Pitfalls of Patent Cases Involving “Paradigm” or “Representative” Patents and Claims
Every patent claim in every patent is its own invention and stands on its own. An accused infringer is liable for patent infringement if it infringes at least one patent claim in one asserted patent.
Some patent cases involve large numbers of patents and/or large numbers of asserted claims. Patent holders are generally quite happy to assert large numbers of patents and claims because it increases defense costs and provides leverage for forcing the defendant to settle. Nevertheless, litigating such cases can be complex and burdensome for a district court, and it can be particularly challenging for a jury to handle. As a result, some district court judges will require patent holders to elect “paradigm” or “representative” patents from among those that are identified in the complaint. In addition, patent holders may be required to elect certain patent claims.
While this process is efficient for the court, it does raise due process concerns for the patent holder. After all, each claim in each asserted patent is its own individual “right to exclude.” We have been involved in this situation, and in our case the district court did not explain how the case would proceed after the “paradigm” patents and claims were litigated. When this happens, the patent holder’s rights may be compromised unless appropriate objections and reservations of rights are made.
The Federal Circuit recently confronted a similar situation in Nuance Communications, Inc. v. Abbyy USA Software House, Inc., et al., ___ F.3d____ (Case Nos. 2014-1629 and -1630) (February 22, 2016). A copy of the opinion can be found here.
The plaintiff Nuance brought an eight patent case involving optical character recognition (“OCR”) against the defendants in the U.S. District Court for the Northern District of California. According to the opinion, Nuance made a proposal to limit its total number of patents at trial. Id. at 5. However, the “proposal” appears to have been in response to a special master’s order to narrow the case. The jury found all asserted claims were not infringed.
The district court awarded the defendants their costs over Nuance’s objection that costs should not be awarded until the remaining patents and claims were tried. The court held that further trials would not be conducted because the judgment on the selected patents and claims “did not exempt any of Nuance’s causes of action or reserve judgment on any of Nuances’ patents that it chose not to pursue at trial.” Id. at 6.
Before the Federal Circuit, Nuance argued that the district court violated Nuance’s due process rights by depriving it of the right to litigate the claims and patents that were not litigated at trial. The Federal Circuit disagreed, despite acknowledging that “clearer guidance from the district court as to the consequences of Nuances’ decision to narrow the case might have been preferable.” Id. at 10-11. The Court took Nuance to task, holding that “ultimately the responsibility was on Nuance to timely notify the district court as to any objection to the court’s procedures.” Id. at 11. The Court was able to identify statements that Nuance made which suggested that Nuance did not expect to have multiple trials. However, Nuance was able to point to several portions of the district court record where it made clear that it intended to eventually try all of its patents and claims.
In any event, the Federal Circuit held that Nuance had foregone its rights to pursue the patents and claims that were not tried because “Nuance made no motion, objection, or assertion otherwise that any limits on the number of claims or patents it could assert deprived it of any due process rights to adjudication on each unique legal issue its operative complaint presented.” Id. at 14. The Court further held that “Nuance actively participated in structuring the winnowing process and never objected until it had already lost at trial.” Id. at 15.
In Nuance the Federal Circuit also discusses its earlier holding in In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir. 2011). In that case, the Court held that a district court could properly limit the number of patent claims that a patent holder could assert at trial if it gave the patent holder the opportunity to assert additional claims by showing that they raised unique legal issues. Id. at 15.
What does this means for patent owners? If confronted with an order to designate paradigm patents and/or claims, the patent holder needs to put a due process objection on the record and request the opportunity to demonstrate that the Court’s process may deprive it of the opportunity to litigate “unique legal issues.” This may be easier said than done, because some district court judges may be hostile to an attempt to preserve the right to litigate more than the paradigm claims or patents. However, without a record that establishes a clear objection and prejudice from a paradigm claim process, the patent holder may find that it is foreclosed from litigating a number of patents (or claims) that it asserted in its complaint.