Patent infringement cases are often long, arduous and expensive undertakings. Although most eventually settle out of court, a resolution could take several years, and legal fees may end up costing a company tens of thousands — if not millions — of dollars.
A client who thinks a competitor is infringing his company's patents may want lawyers to file suit immediately. But that's often not possible, because of attorneys' ethical obligations to conduct a reasonable investigation first or risk court sanctions. While experienced patent lawyers know the particular risks patent litigation poses, newcomers may not be as familiar with them.
When a company suspects that a competitor is infringing its patented product or process, lawyers should, at the very minimum, conduct a Federal Rule of Civil Procedure Rule 11 investigation — a reasonable inquiry into the facts and the law at issue — before filing suit. If a client is pressing to skip that step and move right to filing suit, let him know that, although the statutory language of Rule 11 applies only to lawyers, some case law indicates that courts will consider sanctioning parties for violations.
Not surprisingly, the Federal U.S. Circuit Court of Appeals, which handles appeals in patent cases, has addressed this issue. For example, in 2000's View Engineering Inc. v. Robotic Vision Systems Inc., the Federal Circuit affirmed a district court's entry of more than $97,000 in Rule 11 sanctions for the lawyer's failure to conduct an adequate pre-filing investigation.
Due to the technical nature of patent infringement cases, compliance with Rule 11 can be arguably harder to achieve than in most other cases. Nevertheless, the pre-filing investigation serves two important purposes. First, it provides a basis from which the company can conduct a qualitative analysis of the technical aspects of the case and evaluate its expectations of a successful legal resolution. Second, the investigation protects defendants against baseless claims that their products are infringing another's patents, by showing that the patent-holding plaintiff had a reasonable chance of proving infringement.
Lawyers pressured to file suit right away without taking the time for a pre-suit investigation should consider a 1997 case, Judin v. Hewlett-Packard Co. There, an inventor's first attorney of record relied solely on the inventor's experience and credentials in the industry, as well as the inventor's observations of the accused product from a distance, as a basis for the complaint. The Federal Circuit found "on the record before us, we would have no hesitancy to impose on . . . [the inventor and that lawyer] a Rule 11 sanction in favor of HP," but remanded the case to the trial court to determine sanctions. The Federal Circuit remarked that the first attorney of record had "acted unreasonably in giving blind deference to his client and assuming his client had knowledge not disclosed to the attorney." In other words, counsel must acquire personal knowledge of the facts. It is simply not enough to rely on the company's assessment or purported expertise. Lawyers should conduct an independent investigation of the case.
What to Expect
At a minimum, the pre-suit investigation's infringement analysis should include construing the claims of the asserted patent, obtaining a sample of the suspected product (or adequate technical documentation for the suspected product) and applying the construed claims to the suspected product. Such an investigation will require time, effort, brain power and money. The costs associated with the investigation can vary widely and often depend on the technology at issue and whether an independent expert is required.
First review the patent the company owns to determine the scope and meaning of the terms used in the claims. Second, obtain a sample of the product suspected of infringing the patent and then apply the claims of the patent to the product to see if the claims cover the suspected product.
Lawyers should have access to the company's technical expertise — for example, the ability to talk with engineering staff to learn background technical information. It also may be useful to seek assistance making industry contacts to help obtain a sample of the suspected product. Investigating the suspected product can be time-intensive; prepare the client for potential bills for outside technical experts.
What if a sample of the suspected product is not available or unreasonable obstacles stand in the way of securing one? The Federal Circuit in Judin found that the patentee's first attorney of record could have easily obtained a sample of the accused product at a nominal price, and failure to do so meant that that lawyer failed to meet his Rule 11 obligations. On the other hand, in 2000, the Federal Circuit in Hoffman-La Roche Inc. v. Invamed Inc. found that because obtaining a sample of the accused product proved to be an unreasonable obstacle (i.e., the product owner was not amenable to sharing the technical information), the trial court did not err in refusing to sanction the patentee's lawyer under Rule 11. In other words, courts require lawyers to make reasonable efforts to acquire a sample of the accused product but will not penalize them if reasonable efforts are not entirely fruitful.
What if the infringement analysis is incomplete or a court later holds it to be wrong? The Federal Circuit has required that the patentee apply the asserted claims of each patent to the suspected product and conclude a reasonable basis for finding infringement of at least one claim of each patent asserted. In 2004, the Federal Circuit in Q-Pharma Inc. v. Andrew Jergens Co. found that the patentee conducted a reasonable investigation — not a frivolous one — where the party construed the claims broadly and supported those constructions using intrinsic evidence.
Rule 11 cannot be ignored. At an absolute minimum, lawyers should construe the claims of the asserted patent, obtain a sample of the suspected product (or adequate technical documentation for the suspected product) and apply the construed claims to the suspected product. Anything less may run afoul of Rule 11.
Darin Klemchuk is a partner in and Bhaveeni Parmar is an associate with Klemchuk Kubasta LLP in Dallas. Klemchuk focuses on intellectual property protection and prosecution, commercial and business litigation, and negotiating entertainment-related agreements. Parmar focuses on assessing, managing and protecting intellectual property, with an emphasis on litigating patent, trademark, copyright and trade-secret disputes.