Patent Infringement: How A Freedom To Operate Review Can Help Mitigate The Risk Of Substantial Liability
Damages that may be awarded to a patent owner who can prove that a party infringes a patent can be significant. These damages can include equitable remedies, such as an award of an injunction preventing the infringer from further sales of its infringing product(s), monetary damages, or both.
- Monetary Damages May Include Reasonable Royalty or Lost Profits.
A patentee is entitled to damages “adequate to compensate for the infringement.” The minimum amount of monetary damages that a patentee might recover are a “reasonable royalty.” The royalty amount may be determined by review of a number of factors, including royalty rates charged for a license of the same patent in the past, as well as expert testimony on the royalty rate that is typical in that field. Patentees who had the ability to produce a patented product or to offer a patented method may recover their lost profits.
The amount of monetary damages may be increased if a particular case is found to be exceptional or if an infringement is found to be willful. These enhanced damages, when awarded, can be as much as triple the actual damages. Additionally, attorney fees can be awarded if the patent owner can show that the patent infringement was the result of exceptional circumstances. Interest and costs can also be available.
- Injunctions May Prevent Use of a Patented Technology.
An infringer may be enjoined from practicing a patented technology. In addition to preventing future sales until a workaround is found, an injunction may stop the ongoing use of patented methods or devices. This may result in service interruptions for the infringer’s customers until an alternative source of the infringing good or service may be found.
- An Infringer Can Incur Damages Even Without Knowledge Of The Patent.
Damages can be incurred from infringing a patent even if the infringer is not aware of the patent. For instance, a patent owner may use “virtual marking,” which provides notice of patent coverage via an Internet posting. Although patents to products should be marked, patents for services may not require that notice be provided to potential infringers before damages begin to accrue. Also, if a patent owner does not physically make or sell a product or offer a service relating to their patent, the patent owner may not have an obligation to provide any marking at all.
- Freedom To Operate Reviews May Reduce The Risk Of Patent Infringement.
Freedom to operate reviews are often conducted to reduce the risk of incurring liability from unknowingly infringing one or more third party patents. This type of review often involves a search for patents relevant to a particular product or service offering. The patents identified from the searching are reviewed to determine whether they pose an infringement risk to the product or service offering. Often these reviews are conducted early in the development of a product, while there is still time to consider a workaround to avoid the claims of any patents that are believed to present potentially enhanced freedom to operate risks.
No freedom to operate search will entirely remove the risk of infringement. However, early identification of potentially relevant patents and pending applications can reduce the need for costly changes later in a product’s life.
If patents discovered during the freedom to operate search include claims that cannot be worked around, the developer of a potentially infringing product may further limit liability by obtaining an opinion that the proposed product does not infringe the close claims, or by obtaining an opinion that the close claims are invalid because the patent was improperly issued. Although having a non-infringement or invalidity opinion is not a guarantee that a court will not find that infringement, if any, was willful, they are a significant factor in any “lack of willfulness” defense.