Detailed Table of Contents Main Volume Supplement Preface... vii vii Acknowledgments... ix xi Summary Table of Contents... xiii xiii I. Patent Infringement Liability 1. Direct and Indirect Infringement Liability... 5 3 I. U.S. Patent Rights... 6 A. Origins of U.S. Patent Rights... 7 B. Enforcement of U.S. Patent Rights... 8 C. Forums That Enforce U.S. Patent Rights... 9 1. U.S. District Courts... 9 2. U.S. Court of Federal Claims... 10 3. U.S. International Trade Commission... 11 4. U.S. Court of Appeals for the Federal Circuit... 11 a. U.S. District Courts... 12 b. U.S. Court of Federal Claims... 12 c. U.S. International Trade Commission... 13 5. U.S. Supreme Court... 14 II. Activities That Violate the Patent Law... 14 4 A. Scope of U.S. Patent Rights... 15 4 1. Territorial Reach... 15 4 2. Temporal Reach... 15 B. Direct Infringement Situations... 16 7 1. Infringement Under 271(a)... 16 7 a. Whoever May Be an Infringer... 17 7 b. Intent to Infringe... 18 c. Infringing Conduct... 19 10 xv
xvi Patent Infringement Remedies i. Infringing Manufacture... 19 ii. Infringing Use... 20 10 iii. Infringing Sale... 23 iv. Infringing Offer to Sell... 23 12 v. Infringing Importation... 25 2. Infringement Under Other Subsections of 271... 26 C. Indirect Infringement Situations... 26 13 1. Inducing Infringement Under 271(b)... 27 13 a. Intent to Infringe... 28 13 b. Direct Infringement Prerequisite.. 29 2. Contributory Infringement Under 271(c)... 30 19 a. Intent to Infringe... 31 19 b. Direct Infringement Prerequisite.. 33 21 c. Relationship to Patent Misuse... 33 23 Main Volume Footnote Updates... 24 2. Determination of Patent Infringement... 37 25 I. Infringement Analysis... 38 26 A. Infringement... 39 26 1. Claim Construction... 39 26 a. Patent Claims... 40 b. Claim Interpretation... 40 26 i. Markman Review... 41 ii. Intrinsic/Extrinsic Evidence... 45 26 iii. Means-Plus-Function Claims.. 46 28 2. Comparison of Patent Claims With Accused Product or Process... 46 3. Literal Infringement... 47 31 4. Infringement Under the Doctrine of Equivalents... 47 33 a. Substantiality Test... 48 i. Graver Tank... 48 ii. Warner-Jenkinson... 48 b. Limitations on the Doctrine of Equivalents... 50 33 i. Prior Art... 50 ii. Prosecution History Estoppel... 51 33 B. Infringement Defenses... 56 37 1. Noninfringement... 56 a. Repair Versus Reconstruction... 56 b. License and Implied License... 57
Detailed Table of Contents xvii 2. Invalidity... 57 37 a. Conditions for Patentability... 58 37 i. Utility... 58 ii. Novelty... 58 37 iii. Nonobviousness... 60 42 iv. Statutory Subject Matter [New Topic]... 44 b. Disclosure Requirements... 61 44 i. Written Description... 61 44 ii. Definiteness... 61 46 iii. Enablement... 62 47 iv. Best Mode... 62 3. Unenforceability... 63 48 a. Inequitable Conduct... 63 48 b. Patent Misuse... 64 52 c. Laches and Estoppel... 64 54 d. Claim and Issue Preclusion... 64 58 3. Specific Infringement Liability... 67 61 I. Special Infringement Situations... 68 62 A. Infringement Under 271(e)... 68 62 1. Background and Context... 69 2. ANDA Litigation... 70 62 B. Infringement Under 271(f)... 73 63 C. Infringement Under 271(g)... 75 67 1. Timing... 76 2. Without Authority... 76 3. Materially Changed... 77 68 II. Other Infringement Situations... 80 A. Design Patent Infringement... 81 1. Claim Interpretation... 81 2. Comparison of Patent Claims With Accused Product or Process... 82 a. Sun Hill... 83 b. Elmer... 83 B. Plant Patent Infringement... 84 1. Imazio... 84 II. Patent Infringement Remedies 4. Compensatory Damages... 89 73 I. Damages Generally... 91 75 A. Damages... 92 75 1. Authority... 92
xviii Patent Infringement Remedies 2. Test... 93 a. Lost Profits... 93 b. Reasonable Royalty... 94 3. Public Policy... 94 4. History... 97 5. Nature of Inquiry... 101 75 6. Burden of Proof... 102 78 7. Standard of Review... 102 8. Applications... 103 81 a. Legal Title... 103 b. Impact of State Law Claims... 104 81 c. No Tax Offset... 105 d. Duplicative Recovery [New Topic]... 85 B. Interest... 105 87 1. Prejudgment Interest... 105 87 a. Authority... 105 b. Test... 106 87 i. Discretionary, Not Mandatory... 106 87 ii. Ordinarily Awarded... 107 iii. Dilatory Patentee Conduct... 107 iv. Inapplicability to Enhanced Damages... 111 v. Rate... 111 c. Public Policy... 114 d. History... 114 e. Nature of Inquiry... 115 f. Burden of Proof... 116 g. Standard of Review... 116 h. Applications... 116 i. Basis of the Damages Award.. 116 ii. Difficulty in Calculating Interest... 120 iii. Justification Other Than Dilatory Patentee Conduct... 121 iv. Absence of Justification... 121 2. Postjudgment Interest... 122 a. Authority... 122 b. Test... 123 c. Public Policy... 125 d. History... 125
Detailed Table of Contents xix e. Nature of Inquiry... 127 f. Burden of Proof... 127 g. Standard of Review... 127 h. Applications... 128 C. Costs... 129 87 1. Authority... 129 2. Test... 131 3. Public Policy... 131 4. History... 131 5. Nature of Inquiry... 132 87 6. Burden of Proof... 132 88 7. Standard of Review... 132 8. Applications... 133 a. Expert Witness Fees... 133 b. Transcripts, Translations, and Copying... 134 c. Video Models... 135 d. Disclaimer... 136 II. Limitations on Damages Recovery... 137 90 A. Time Limitation on Damages... 137 90 1. Authority... 138 2. Test... 138 3. Public Policy... 140 4. History... 140 5. Nature of Inquiry... 142 6. Burden of Proof... 142 7. Standard of Review... 143 8. Applications... 143 90 B. Marking... 144 93 1. Authority... 144 2. Test... 147 a. Form of Notice... 147 i. Actual Notice... 147 ii. Constructive Notice... 150 3. Public Policy... 159 4. History... 159 5. Nature of Inquiry... 159 6. Burden of Proof... 160 7. Standard of Review... 160 8. Applications... 160 93 a. Patented Product Prerequisite... 160
xx Patent Infringement Remedies b. Declaratory Judgment Jurisdiction... 161 c. False Marking... 162 94 d. Communicating Patent Rights to Customers [New Topic]... 95 C. Maximum Recovery Rule... 163 1. Authority... 163 2. Test... 164 a. Shockley... 164 b. Oiness... 165 c. Unisplay... 165 Main Volume Footnote Updates... 100 5. Lost Profits... 167 101 I. Authority... 169 102 A. Statute... 169 B. Judicial Precedent... 170 102 II. Test... 170 105 A. Panduit Factors... 171 105 1. Demand for the Patented Product... 172 a. Supporting Evidence of Demand... 173 b. Undermining Evidence of Demand... 175 2. Absence of Noninfringing Substitutes... 178 a. Market Evidence... 178 b. Nonmarket Evidence... 182 3. Patentee Capacity... 184 105 4. Amount of Lost Profits... 186 B. Alternative Tests... 187 1. Two-Supplier Market... 187 2. Mini-Market... 190 C. Compensable Injury... 191 106 1. Consequential Harm... 191 106 a. Lost Sales... 191 i. Past and Present... 192 ii. Future... 192 b. Price Erosion... 194 106 c. Diminution of Business Goodwill.. 197 d. Impairment of Business Growth or Other Loss... 199 2. Foreseeable Harm... 199 107 a. Collateral and Derivative Sales... 200 107 b. Entire Market Value... 202
Detailed Table of Contents xxi III. Public Policy... 203 IV. History... 205 V. Nature of Inquiry... 207 VI. Burden of Proof... 207 109 VII. Standard of Review... 208 VIII. Applications... 209 111 A. Lost Profits Generally... 209 1. Infringing Party... 210 2. Infringing Conduct... 212 B. Proof... 214 1. Reasonable Probability... 217 C. Causation... 220 111 1. But For... 220 111 2. Reasonable Foreseeability... 225 113 a. Convoyed Sales... 226 113 b. Entire Market Value... 229 D. Panduit Factors Generally... 234 114 1. Demand... 236 2. Capacity... 240 3. Noninfringing Substitutes... 241 114 4. Amount of Profit... 251 115 a. Price Erosion... 251 115 b. Future Sales... 258 c. Business Goodwill... 259 E. Two-Supplier Market... 261 116 F. Calculation... 262 1. Award Amount... 268 6. Reasonable Royalty... 273 119 I. Authority... 275 A. Statute... 275 B. Judicial Precedent... 276 II. Test... 276 121 A. Royalty Calculation... 278 121 1. Georgia-Pacific Factors... 280 121 a. Established Royalty... 280 121 b. Comparable Royalty... 281 128 c. Existing License Terms... 282 d. Licensing Policy... 282 e. Competition Between Licensor and Licensee... 283 f. Collateral Effect... 284 g. Remaining Term of Patent... 285
xxii Patent Infringement Remedies h. Commercial Success... 285 128 i. Advantages Over Prior Art... 285 j. Nature of Invention... 286 k. Nature of Infringement... 286 129 l. Customary Profit Margin... 287 131 m. Profits Attributable to Patented Feature... 287 n. Expert Testimony... 288 132 o. Hypothetical Royalty... 288 134 i. Accuracy Irrelevant... 289 ii. Analytical Approach... 290 B. Compensable Injury... 293 1. Consequential Harm... 293 a. Diminution of Business Goodwill... 293 b. Impairment of Business Growth or Other Loss... 294 2. Foreseeable Harm... 295 a. Collateral and Derivative Sales... 296 b. Entire Market Value... 297 c. Panduit Kicker... 299 III. Public Policy... 301 IV. History... 302 V. Nature of Inquiry... 303 VI. Burden of Proof... 304 A. Standard... 304 VII. Standard of Review... 304 A. Standard... 304 VIII. Applications... 305 137 A. Reasonable Royalty Generally... 305 137 1. Infringing Party... 308 2. Infringing Conduct... 308 139 a. Infringing Activity... 308 b. Time of Infringement... 309 139 B. Proof... 309 139 C. Causation... 310 1. Reasonable Foreseeability... 310 a. Convoyed Sales... 310 b. Entire Market Value... 312 D. Georgia-Pacific Factors Generally... 313 139 1. Established Royalty... 314 139 2. Prior Royalties... 317 140
Detailed Table of Contents xxiii 3. Nature and Scope of the License... 319 4. Refusal to License... 320 5. Market... 320 6. Derivative or Convoyed Sales... 321 7. Patent Term... 322 8. Established Profitability... 322 140 9. Advantages and Nature of the Patented Invention... 323 10. Infringer s Use of the Invention... 324 11. Customary Profit... 326 141 12. Attributable Profit... 326 13. Expert Testimony... 327 14. Hypothetical Negotiation... 328 E. Additional Bases for Royalty Rate... 332 1. Business Goodwill... 332 F. Calculation... 334 141 1. Award Amount... 337 141 Main Volume Footnote Updates... 144 7. Noncompensatory Damages... 343 145 I. Enhanced Damages... 344 146 A. Authority... 345 1. Statute... 345 2. Judicial Precedent... 345 B. Tests... 346 146 1. Willful Infringement... 346 146 a. Opinion of Counsel... 348 149 i. Timing... 351 ii. Competency... 353 154 2. Exceptional Case... 357 3. Enhancement... 359 C. Public Policy... 360 D. History... 361 E. Nature of Inquiry... 361 157 F. Burden of Proof... 361 G. Standard of Review... 362 H. Applications... 362 158 1. Enhanced Damages Generally... 362 2. Attorney Fees Generally... 364 3. Exceptional Case... 366 158 a. Generally... 366 i. Allocation... 370
xxiv Patent Infringement Remedies b. Nature of Inquiry... 376 158 i. Appellate Record... 380 158 ii. Finality... 384 c. Inadequate Prefiling Investigation Basis... 384 161 d. Frivolity Basis... 387 163 e. Inequitable Conduct Basis... 391 f. Litigation Misconduct Basis... 397 165 g. Prevailing Party... 404 168 h. Willful Infringement... 406 170 i. Opinions of Counsel... 419 175 j. Competency... 424 178 k. ANDA [New Topic]... 178 II. Attorney Fees... 432 179 A. Authority... 432 B. Test... 433 C. Public Policy... 434 D. History... 434 E. Nature of Inquiry... 437 179 F. Burden of Proof... 437 G. Standard of Review... 437 H. Applications... 438 182 1. District Court Sanctions... 438 182 a. Discovery Sanctions... 440 184 2. Appellate Sanctions... 442 186 a. Frivolous Appeal... 442 186 b. Conduct... 452 187 Main Volume Footnote Updates... 193 8. Injunctive Relief... 455 195 I. Temporary Restraining Order... 457 A. Authority... 457 II. Preliminary Injunction... 458 197 A. Authority... 458 B. Test... 460 197 1. Reasonable Likelihood of Success on the Merits... 460 197 a. Patent Infringement... 461 b. Presumption of Patent Validity... 461 c. Patent Validity... 461 198 2. Irreparable Harm... 462 199 3. Balance of Hardships... 462 4. Public Interest... 463
Detailed Table of Contents xxv 5. Enforceability... 464 6. Special Circumstances [New Topic]... 202 C. Public Policy... 465 D. History... 465 E. Nature of Inquiry... 466 F. Burden of Proof... 467 G. Standard of Review... 468 H. Applications... 469 205 1. Injunctive Relief Generally... 469 205 2. Appellate Review... 471 205 3. Standards Generally... 475 206 a. Likelihood of Success on the Merits... 478 207 i. Relationship to Claim Construction... 479 208 ii. Infringement... 480 209 iii. Validity... 483 209 1) Enablement... 487 2) Inventorship... 487 b. Irreparable Harm... 488 210 c. Balance of Hardships... 500 211 d. Public Interest... 502 211 4. Procedures... 503 211 a. Choice of Law... 503 b. Rolling Claim Construction... 504 211 c. Appellate Process... 505 d. Law of the Case... 507 e. Bond/Restitution... 508 III. Permanent Injunction... 508 212 A. Applications... 511 217 1. Permanent Injunctions Generally... 511 217 2. Scope of Injunction... 513 218 3. Effect of Damages Awards... 518 220 IV. Contempt... 521 222 A. Applications... 523 227 1. Contempt Generally... 523 227 2. Standards... 525 227 a. Scope of Injunction... 526 227 b. Infringement... 527 229 c. Burden of Proof... 529 d. Appellate Review... 530 e. Parties/Privity... 532 230 3. Sanctions... 534
xxvi Patent Infringement Remedies V. Writs... 535 231 VI. USITC Exclusion Orders... 535 241 9. Other Statutory Remedies... 539 251 I. Design Patents... 539 251 A. Applications... 545 1. Remedies Under 284 or 289... 545 2. Damages Calculation... 548 3. Tax Implications... 549 II. Pre-Grant Damages... 549 253 III. Inventorship... 550 256 IV. Delta Period Infringement... 557 V. Claims Against the U.S. Government... 561 275 A. Applications... 562 1. Reasonable and Entire Compensation... 562 2. Delay Damages... 578 VI. Medical Procedure Patents... 582 A. Authority... 582 Main Volume Footnote Updates... 281 III. Patent Portfolio Management Considerations 10. Opinions of Counsel... 587 285 I. Effect on Patent Infringement Damages... 588 II. Good Faith Conduct... 591 285 A. Standards for Exculpatory Opinions of Counsel... 595 285 1. Timing... 595 285 2. Competency... 605 288 III. Strategic Considerations... 611 290 11. Valuation Models... 613 297 I. Cost Approach... 614 A. Formula... 615 B. Considerations... 615 II. Market Approach... 616 III. Income Approach... 618 IV. Econometric Models [New Topic]... 297 12. Contracting Around Liability... 621 299 I. Licensing Structures... 621 299 II. Cooperative Agreements... 624 13. Collateral Concerns... 627 309 I. Antitrust Concerns... 627 309
Detailed Table of Contents xxvii II. Insurance... 634 III. Tax... 637 IV. Bankruptcy... 640 322 IV. Litigation Matters 14. Case Presentation... 645 327 I. Forum... 645 327 A. Authority... 645 327 II. Experts... 646 336 III. Stays... 649 A. Authority... 649 IV. Litigation Conduct and Misconduct... 651 338 A. Authority... 651 338 15. Alternative Dispute Resolution... 655 345 I. Arbitration... 656 345 A. Authority... 656 345 II. Mediation... 657 353 Main Volume Footnote Updates... 354 Appendixes APPENDIX A: THE COMPLAINT... 663 357 APPENDIX B: AIPLA S MODEL PATENT JURY INSTRUCTIONS... 359 Disclaimer... 359 Damages... 359 12.0 Damages Generally... 359 12.1 Date Damages Begin... 360 12.2 Two Types of Damages Lost Profits and Reasonable Royalty... 361 12.3 Lost Profits But-For Test... 362 12.4 Lost Profits Panduit Factors... 362 12.5 Lost Profits Panduit Factors Demand... 363 12.6 Lost Profits Panduit Factors Acceptable Non-Infringing Substitutes... 363 12.7 Lost Profits Panduit Factors Capacity... 364 12.8 Lost Profits Panduit Factors Amount of Profit Incremental Income Approach... 364
xxviii Patent Infringement Remedies 12.9 Lost Profits Market Share... 365 12.10 Lost Profits Price Erosion... 365 12.11 Lost Profits Cost Escalation... 366 12.12 Lost Profits Collateral Sales... 366 12.13 Lost Profits Doubts Resolved Against Infringer... 367 12.14 Reasonable Royalty Generally... 367 12.15 Reasonable Royalty Definition... 367 12.16 Reasonable Royalty Relevant Factors... 368 12.17 Reasonable Royalty Timing... 369 13.0 Willful Infringement... 370 APPENDIX C: VALUATION... 693 371 APPENDIX D: AUDIT CHECKLIST... 695 373 Glossary... 375 Table of Cases... 697 389 Index... 709 About the Author... 399