Elements that make up Intellectual Property

Proper damage or liability assessment considerations, in terms of suitability of expert witness services which are engaged for testimonial purposes in intellectual property disputes, require litigators to possess sufficient knowledge of all available remedies. However, this must also include a full understanding as to applicable standards and criteria for assessing damage awards, as well as any limiting factors associated with remedial provisions. This notion is particularly exemplified given that intellectual property disputes often involve overlapping requests for relief, wherein, the singular actions of the alleged violator, allow for recovery pursuant to separate and distinct statutes. For example, with regard to patent infringement, 35 U.S.C. 289 provides an additional remedy for infringement of design patent, as follows:

Whoever during the term of a patent for a design, without license of the owner,

(1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or
(2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties.

Nothing in this section shall prevent, lessen, or impeach any other remedy which an owner of an infringed patent has under the provisions of this title, but he shall not twice recover the profit made from the infringement.

In taking note to the concluding sentence of the preceding citation, practitioners can easily see the potential for recovery brought forth under separate requests for relief, yet extending from a single product alleged to have been infringed upon. Through understanding the interrelated claims for relief pursuant to 35 U.S.C. 284, which allows for the recovery of “reasonable royalties,” as well as claims for “total profit,” under 35 U.S.C. 289, Plaintiffs can maximize damage awards, while defense can limit liabilities.

An additional recovery consideration involves provisions that provide for attorney fees, which although are seemingly in contradiction to the American Rule, are permissible under federal law pertaining to Patent Infringements. Pursuant to 35 U.S.C. 285, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” Also take note to the availability of recovery for attorney fees in  trademark infringement claims brought pursuant to subsection (3) of 15 U.S.C. 1117- Recovery for Violation of Rights, which utilizes the same ‘exceptional case’ standard.

As has been stated in numerous cases evaluating a party’s request for attorney fees, the determination involves a two-step process. First the court must determine whether the moving party has proven, by clear and convincing evidence, that the case is exceptional. Upon deeming the case exceptional, the court must then decide whether the award is justified and appropriate. See Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1327 (Fed.Cir.2003)see also Aspex Eyewear Inc. v. Clariti Eyewear, Inc., 605 F.3d 1305, 1314 (Fed.Cir.2010).

Prior decisions have cited a number of exceptional circumstances which permit recovery for attorney fee requests brought pursuant to 35 U.S.C. 285. For example, “[a] case may be deemed exceptional under § 285 where there has been a frivolous suit or willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Federal Rule of Civil Procedure 11, or like infractions.” See, Serio-US Indus., Inc. v. Plastic Recovery Techs. Corp., 459 F.3d 1311, 1321-22 (Fed. Cir. 2006). Also, as stated in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed.Cir.2005), “[a]bsent litigation misconduct or misconduct in securing the patent, a district court can award attorney fees under § 285 only if the litigation is both: (1) brought in subjective bad faith; and (2) objectively baseless.”

It is important to point out that when an award for attorney fees under 35 U.S.C. 285 is insufficient, the court may award expenses, such as expert witness fees. However, before awarding expert witness fees, as pointed out in Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381, 1391 (Fed.Cir.2008), “the district court must offer a reasoned explanation for why the award of attorney fees and expenses under section 285 is not a sufficient sanction for the conduct in question.” This matter was addressed in MarcTec, LLc v. Johnson & Johnson, 664 F. 3d 907 (Fed. Cir. 2012), wherein the district court, in awarding expert fees, found that:

(1) “[e]xpert fees are recoverable in patent cases where, as here, there was bad faith, such as the filing of a frivolous action”; and (2) “[b]ecause of MarcTec’s bad faith in bringing and pressing this suit when it had no basis for asserting infringement, [the defendant] is awarded its expert fees of $809,788.02 in the exercise of this Court’s inherent power.” MarcTec, supra, quoting Exceptional Case Order, 2010 WL 680490, at *11, 2010 U.S. Dist. LEXIS 15789, at *30.

In affirming its decision to award expert fees, the appellate court in MarcTec stated:

(1) Defendant was forced to incur expert witness expenses to rebut the Plaintiff’s unreliable and irrelevant expert testimony which was excluded under Daubert; and (2) the amount Defendant was required to expend on experts was not compensable under § 285. Because Plaintiff’s vexatious conduct and bad faith increased the cost of litigation in ways that are not compensated under § 285, we find that the district court did not abuse its discretion in awarding expert fees to Defendant. MarcTec, supra at 921-922.

What is demonstrated by the decision in MarcTec, and other similar cases, is that although courts do possess the inherent power to award expert witness fees, this power is not unbridled. More importantly, in order to recover such fees, the demand for specified fees must be properly asserted, for it is unlikely that such an award would occur upon the court’s own initiative. It is further noted that the award of expert fees is not limited to recovery for a defending party to an action, rather, the aforementioned case merely provided as an example.

In summation, intellectual property disputes are typically complicated, and as such, they can be extremely expensive. By knowing all available routes to recovery, as provided by statute, and further interpreted by case law, practitioners may find themselves in a better position to limit litigation expenditures for their clients.

By: Alicia McKnight, J.D.