The Rise of The End User in Patent Litigation (and Attorney Fee Shifting)
|Written by Gaia Bernstein
Posted: June 24, 2014 @ 9:00 am
We usually think of two players in the patent system: the patentee and its competitor, assuming that competitors will represent the interests of end users. But, in my article – The Rise of the End User in Patent Litigation, which is forthcoming in the Boston College Law Review – I show that this is changing. Increasingly end users are becoming significant players in the patent system. What follows is an executive summary of this article.
Attention has recently turned to patent assertion entities that are suing vast numbers of customers using patented technologies in their everyday businesses. But, end users were also principal players in some of the main recent patent before the Supreme Court. In Bowman v. Monsanto, Monsanto sued farmers for re-using its patented self-replicating seeds. In Association for Molecular Pathology v. Myriad Genetics, patients and physicians sued to invalidate breast cancer gene patents. And, patients and drug stores repeatedly challenge pay-for-delay agreements between patentees and competitors, claiming they undermine patients’ interests in access to generic drugs. Finally, end users are likely to become even more prevalent in patent litigation, as the 3D printer becomes more popular, making it more likely that an individual or a small business will make an infringing item that will expose them to patent liability.
I define end users broadly to include those using a patented technology for personal consumption and those using it in business, but it is important to emphasize that they are strictly users. One would still be a user under my definition even if they incorporate the patented technology into a product or service they offer their customers they do not make or sell the technology itself.
End users differ from small technological competitors in three respects. First, end users usually lack technological sophistication – they are generally not technological companies, and do not produce and supply the allegedly infringing technology. Second, end users usually become involved in the patent conflict relatively late in the life of the patent, after the patented technology enters the market and achieves widespread adoption. Third, end users are typically one-time players. In most cases the technology is ancillary to their business and they do not have a long-term stake.
One may have thought that the last major overhaul of U.S. patent laws would have addressed the thorny issues of patent litigation and enforcement. Unfortunately the America Invents Act did not predict and is largely ill equipped to address the growing role of end users. The AIA tried to address the needs of small entities, mainly, by adding and changing procedures to challenge patents in the PTO, providing a cheaper and faster forum for challenging validity. But, the AIA’s novel PTO procedures are largely unsuitable for end users because they permit expansive challenges mostly early in the life of the patent before end users are likely to be involved in the patent dispute.
The AIA’s failure to account for the rise of the end user leaves end users without tools that can put them on equal procedural footing with traditional patent litigation parties. Fee shifting of attorney fees and litigation expenses to the prevailing party can play a role in end user cases. I acknowledge that fee shifting, by no means, will motivate all end users to litigate even meritorious cases and challenge potentially invalid patents. The rise of the end user is a complex phenomenon that needs to be addressed by series of reforms (which I address in other articles I am working on). But, importantly, fee shifting is applicable to the diverse array of end user cases and can contribute toward leveling the footing of end users in all type of end user-patentee disputes.
Fee shifting in patent litigation has been a hot topic this year. Recently, the Supreme Court decided two fee shifting cases: Highmark v. Allcare and Octane Health v. Octane Fitness. In Octane Health, the Court lowered the standard for awarding fee shifting in patent litigation. Congress is also considering multiple bills advocating different versions of fee shifting. The problem is that although some of the congressional bills address ’patent assertion entities’ suits against customers, neither these bills nor the Supreme Court decisions address the broader role that end users are now playing in our patent system. With this in mind I believe the case for fee shifting is particularly strong where end users are implicated.
Although end users would benefit from any change that facilitates fee shifting, particularly pro-alleged infringer fee shifting, these are less effective because they do not carry a direct message to end users that their risk in undertaking litigation and incurring huge costs would be decreased. For that reason, I propose to include the end user status as a factor that weighs in favor of fee shifting. And although I define end user broadly in the article, I suggest that as courts determine whether to award fee shifting they should look closely at the specific end user and compare him to the classic end user. For example, users who possess technological sophistication may not resemble a competitor as much as the user innovator, but may still share fewer of the classical characteristics of the end user. In this case inequality between parties may also be reduced and the case for fee shifting would be weaker.
For more information please see my complete article, which is available at: The Rise of the End User in Patent Litigation.
About the Author
Gaia Bernstein is a Professor of Law at Seton Hall University School of Law. Professor Bernstein specializes in intellectual property, law and technology theory, law and genetics, information privacy, reproductive technologies and family law. Her scholarship looks at the inter-relations between technology, law and society, examining the dissemination and adoption processes of new technologies, including both medical and communications technologies. Professor Bernstein’s current scholarship and ongoing research focuses primarily on the role of end users in patent law.
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