Five Common Mistakes of Patent Prosecution from the Enforcement Perspective (Part 3)

Mistake #3: Potential Infringing Acts?

Well, this is not really a mistake. Too often, however, are claims of a patent application/family directed to one type of potential infringing acts only. The reasons could be that (1) the person who drafts the application does not think ahead and draft claims with an eye towards enforcement, (2) the person who drafts the application does not fully understand the technology roadmap in the market beyond the invention itself, or (3) both.

Examples
• Claims directed to a computer processor chip, but none directed to a computer or a network system using the chip.

Consequence
• Less flexibility in enforcement.
• In the example above, the patentee can only sue on the chip, but not a computer or a network system.
• Potential damages may be negatively affected.

Case Study

In Quanta Computer, Inc. v. LG Electronics, Inc., No. 06-937 (U.S. June 9, 2008), some of key facts and arguments are as follows:
• LGE has patents that are directed to computer chips and computers.
• LGE licensed its patents to Intel for Intel’s chips with the condition that the license does not cover combinations (e.g., computers) with non-Intel products by Intel’s customers.
• LGE sought royalties from computer manufacturers, and got payments from many.
• Quanta contended that it does not have to pay royalties for its computers containing Intel chips due to patent exhaustion, among other reasons.

The US Supreme Court held that patent exhaustion applies here, partly because Intel did not violate any terms of the LGE-Intel license by selling its chips.

Notwithstanding LGE’s losing, this case illustrates the benefits of having claims directed to multiple potential infringing acts:
• “The sale of a device that practices patent A does not, by virtue of practicing patent A, exhaust patent B.” Slip op. at 15.
• Overall, the Court appears to suggest that a patent license may be drafted in a way to avoid patent exhaustion.
• Conceivably, a patentee may choose not to license a chip maker but sue a computer manufacturer directly for higher damages (no patent exhaustion in this scenario).

Solution

Draft multiple sets of claims (or patents), each set covering a different type of potentially infringing acts in the supply chain (i.e., chip, computer, and network system).
• Increase flexibility in enforcement.
• Increase potential damage awards.

(TO BE CONTINUED)