When litigation is necessary to resolve matters concerning alleged violations of intellectual property rights, the multitude of remedies available under both state and federal law often result in complex pleadings containing multiple counts. In addition to claims brought pursuant to state law, such as common law unfair trade competition, or similar remedial provisions contained within state regulations pertaining to Business and Professions, intellectual property claims generally involve allegations of violation(s) in federal law. Common claims brought forth pursuant to federal statute include those for False Advertising and Unfair Competition, Patent Infringement, and Trademark Infringement. This article explores solely the issue of claims brought pursuant to federal provisions, as codified by United States Code.
Of course, assessing liability, in terms of whether an alleged violation did in fact occur, is a necessary precursor to a determination of recovery for damages in intellectual property disputes. However, in matters where liability appears to have clearly attached, litigators to these actions might find financial resources for legal support services, such as patent experts, are most efficiently maximized through limiting the scope of such services to the issue of damages. This is not to say that litigators should make impetuous assumptions concerning liability, and hastily choose to focus solely on the matter of damages; to do so would clearly be putting the cart before the horse. Rather, practitioners must assess the factual circumstances of particular matter to determine the appropriate allocation of available resources from those intended for litigation support services. Rationale of this notion is particularly exemplified in cases where there is a presumption that the product at issue was made by the patent process, which results in a shift of burden in establishing infringement to the Defendant, pursuant to 35 U.S.C. 295, which provides:
In actions alleging infringement of a process patent based on the importation, sale, offer for sale, or use of a product which is made from a process patented in the United States, if the court finds—
(1) that a substantial likelihood exists that the product was made by the patented process, and
(2) that the plaintiff has made a reasonable effort to determine the process actually used in the production of the product and was unable to so determine,
the product shall be presumed to have been so made, and the burden of establishing that the product was not made by the process shall be on the party asserting that it was not so made.
It follows then, that in matters involving presumption, the opportunity to redirect resources towards litigation support services, in particular, experts obtained for the purpose of assessment on the critical issue of damages, may present itself. The logic behind such reallocation of resources is realized through a practical interpretation of 35 U.S.C 284, which is a federal statute pertaining to damages for patent infringement. The inference that expert testimony on the issue of damages as being essential to recovery can be easily ascertained by taking note of the emphasis added to the foregoing citation of 35 U.S.C. 284, which provides:
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154 (d).
The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances. [emphasis added]
Because intellectual property actions often consist of concurrent issues of both trademark and patent infringements, along with their associated claims, the beneficial value of legal expert support is further realized in federal statutes pertaining to trademark infringement. In regard to damages, 15 U.S.C. 1117 – Recovery for Violation of Rights provides:
(a) Profits; damages and costs; attorney fees
When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125 (a) or (d) of this title, or a willful violation under section 1125 (c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover
(1) defendant’s profits,
(2) any damages sustained by the plaintiff, and
(3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party.
Like its patent infringement counterpart, a common sense interpretation of the above referenced trademark statute demonstrates the critical essentialness of presenting supporting evidence in the form of expert testimony. Provided with the opportunity to provide the court, through such expert testimony, with one party’s own damage calculations, which are then compared with judicial calculations, and which further permit determinations of treble recovery, practitioners would be wise to take advantage of the potential to either increase or reduce a damage award amounts.
As a related consideration, in matters asserting both patent and trademark claims, litigators should keep in mind the significance of having the aforethought to select expert witnesses according to the issues most wanting of supporting evidence, whether in patent or trademark, or both. Considerations must then be further delineated by priority between issues of liability and damages. By properly assessing any and all anticipated uses of an expert witness, and doing so in the initial stages of litigation, practitioners can avoid finding themselves in the position of having insufficient supporting evidence at a time where disclosure time limits have passed, or worse, having a disclosed witness’s testimony either excluded or limited by the court at the pre-trial or trial stage.
The most simplistic notion that can be obtained from the discussion herein is that although statutes don’t often, and as some may contend, rarely offer specific guiding principles, this is not necessarily the case with regard to intellectual property disputes. Basic notions of legal practice coupled with common sense interpretation of applicable statutes, appears then, to imply an intrinsic necessity to support arguments through testimony provided from a carefully selected expert witness.
By: Alicia McKnight, J.D.