Patent damages


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Patent damages

  1. 1. <ul><li>PATENT DAMAGES </li></ul><ul><li> PRESENTED BY </li></ul><ul><li>R.KUMARAVENKATESAN </li></ul><ul><li>ADVOCATE </li></ul><ul><li>PATENTS DEPARTMENT </li></ul><ul><li>ALTACIT GLOBAL </li></ul>PRESENTATION
  2. 2. <ul><li>PATENT </li></ul><ul><li>A patent is an exclusive right granted by the government to the true and first inventor or to his assignee for his invention for a for a limited period of time to make, use and vend the invention upon exchange for the public disclosure of his invention </li></ul><ul><li>Thus Patentee has the right </li></ul><ul><li>to exploit the patent </li></ul><ul><li> to withdraw </li></ul><ul><li> to protect and sue when infringed and </li></ul><ul><li> to get remedies for infringement </li></ul>INTRODUCTION
  3. 3. <ul><li>Patent system Precisely includes </li></ul><ul><li>Inventor - true and first inventor/assignee </li></ul><ul><li>Invention- novelty, inventive step, industrial application </li></ul><ul><li>Registration and renewal -patent offices </li></ul><ul><li>Exclusive right -to make, use, vend, assign through license </li></ul><ul><li>Protection -by statutes (the Patents act 1970) </li></ul><ul><li>Remedies - through civil and criminal law proceedings </li></ul>PATENT SYSTEM
  4. 4. <ul><li>Patents add economic and scientific value to the products </li></ul><ul><li>Based on research and development </li></ul><ul><li>High investment in making R&D facilities </li></ul><ul><li>Right granted for a limited period and not a permanent right. </li></ul><ul><li>Associated with, the prestige of the company. </li></ul><ul><li>Competitive nature of the companies </li></ul><ul><li>Increase in infringing attitude among the competitors </li></ul><ul><li>Associated with the price of the product </li></ul><ul><li>Mostly owned by MNC’s which are ready to face litigations. </li></ul>IMPORTANCE OF PATENTS
  5. 5. <ul><li>(a)Patent Administrative Cases </li></ul><ul><li>Includes disputes on grant of a patent, patent invalidation and upholding, and compulsory licensing. Patent Office is the defendant . </li></ul><ul><li>(b) Patent Infringement Cases </li></ul><ul><li>Includes, infringement of patents, disputes relating to ownership of patent, contractual disputes, regarding assignment, patent licensing, and revocation. </li></ul><ul><li>Forums: Controller general of patents, IPAB, </li></ul><ul><li>District court, High court under Article 226/227 and </li></ul><ul><li>Supreme court under Article 32,133,136,or 142. </li></ul>PATENT DISPUTES AND FORUM
  6. 6. <ul><li>Patent infringement is the unauthorized making, using, offering for sale, selling of any patented invention within a jurisdiction, or importing into the jurisdiction of any patented invention during the term of a patent. </li></ul><ul><li>Three basic types of patent infringements: </li></ul><ul><li>Direct patent infringement </li></ul><ul><li>Anyone who makes, uses, or sells the patented invention </li></ul><ul><li>Indirect patent infringement </li></ul><ul><li>A person actively encourages another to make, use, or sell the invention, </li></ul><ul><li>Contributory patent infringement </li></ul><ul><li>Knowingly, selling or supplying an item for which the only use is in connection with a patented invention </li></ul>PATENT INFRINGEMENT AND TYPES
  7. 7. <ul><li>Injunction - prima facie, balance of convenience, irreparable loss </li></ul><ul><li>Accounts of profit- assessment of the un lawful gain by the infringer </li></ul><ul><li>Damages - compensatory relief for the loss. </li></ul><ul><li>Damages: Monetary compensation that is awarded by a court in a civil action to an individual who has been injured through the wrongful conduct of another party </li></ul><ul><li>measure in financial terms the extent of harm a plaintiff has suffered by the defendant. </li></ul><ul><li>generally regarded as remedial rather than preventive or punitive </li></ul><ul><li>may even be more than monetary profits reaped by the defendants by the misuse of the plaintiff’s patent. </li></ul>RELIEFS AVAILABLE
  8. 8. <ul><li>Compensatory damages </li></ul><ul><li>The lost profits of the patentee or a reasonable royalty on the infringer's sales, or </li></ul><ul><li>A combination of lost profits and a reasonable royalty award, along with interest and costs, </li></ul><ul><li>Nominal damages: </li></ul><ul><li>Punitive damages/exemplary damages : </li></ul><ul><li>Damages over and above compensatory damages </li></ul><ul><li>The infringer knew or should have known it was infringing, willful infringement </li></ul><ul><li>Enhanced damages up to three times the compensating award, </li></ul>TYPES OF DAMAGES
  9. 9. <ul><li>4 types of damages are awardable </li></ul><ul><li>1. Compensatory damages -A reasonable royalty would be that amount </li></ul><ul><li>2. Damages based on, the &quot;entire market value&quot; rule -to collect damages based on the value of an entire infringing device, </li></ul><ul><li>3. Pre judgment and post judgment interest on an infringement award </li></ul><ul><li>4. Punitive damages- allows a court to award up to triple damages if the infringer has knowingly, deliberately, intentionally, willfully, or wantonly infringed the patent </li></ul><ul><li>It is also customary for the successful party to be granted the cost of litigation on the completion of the case. </li></ul>DAMAGES UNDER U S LAW
  10. 10. <ul><li>Sec.104. No suit for a declaration under section 105 or for any relief under section 106 or for infringement of a patent shall be instituted in any court inferior to a district court having jurisdiction to try the suit: </li></ul><ul><li>Provided that where a counter-claim for revocation of the patent is made by the defendant, the suit, along with the counter-claim, shall be transferred to the High Court for decision. </li></ul><ul><li>Sec.105. Power of court to make declaration as to non-infringement. </li></ul><ul><li>Sec.106 . Power of Court to grant relief in cases of groundless threats of infringement proceedings. </li></ul><ul><li>Sec.108 . The reliefs which a court may grant in any suit or infringement include an injunction and, at the option of the plaintiff, either damages or an account of profits. </li></ul>PATENTS ACT, 1970 Regarding Infringement
  11. 11. <ul><li>Sec.111. Restriction to grant damages or account of profits for infringement . </li></ul><ul><li>In a suit for infringement of a patent ,damages or an account of profits shall not be granted against the defendant when, </li></ul><ul><li>who proves that at the date of the infringement he was not aware and had no reasonable grounds for believing that the patent existed. </li></ul><ul><li>In respect of any infringement committed after a failure to pay any renewal fee within the prescribed period and before any extension of that period. </li></ul><ul><li>Where an amendment of a specification by way of disclaimer, correction or explanation has been allowed under this Act after the publication of the specification, no damages or account of profits shall be granted in any proceeding in respect of the use of the invention before the date of the decision allowing the amendment, unless the court is satisfied that the specification as originally published was framed in good faith and with reasonable skill and knowledge. </li></ul>PATENTS ACT, 1970 Regarding Infringement continued…
  12. 12. <ul><li>The ability to prove lost profits or a reasonable royalty </li></ul><ul><li>Thoroughness in maintaining records, </li></ul><ul><li>Discovering information from the infringer, and </li></ul><ul><li>Having proper guidance by experts </li></ul><ul><li>Effective claim comparison by preparing claims chart. </li></ul>QUANTUM OF DAMAGES
  13. 13. <ul><li>Claim chart is a two-column table, where the left side column contains the claims (broken down into component elements) and the right side column contains 'Yes'/ 'No'. </li></ul><ul><li>Splitting each of the independent claims into component elements and each element then is compared with the 'accused product'. </li></ul><ul><li>Claim chart are effective in infringement and invalidation analysis and estimating the damages. </li></ul><ul><li>Relevant portion of the specification with reference to a claim is compared with the defendants claim. </li></ul><ul><li>Useful in preventing the rejection of claim due to 'Non-enablement'[claim is not supported by relevant specification] </li></ul><ul><li>Technical evidence required to strengthen and enhance the litigation </li></ul>CLAIMS CHART
  14. 14. <ul><li>Quantum of loss actually sustained by the plaintiff which was, the natural and direct consequence of the unlawful acts of the defendants. </li></ul><ul><li>Speculative and unproven damages are not considered while determining the quantum of damages </li></ul><ul><li>damages may be based on the patentee’s loss or the infringer’s profit, or on royalties due on a hypothetical license. </li></ul><ul><li>Panduit Corp. v. Stahlin Bros. Fibre Works . U S JUDGEMENT </li></ul><ul><li>the patentee must prove: </li></ul><ul><li>1. demand for the patented product; </li></ul><ul><li>2. the absence of acceptable non- infringing alternatives; </li></ul><ul><li>3. the patentee's capacity to exploit the demand; and </li></ul><ul><li>4. the amount of profit the patentee would have made. </li></ul>ESTIMATING THE QUANTUM
  15. 15. <ul><li>The Indian courts, however, have not yet explained how to account for patent damages, with no reported court decisions in this area to date- ref: Halsbury’s law monthly. </li></ul><ul><li>Uniloc USA, Inc. v. Microsoft Corp ( The United States Court of Appeals for the Federal Circuit Jdmnt) ., 318 FSupp 1116, 1120 (SDNY 1970), </li></ul><ul><li>Rejected use of the long-standing &quot;25 Percent Rule&quot;(in calculating Reasonable royalty amount) in determining patent damages </li></ul><ul><li>The Federal Circuit held that there is no rule of thumb that 25% of the expected profit rate would be an assumed baseline license rate when calculating patent infringement damages. </li></ul><ul><li>25% rule was not based upon reasonable scientific evidence and should no longer be used to measure reasonable royalty patent infringement damages. </li></ul><ul><li>In this case Microsoft Corp was ordered to pay $388 million in damages for infringing a patent held by anti-piracy software maker Uniloc Inc </li></ul>REPORTED DECISIONS
  16. 16. <ul><li>Georgia-Pacific Corp. v. United States Plywood Corp </li></ul><ul><li>Reasonable royalties were the basis of damage awards in a majority of patent infringement cases. </li></ul><ul><li>The Reasonable royalties were calculated on the basis of Georgia-Pacific factors. </li></ul><ul><li>The US court has pointed out following factors to be considered while calculating Reasonable royalties. </li></ul><ul><li>1. The royalties received by the patentee </li></ul><ul><li>2. The rates paid by the licensee for the use of other patents comparable to the patent in suit. </li></ul><ul><li>3. The nature and scope of the license, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the manufactured product may be sold. </li></ul>REPORTED DECISIONS Continued….
  17. 17. <ul><li>4. The licensor's established policy and marketing </li></ul><ul><li>5. The commercial relationship between the licensor and licensee, such as, competitors in the same territory in the same line of business; or inventor and promoter. </li></ul><ul><li>6. The effect of selling the patented specialty in promoting sales of other products (non-patented items) of the licensee; </li></ul><ul><li>7. The duration of the patent and the term of the license. </li></ul><ul><li>8. The established profitability of the product; its commercial success; and its current popularity. </li></ul><ul><li>9. The utility and advantages of the patent property over the old modes or devices, if any, that had been used for working out similar results. </li></ul><ul><li>10. The nature of the patented invention; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the invention </li></ul>REPORTED DECISIONS Continued…
  18. 18. <ul><li>Lucent Techs., Inc. v. Gateway, Inc . – in which Georgia-Pacific factors are considered. </li></ul><ul><li>In re Seagate , the Federal Circuit held that in order to support an award of special damages (treble damages), one must proove &quot;willful infringement. </li></ul><ul><li>Polaroid Corp. v. Eastman Kodak Co .- The court awarded $454 million in lost profits and $455 million in interest for a total of $909 million.  </li></ul><ul><li>Abbott Vs Glenmark – A federal jury has awarded Abbott Laboratories $16 million in a suit against Glenmark Pharmaceuticals Ltd </li></ul>REPORTED DECISIONS Continued
  19. 19. REPORTED DECISIONS Continued <ul><li>State Industries, Inc. v. Mor-Flo Industries, </li></ul><ul><li>Rite-Hite Corp. v. Kelley Co., </li></ul><ul><li>Minnesota Mining & Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc ., </li></ul><ul><li>Cornell v. Hewlett-Packard Co case </li></ul>
  20. 20. <ul><li>THANK YOU </li></ul><ul><li>THANK YOU </li></ul><ul><li>THANK YOU </li></ul><ul><li>THANK YOU </li></ul><ul><li>THANK YOU </li></ul><ul><li>THANK YOU </li></ul>THANK YOU