Tag: patent infringement

The Patent Holders’ Rights

A person or entity that owns a patent has the right to prohibit others from making, using, selling, offering for sale or importing an infringing product. Usually, the process begins with the patent holder informing the alleged infringer of their rights and pointing out the features of the product being sold that they believe violate those rights.

Patent Infringement Litigation

The two parties may argue back and forth about whether or not actual patent infringement is occurring, and if they cannot agree, then the patent owner may file a lawsuit. The entire process is incredibly complex and time consuming with evidence being collected and depositions being held. Most of these cases do not go to trial. The ones that do usually have both sides digging in their heels. If the patent holder prevails, then it’s a foregone conclusion that the defendant will appeal the decision.

When it’s time for the judge or jury to render a decision, they have two basic choices. They can either award damages based on the entire market value of the products sold or damages may be awarded based on a reasonable royalty for the infringing features alone.

Recent Litigation Case

A recent decision by the Federal Circuit Court of Appeals appears to place limits on the damages that can be awarded to patent holders. Arguing that plaintiffs should only be able to recover damages based on the monetary value of the infringing features in the product, the court decided that the plaintiff was only entitled to a smaller settlement amount.

Power Integrations, Inc. sued Fairchild Semiconductor International over features in their power supply controller chips. The plaintiff held two patents for switching regulators, and they argued that Fairchild was infringing both of those patents with their products.

A 2014 jury trial found in favor of Power Integrations to the tune of $105 million. This amount represented a reasonable royalty based on the value of the infringing features in the products. Fairchild asked for a new trial but was denied. The Federal Circuit subsequently heard another case in which a product contained both infringing and non-infringing features, in which damages were awarded for the total market value of the product. This led them to order another trial, this time focused solely on damages.

Power Integrations was awarded $140 million after this trial, with the amount this time being based on the entire market value. This amount included compensation for the overall product, including its non-infringing features.

Fairchild asked for another trial in the wake of this decision but was again denied. Nevertheless, they filed an appeal, which has now been heard at the Federal Circuit. In vacating the damages in the second trial, the court held that “a patentee is only entitled to a reasonable royalty attributable to the infringing features.” This rule essentially means that the plaintiff must demonstrate their damages as a separate, smaller amount compared to the total profit realized by the defendant when the product in question involves non-infringing features.

The Courts Decision

Essentially, the court decided that some of the features in Fairchild’s products were not patented, and because they were significant to the product, they were also instrumental in the buying decisions of consumers. Because Power Integrations could not demonstrate that the patented features in the product were solely what was driving customer demand, they were not entitled to the total market value.

Accordingly, the court vacated the damages decision from the second trial. This is potentially good news for anyone who is accused of patent infringement as it places a strict limit on how much the plaintiff is allowed to recover. Of course, the better option is to strive to avoid infringing on a patent holder’s rights in the first place by working with an intellectual property attorney.

Let us know if we can help with any patent litigation issues you may be facing.

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Author: Jeff Williams

Jeff Williams is an experienced mechanical engineer and lawyer that consults closely with clients in a strait forward and clear manner. He brings a particular set of strengths and unique perspectives to the firm.

Jeff received a B.S. in Mechanical Engineering from Arizona State University in 2005. He was an engineer for a number of years at a number of large corporations before pursuing his law degree. He graduated from Texas A&M University School of Law (formerly Texas Wesleyan University School of Law) with a J.D. in 2010. By combining his education and prior work experience into the field of intellectual property law, Jeff has developed key skills to fully assist clients.

February 18, 2016

Changes on the Horizon for Texas Patent Infringement Cases

East Texas is a hub of patent litigation. It has attained this status thanks to the speed with which such cases were often ushered through the courts, which is thought to favor plaintiffs. Patent holders also liked to file suit here because judges were less likely to rule on summary judgment, preferring to allow juries to decide whether or not defendants had infringed patents. This favorable climate led many patent holding companies to set up shop in East Texas. However, the tide may be turning.

Recent Patent Infringement Court Cases

One case was recently decided in a Tyler, Texas courtroom in which patent holding company VirnetX prevailed over tech giant Apple. VirnetX claimed that Apple infringed its patents for technology that is used in Apple’s FaceTime app as well as its VPN On Demand service. The trial has been ongoing since 2010, and this is not the first time that VirnetX has been awarded multiple millions of dollars in a judicial decision. This time, the judge declared that VirnetX should receive $625 million. A previous ruling in 2012 gave the holding company $368 million. That verdict was overturned on appeal, leading to the new trial.

A similar case involving Samsung and Imperium IP Holdings reached a decision in which the plaintiff received $7 million. Imperium argued that Samsung was infringing three of its patents. They have another case against Apple involving the same technology that is still pending.

The Patent Troll Problem

The problem with these scenarios is that VirnetX and Imperium are patent trolls. Instead of designing or manufacturing anything, VirnetX specializes in scooping up patents which they assert against large companies with deep pockets. The technology that VirnetX claims Apple infringes was created and patented by Science Applications International Corporation. For years, VirnetX has stated that they will be marketing the technology. However, they don’t seem to be moving toward this. They simply sue larger companies instead.

Most companies avoid litigation. It’s divisive, expensive and risky. That’s not the case with patent trolls. They’ve been claiming patent infringement and winning big in the courts for so long that they don’t hesitate to file suit. Some of the companies they target don’t make much effort to defend themselves. The hint of litigation is enough to have them paying licensing fees.

This occurs often in Texas and elsewhere. Patent trolls, or lawyers who represent them, send vague, unsubstantiated demand letters that allege infringement. The letters hint at litigation that can be avoided with a licensing fee. Smaller companies don’t have the knowledge to recognize that these letters could be refuted by a patent attorney.

Texas Patent Law Changes

Texas law changed in September 2015 when it became a crime to send bad faith demand letters. Essentially, this means that patent trolls can be prosecuted for sending vague, baseless demand letters. The Attorney General now has power to bring charges against the companies that send such letters, making it less likely to occur in the future.

These changes may make the recent VirnetX v. Apple case a rare thing. Patent trolls are likely to be more wary when it comes to going after large corporations if they believe that the Attorney General will be coming after them. However, smaller business owners and individuals will remain more vulnerable.

Contact Texas patent attorney Jeff Williams to learn more about how to protect yourself from patent trolls and all other intellectual property needs.

Author: Jeff Williams

Jeff Williams is an experienced mechanical engineer and lawyer that consults closely with clients in a strait forward and clear manner. He brings a particular set of strengths and unique perspectives to the firm.

Jeff received a B.S. in Mechanical Engineering from Arizona State University in 2005. He was an engineer for a number of years at a number of large corporations before pursuing his law degree. He graduated from Texas A&M University School of Law (formerly Texas Wesleyan University School of Law) with a J.D. in 2010. By combining his education and prior work experience into the field of intellectual property law, Jeff has developed key skills to fully assist clients.