SMALL PATENT CLAIMS
a party pursues a frivolous case, the court may sanction any party or its attorneys.
Tere are many ways to deter and prevent bad cases:
• Te loser can pay reasonable attorney fees;
• Tere can be a presumption that the loser pays attorney fees but the court can relieve the losing party from a portion of the fees in particularly close cases, or if the winner engaged in behaviour that warranted some relief;
• A standard fee can be paid by the loser either to the court or to the winner; or
• Attorneys can be sanctioned for bringing or defending cases that are not close (eg, perhaps winnable on summary determination).
By deterring bad cases while encouraging good cases, patents and the rights of patent owners will be enforceable while patent owners are prevented from holding potential defendants hostage to a system that forces settlement to avoid the cost of litigation.
There must be an appeals process
Patent owners and accused infringers must have faith in any system for resolving patent disputes. Such faith is bolstered by an appellate review process that gives the parties comfort that wildly unjust decisions will be identified and reversed.
To appreciate the importance of appellate review, consider how few cases are resolved through arbitration. In theory, arbitration should always be preferred to litigation. Aſter all, arbitration is less expensive than litigation and can be administered by an expert in patent law and the technology. Te parties themselves can select the arbitrator or panel of arbitrators. Although there may be other reasons that binding arbitration is not selected by the parties of a dispute, the lack of an appellate process is clearly an important reason that parties do not agree to binding arbitration.
Ultimately, all patent litigants have an appeal as a matter of right to the Court of Appeal for the Federal Circuit. For a small claims court to be successful, such an appeal as a matter of right must also be available to the losing party. Having an appeal to the Federal Circuit helps maintain consistency in the application of the patent laws and gives litigants comfort that mistakes can be identified and reversed.
There must be specialised expertise
Specialised expertise allows patent cases to be administered without the parties having to
“WITH THE ADDED BURDEN OF ELECTRONIC DISCOVERY AND A GENERAL LACK OF JUDICIAL SUPERVISION, PATENT CASES ARE BECOMING A GAME EVEN KINGS ARE RELUCTANT TO PLAY.”
raised by the notified party. Exercising the option to intervene is voluntary and will require consent for the USPTO to determine a remedy for infringement (damages up to a certain amount and an injunction) without a jury. Te elevated proceeding will have limited discovery that is proportional to the size of the case. Any decision would be appealable to the Court of Appeal for the Federal Circuit.
• If the notified party voluntarily elects not
educate the judge. In many patent cases, the litigants are forced to spend time educating the judge on both legal issues (the patent law) and technical issues. Having patent judges with some technical experience will help to resolve cases with less expense and more accuracy.
A proposal for discussion
Tere are many possibly ways to handle small patent claims. One of the challenges to any system is that it must not violate the US Constitution. Most notably, commentators are worried that a small claims court could not award damages without a jury.
Te purpose of the following proposal is to
encourage the parties to litigate at the USPTO in an environment of expertise and limited cost. A defendant need not participate but will have limited defences if it elects to litigate in the federal district court. Tis proposal is intended to be radical to solicit thought and discussion.
• A new ex parte post-grant ‘scope’ proceeding would allow a patent owner to have the USPTO determine whether a patent has a scope that is sufficient to encompass a particular product or method. Te proceeding would be handled by three administrative judges.
• If the product is an unauthorised product, the patent owner must give reasonable notice of the proceeding to the party that the patent owner perceives is the infringer.
• Te notified party may intervene in the proceeding. If
it elects to intervene, the
proceeding becomes a small claims tribunal in which the UPSTO will determine not just scope but also validity and any other issue
22 World Intellectual Property Review Annual 2013
to participate in the process, the scope proceeding will continue without the notified party. At the end of the scope proceeding, the USPTO will declare one of three things: the patent scope is sufficient to cover the identified product or process; the patent scope is insufficient to cover the identified product or process; or the evidence is insufficient to make any determination vis- à-vis the identified product or process. With an ex parte scope determination in hand, the patent owner may proceed to federal district court. Te scope of the patent has been determined, so the accused infringer cannot defend on the basis of non-infringement unless the product or process is different than the product or process which was evaluated in the scope proceeding.
David K.S. Cornwell is a director at Sterne, Kessler, Goldstein & Fox, an IP law firm based in Washington, DC. He can be contacted at:
davidc@skgf.com
David Cornwell heads the CleanTechSM industry group and the patent forensics practice group, and he is also member in the mechanical group. His technological experience is primarily in the areas of energy
and mechanical engineering.
Cornwell specialises in patent litigation in the fields of consumer product protection, clean energy and clean technology, biotechnology, technologies.
computers and related
www.worldipreview.com
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