Many businesses hold patents, which
protect the core of the company’s
existence. Whether it is two or dozens of such patents, they represent the
company’s ability to distinguish itself to the
market. However, the landscape around
protection of those patents is changing.
Smart Business asked Michael Wilson of
the Dallas law firm of Munck Carter, P.C. to
help us through the thicket.
What is going on with our rights to enforce
our patents?
First, the U.S. Supreme Court has been
more active over the past couple of years in
considering and deciding cases affecting
patent rights. Overall, I think the impact of
the recent decisions is that the courts are
making it more difficult to enforce patent
rights. It also has become easier to challenge the validity of a patent as part of a
lawsuit.
Earlier this year, the U.S. House of
Representatives passed a patent reform
bill, H.R. 1908. The U.S. Senate was considering a similar bill. The bills could negatively impact the rights of patent owners.
For example, both bills include changes
affecting such things as venue (where a
patent owner can file a lawsuit) and calculation of damages (the amount of money
that a patent holder can recover from those
found to have infringed a patent).
Supporters of the bills promise to press
for passage during the next session of
Congress, so many people expect change
as soon as 2009. However, the November
election could cause shake-ups in the committees that control these issues. That
could delay the bill or cause changes to the
more important proposals.
How would these changes impact venue?
Where a patent owner files a patent
infringement suit can have a significant
impact on how the case turns out and costs
associated with the case. The proposed
venue changes would require most patent
suits to be filed where the defendant is
based or has a major presence. Right now,
a patent holder has more options, including filing in the patent owner’s home district or in any venue in which the defendant is selling infringing products. This
allows plaintiffs to bring claims in federal
districts that they believe are better suited
to hearing their claims.
For example, recently more plaintiffs
have elected to file patent suits in the
Eastern District of Texas, both because of
their perception of the juries here and
because the district has adopted specific
‘patent rules’ designed to streamline and
speed the litigation process.
How would these changes affect one’s ability
to recover damages?
Supporters of patent reform believe damage awards are too high. The proposed
changes include rules to control how
courts and juries measure damages where
there is infringement. What has not
received as much press, though, is that the
courts often reduce or eliminate these
damage awards, even without any
changes. For example, reform proponents
like to point to the $1.5 billion jury verdict
Alcatel-Lucent obtained against Microsoft
in 2007, but the trial judge vacated the
award.
In addition, there is a legitimate concern
that patent reform may have a corresponding negative impact on the value of these
patents, which is not good news to the
companies that own them.
Don’t some big companies oppose these
changes?
Many companies and groups oppose
changes, including some of the large pharmaceutical companies. These companies
have spent a great deal of time and money
in research and development and in obtaining patents. The last thing they want are
changes in the law that weaken their rights.
In addition, many businesspeople and
economists believe that the current patent
system has been incredibly successful in
sparking innovation in this country, so they
are reluctant to make wholesale changes
to a system that seems to have worked for
a long time.
Support comes from big businesses that
are commonly named as defendants in
patent infringement suits, including large
technology companies. But that is not to
say that the bills do not have broader support. Definitely, public attention from cases
such as the Microsoft and BlackBerry
cases has created a perception that the
patent laws need changing.
What do these changes mean to a smaller
business?
These days, many small businesses have
spent a great deal of capital and human
resources creating new and innovative
technologies. In many cases, a company’s
patents and other intellectual property are
among its most valuable assets. The proposed new laws could reduce the value of
those patents. So any business that owns
patents needs to take stock of its intellectual property rights and strongly consider
whether to be more aggressive in licensing
or otherwise enforcing its rights before any
patent reform takes place.
MICHAEL C. WILSON is a shareholder at Munck Carter, P.C. and a member of the firm’s litigation section. Wilson has 17 years of
experience in all aspects of litigation, including trials, arbitration, mediation and appeals. Reach him at [email protected].
