  If this historical position is overruled, and if the definition of “resides” in §1391(c) is held not to apply to patent cases, then the sole venue in patent cases will be the venue where the defendant has committed alleged acts of infringement and has a regular and established place of business, which should significantly reduce the inconvenience and litigation expenses of accused infringers.