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Media Content and New Services: Handling Infringement Claims
Patent infringement safeguards for the cable and telecom
industries
By
James S. Hsue
[May 2008]
Ten to twenty companies, most of which are “patent trolls,” have filed patent infringement suits against the cable and telecommunications industries. With the rapid deployment of high definition television (HDTV), and the convergence in the delivery of media content, voice and other new services in both industries, these suits are probably expected. This advisory briefly summarizes precautions media operators can take when faced with patent claims.
Indemnity from vendors
Upon receipt of a letter offering to license or simply introducing certain patents, it is useful to review vendor agreements to determine whether any liability under the patents is covered by an indemnity clause in the agreements. Indemnity clauses frequently contain a notice requirement before the vendor's indemnity obligation is triggered. It is therefore important to review indemnity clauses in vendor agreements to comply with the notice requirement. There may also be certain exceptions in indemnity clauses that should be reviewed, such as where the equipment purchased is designed according to purchaser specifications, or where the vendor has no patent liability when the purchased equipment is combined with other components.
Due diligence requirements
To reduce the risk for willful infringement after receiving a letter providing notification of certain patents, for reasons explained below, it is advisable to document why the patents at issue are not believed to be of concern as soon as possible.
If an infringer is successfully sued for willful infringement, the infringer can potentially be liable for treble damages and attorney's fees. The standard for willful infringement has changed recently. To prove willful infringement, the patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that the action constituted infringement of a valid patent. Important factors that will be considered in proving willful infringement include whether the alleged infringer acted in a manner consistent with the standards of commerce and whether there was intentional copying. Though not required in many cases, formal opinion letters are still useful for shielding against willful infringement liability.
A good defense against willful infringement is a good faith belief that the claims of the patent are invalid. This can be shown by gathering relevant prior art such as patents, publications or non-documentary evidence, reviewing the patent claims against the prior art, and coming to a reasoned conclusion that the prior art renders the patent claims invalid. If done properly, this is a good defense—even if the patent is ultimately ruled to be valid in light of the prior art. For this reason, it may be useful to gather a collection of pertinent prior art to use against patents of concern.
Actions to consider
If there is a community of interest among companies that received the same or similar letter, it is possible to form a defense pool of companies affected by a particular patent. This can be an effective way to share information and costs. Without the formation of a defense pool, sharing information between companies may become tricky because of issue preclusion and other concerns, unless the information is publicly available.
In some circumstances, it is also possible to file a court action in response to these letters to obtain a declaration by the court that the patent is invalid or that it is not infringed.
If there is prior art that invalidates the patent at issue, it is important to determine whether it is better to attempt to invalidate the patent at the U.S. Patent Office or in court. The patent can be invalidated at the Patent Office by filing a reexamination of the patent. To use the prior art in court, it is necessary to either file a court action, or to use it as a defense in a patent infringement action filed by the patentee. Pending in Congress is a patent reform bill, which is intended to replace
one form of
the reexamination process
with
a post grant
opposition
procedure at the Patent Office for challenging issued patents.
For
more information, please contact:
This
advisory is a publication of Davis Wright Tremaine LLP. Our purpose
in publishing this advisory is to inform our clients and friends
of recent legal developments. It is not intended, nor should it
be used, as a substitute for specific legal advice as legal counsel
may be given only in response to inquiries regarding particular
situations.
Copyright © 2008, Davis Wright Tremaine LLP.
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