Kara Sears
The history of patent damages lawsuits is a long and complex one, with the nineteenth century seeing a surge in patent cases, dwarfing the number of cases filed in recent years. The economic historian Zorina Khan analysed 795 reported opinions in patent cases from 1790-1860, indicating the prevalence of patent litigation in nineteenth-century America. One notable early patent damages lawsuit was filed in 1870 by John J. Schillinger, who sued the United States for wrongful use of his patented concrete pavement design in the construction of the Capitol grounds. Another early case was in 1895, when the Consolidated Electric Light Company sued the McKeesport Light Company for infringing on a patent related to an incandescent lamp. More recently, in 1990, Litton Industries Inc. filed a patent infringement lawsuit against Honeywell Inc., alleging the use of a patented thin-film process, with the case finally settling in 2001. The twenty-first century has also witnessed a significant increase in patent litigation, with the number of cases doubling during the 1990s and continuing to rise, leading to criticism of the patent system.
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What You'll Learn
Patent infringement lawsuits
Patent infringement occurs when an individual or commercial entity engages in unauthorized acts such as making, using, selling, or importing a patented invention without the consent of the patent holder. Patent infringement lawsuits can be lengthy and result in significant financial losses and protracted litigation.
The nineteenth century saw a surge in patent cases, with New York City and Philadelphia having ten times more patent litigation per U.S. patent in 1850 than the entire United States in 2013. The economic historian Zorina Khan analyzed 795 reported opinions in patent cases from 1790-1860, indicating a high volume of nineteenth-century patent litigation.
Some notable patent infringement cases include:
- Kodak vs. Polaroid: In 1990, Kodak was ordered to pay Polaroid $909 million USD in damages, later adjusted to $925 million USD, for infringing on Polaroid's patents.
- LabCorp vs. Metabolite: In 1999, Metabolite took legal action against LabCorp for infringing on a patent covering a diagnostic test. LabCorp was ordered to pay $4.7 million in damages.
- Centocor vs. Abbott Laboratories: In 2009, Centocor won a patent infringement lawsuit against Abbott Laboratories over its drug Humira, receiving $1.67 billion in damages.
- Robert Kearns vs. Chrysler: Robert Kearns, an inventor who created intermittent windshield wiper systems, received $30 million in compensation in 1995 for Chrysler's patent infringement.
These cases highlight the importance of understanding patent law and protecting intellectual property rights.
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Patent litigation explosion in the 19th century
The nineteenth century witnessed an unprecedented surge in patent litigation cases, with the most prolific enforcers bringing hundreds or even thousands of suits. This trend, dubbed the "first patent litigation explosion," stands in contrast to the modern-day perception of a patent litigation explosion.
The rate of lawsuits per patent in 1850 was more than ten times higher than in 2013, and New York City and Philadelphia alone had more patent litigation than the entire United States in the latter year. Similarly, the Southern District of New York in 1880 would have ranked third in terms of districts with the most patent infringement suits in 2014. This indicates that the absolute quantity of late-nineteenth-century patent cases was significant when compared to recent years.
Several factors contributed to the patent litigation explosion in the nineteenth century. One factor was the opportunism and rent-seeking behaviour that the patent system allowed for a period. Patents could be extended beyond the standard 14-year term, leading to well-funded lobbying battles in Congress. Additionally, suits were commonly filed against large numbers of small-scale technology users, including farmers, who faced high costs when sued in a distant federal court. The scale of businesses also played a role, as patentees often had to target individual infringers due to the absence of large-scale manufacturing firms or retailers in their sectors.
The first patent litigation explosion eventually ebbed, with a decline in the number of suits by the 1890s and early 1900s. This decrease was partly due to courts cracking down on abusive practices by patentees and a shift towards contests between bigger companies. Additionally, judicial hostility towards suing small, weak defendants and the rise of modern corporations may have contributed to the decline in individual lawsuits.
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Patent validity and infringement
The defence against patent infringement claims can be based on non-infringement or invalidity. Non-infringement asserts that at least one element of the asserted claim is absent in the accused product or method. On the other hand, invalidity challenges the validity of the patent itself or the allegedly infringed claims. Case law provides additional defences, such as the first-sale doctrine, the right to repair, and unenforceability due to inequitable conduct.
In the United States, a valid patent grants its owner the exclusive right to practice the invention described in the patent. Patent infringement occurs when an individual or entity engages in prohibited acts, such as making, using, selling, offering to sell, or importing the patented product without authorisation. 35 U.S.C. § 271(b) addresses instances where one actively induces patent infringement by encouraging or aiding another party to infringe. 35 U.S.C. § 271(c), or "contributory infringement," pertains to situations where a seller provides a part or component that contributes to an infringement when used in a specific way, even if the part itself does not infringe any patents.
The consequences of losing a patent infringement lawsuit can be significant, impacting operations and profitability. Monetary damages are often imposed, and in some cases, the infringer may be forced to remove the infringing product from the market. The complexity and value of inventions can lead to lengthy lawsuits as patents are examined in detail. Patent infringement insurance is available to protect inventors and third parties from the risks of inadvertent infringement, although it is often expensive and challenging to obtain.
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Patent lawsuits in England and Venice
The history of patent law is generally considered to have started in Venice with the Venetian Statute of 1474. The statute of 1474 might have played a significant role in encouraging inventors to patent and exercise their inventions in Venice. From the late 15th century and throughout the 16th century, the Venetian government received over a thousand petitions to patent inventions, ranging from windmills to culinary experiments. This legislation provided a formal legal mechanism for individual entrepreneurs to challenge corporative monopolies.
In England, grants in the form of letters patent were issued by the sovereign to inventors who petitioned and were approved. A grant of 1331 to John Kempe and his company is the earliest authenticated instance of a royal grant made with the purpose of instructing the English in a new industry. In 1637, Mrs. Amye Everard Ball became the first woman in England to be granted a patent, for a tincture of saffron.
In the 1850s, patent law in England began to be criticised as obstructing research and benefiting the few at the expense of the public good. This campaign against patenting, supported by inventors, entrepreneurs, economists, law scholars, scientists, and manufacturers, came close to abolishing patents. However, the system was not abolished and was instead reformed with the Patent Law Amendment Act of 1852, which simplified the procedure for obtaining patents, reduced fees, and created one office for the entire United Kingdom.
In the 21st century, there has been a "patent litigation explosion", with a surge of patent cases. However, this is not unprecedented, as an even bigger surge of patent cases occurred in the 19th century. For example, in 1850, New York City and Philadelphia had ten times more patent litigation per U.S. patent in force than the entire United States in 2013.
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Patent lawsuits in colonial America
In early colonial America, there were no general laws providing for the issuing of patents. Inventors of new products could appeal to colonial governments, which could grant them exclusive commercial rights to the products. The earliest such right was granted in the state of Massachusetts in 1641 when the Massachusetts General Court gave Samuel Winslow the exclusive right to utilize a new process of making salt for 10 years. This case is unofficially known as the first "patent" in America. Similar exclusive commercial rights were granted in other colonies and later states.
As the number of patent applications increased, the patent office became overwhelmed and unable to adequately examine every application. This resulted in patents being granted to objects and procedures that were not original inventions or useful, leading to more lawsuits being filed over patent validity and infringement. The nineteenth century saw a surge in patent cases, with New York City and Philadelphia alone having ten times more patent litigation per U.S. patent in force in 1850 than the entire United States in 2013.
The Patent Act of 1793 barred foreign inventors from receiving patents while granting patents to Americans who had pirated technology from other countries. This policy made the United States a ""sanctuary for industrial pirates," allowing Americans to commercialize foreign innovations with legal immunity. The Patent Act of 1836 created an official Patent Office, restructuring the process and freeing the Secretary of State from the duty of granting patents.
The Court of Customs and Patent Appeals was abolished in 1982, transferring patent appeal cases to the Court of Appeals for the Federal Circuit. This court assured the uniformity of patent case law in the country. In 2011, the Leahy-Smith America Invents Act enacted significant changes to the U.S. patent system, switching from a "first to invent" to a "first inventor to file" system.
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Frequently asked questions
The first authenticated instance of a patent was granted in 1331 to John Kempe and his company. However, the first patent damages lawsuit is unknown. The nineteenth century saw a surge of patent cases, with New York City and Philadelphia having ten times more patent litigation per U.S. patent in 1850 than the entire United States in 2013.
Notable patent damages lawsuits include the case between Kodak and Polaroid, which resulted in Kodak paying $925 million USD in damages, including interest. Another example is the lawsuit between Marvell Technology and CMU, where Marvell Technology was initially ordered to pay $1.54 billion USD but was later reduced to a minimum of $278 million USD.
Losing a patent infringement lawsuit can have significant impacts on operations and profitability. It may result in financial penalties, including monetary damages, enhanced damages of up to three times the assessed amount, and legal fees.
