Welcome to part four of Patent Law. And this part we're going to talk about how to enforce, or avoid a patent. So our agenda is to do the following, we're going to talk a little bit about strategy. Because above all, whether to enforce a patent, not enforce a patent or whether to take a license on a patent or try to fight a patent infringement law suit, is really all about strategy. And it's about understanding the odds, understanding the mechanics which is the next part we're going to talk about. Then we're going to talk about the basics of what patent infringement means, what does it mean to actually infringe a patent? How do you analyze that? I have a case study involving something that many of you may know about which is the Super Soaker squirt gun. And the patent infringement lawsuit involving that toy. Then we're going to talk briefly about the doctrine of equivalents which is a part of the patent infringement analysis. It's an important part, not one that is particularly successful all the time for patentees, but it does raise a fair amount of questions about patent infringement. And then finally, we're going to talk about remedies. What happens if there is a finding of patent infringement? Both in terms of the patentee and in terms of somebody who might be found to be infringing. So we're going to do all of that over the next several segments. So let's talk about strategy first. So a patent, it's very important to understand, is really just a hunting license. And by that I mean that nobody is going to enforce your patent for you. You have to decide, you, the patentee make the decisions about enforcement. The government isn't going to enforce for you, a third party's not going to enforce for you. You need to make the decision about how and when and where to enforce your patent. And how much the rewards are for enforcing your patent really vary tremendously, depending on a lot of factors. So it depends on the patent, how important is your patent? What is the industry? Is it a patent that's going to read on important products that have a lot of financial success behind them? Or is it in a smaller industry where there's not a lot of money available? Some of its going to depend on the patentee him or herself. Do you have the resources to try to enforce the patent to higher attorneys to either assert a patent infringement lawsuit? Or at least send letters to people you think might be in infringing the pattern telling them to stop or to take a license? And all of those costs are borne by the patentee, the patentee is going to make these choices and bear the cost. Now, the defendant if it goes to litigation is going to bear costs as well. But the costs are private, primarily, I mean, there's certainly costs associated with running the court system that the government will take care of. But in general, the costs of patent enforcement are borne by private parties. It's a private system, and it is just a hunting license, it is not something that you automatically get. So it's also a hunting license that can revoked. So the invalidity of the patent as we talked about earlier in this course, is a defense to patent infringement. And in fact it's a defense that's raised in almost every patent infringement case. So it's very typical that if I as a patentee file a lawsuit against a potential defendant or a defendant in a patent infringement case. That defendant, that potential infringer will respond not only by saying I don't infringe, but also by saying my patent is invalid. And then we're going to have essentially two trials in one, for a patent lawsuit which is a trial both on whether somebody is infringing my patent as well as a trial on my patent. A trial about whether my patent meets the standards of validity that we talked about earlier in the course. And this is not merely a hypothetical, because by most estimates about 25 to 40% of patents that end up getting asserted in litigation are in fact found invalid during that litigation. So patent litigation is a particularly interesting area, because it's one of the very few areas of patent litigation that you can end up far worse off than where you started as the patentee. It would almost be as if you owned a piece of property and you sued somebody for trespassing, ended up losing your front lawn. That's the kind of thing that can happen to patentees, because it's a hunting license but it's a hunting license that can be revoked by the court. And when you start a patent infringement lawsuit you're going to create that situation. So that means this is all about strategic decision-making on the part of the patentee to begin with. So on the pros of trying to enforce your patent, it can strengthen your competitive position. It can place you in a position where you can either as we talked about earlier on the course, raise the price of the goods that you're selling or the services that you're selling. Because you have this competitive position, because you have this patent. It can force people to take a license to your patent. Maybe instead of selling your own products, you want to expand by licensing other people to manufacture your invention and create the new revenue streams that way. It can strengthen your technological position. It can inform competitors, the industry, the public about what your goals are in terms of technological strategy and allow everybody to make decisions that way. So if you know that you're going to pursue a particular kind of technological path, a particular kind of technology for example. You can get a series of patents on them, enforce those patents vigorously, which can dissuade or even prevent others from trying to follow that same path. Now the downsides of enforcing your patent are many as well. First of all, it's really costly, patent infringement litigation is one of the highest cost areas of litigation. You might lose the patent, we just talked about that. So you can end up worse off than when you started if you try and enforce your patent. It's very time-consuming, these cases took a long time. They take a long time not only in terms of the span of time from the beginning of the case to the end of the case, but they take a lot of time in terms of the destruction. When a panel lawsuit is going on your engineers who would otherwise be creating new products or developing advances to the existing products are going to be distracted. They are going to be doing things related to the patent litigation which, of course, is not the things that you would probably prefer them to do, which is to create new goods and services. So it's a real pro and con analysis, and a strategic analysis that the patentee has to go through. The defendant also, or the potential defendant has significant strategy to consider as well. So we have very strong incentives as a defendant to sell. So patent litigation is very costly, that means that a lot of those cost to defend yourself are going to fall on you, the defendant. It might be cheaper, easier, less time consuming, less distracting to simply settle the case. It can also mean that because patent litigation is often what I describe as backwards looking. It can mean that you are litigating over a product or a good, or a service, that you stopped selling potentially years ago, especially in areas such as high technology. A lot of the sort of well known in the newspapers iPhone litigation between Apple and Samsung. All of that almost always has to do with iPhone or Samsung products that were on the market months, years, sometimes even four or five years before, because patent litigation is really quite backward looking. In part, because of how long it takes to get a patent, how long it takes to enforce a patent. And because of that you can end up spending your time as a defendant, defending a product that you sold and stopped selling perhaps years ago. So lots of strategic considerations to keep in mind. But the benefits of winning if you are defending can be really high. So if you invalidate a key pattern in an industry, that can change the industry over night. So imagine if Apple had been found to have several of its important iPhone patents to have been invalidated. They weren't, but if they had, that changes the industry in a quite significant way. Because it really opens up the ability for competitors to make their own related products. Avoiding infringement can establish your own technological roadmap. The ability to determine exactly where the boundaries are between what your competitor owns in his or her patent and what you can do with your own products could be vitally important to the future of your product development pipeline, as well as the industry itself. So lots of stakes on both sides to both fight and to settle. And so if you get the situation in patent litigation where you have various strategic decision making, on the part of the patentee and in part of the defendant. You sort of think about the interaction of those things. And that means that patent litigation is uniquely high stakes where both sides have a lot to gain and a ton to lose. Both sides have real incentives to go forward to fight, to push vigorously, as well as to not do it at all. And yet at the same time you've get a very costly, time consuming litigation so you've got both very high stakes and high cost. So this means patent allegation is above all else a truly strategic puzzle that both patentees and defendants have to sort of work their way through to try and determine what the right decision is. And this often leads in practical terms to sort of two distinct approaches to enforcement of patents. So one is the sort of win-at-all costs scorched-earth litigation we're going to enforce to the maximum potential extent,. We're going to litigate, we're going to appeal, we're going to spend every dollar we need to spend to maximize our position in the marketplace. That happens, happens a fair amount in the patent law. This is not an unusual mode of litigation in these areas. On the other hand, the other way that you see people enforcing their patents in many cases is to offer licenses on very, very reasonable terms. And that is reasonable enough time so that for the defendant, it's easier to just take the license and go along. And work together with the patentee to make some advances in the product or maybe to expand the marketplace in some way. And they might get along, work together instead of fighting. Because there's a strong incentive to not fight, but there's also a strong incentive to fight. And what you see over time is that there's sort of two very distinct, almost opposite approaches to enforcing patents. The win-at-all costs on one hand, and the fair and reasonable licensing terms on the other. And it's not to say that either one of these is better, I think it really depends on the particular circumstances. In some cases, it is going to make more sense given the structure of the industry, the technology, the pattern itself, the position that the patentee is in. It might have make sense to you got to win that litigation. On the other hand, in other cases, it might be that it's much better to try and work with as many defendants as you can or potential defendants as you can. Don't sue, don't risk the patent, take the licensing fees even if they're lower than you might otherwise get and all work together to grow the business. So a patent instead of sort of a hunting license is probably better thought of as a strategic asset. So it's an asset that allows a wide range of approaches in any particular case. And different approaches will be right depending on the different context and one size really does never fit all when it comes to patent enforcement.
