Inequitable conduct applies where a patent applicant misrepresented or omitted information in his application that was material to obtaining the patent, and he did so with specific intent to mislead or deceive the PTO.
Patent exhaustion applies where a plaintiff is attempting to exercise rights over a particular item after an authorized sale of that item. The first sale of the item forecloses the patentee from exercising rights over the item.
Patent misuse applies where the patentee employs conditions in a license or sale of the patented technology to expand the scope of the patent grant. The most common instance occurs where a patentee conditions a license on purchasing an unpatented product.
The Patent Act recognizes that a defendant may raise as defenses challenges to validity and infringement. These challenges are the most common defenses in a patent suit. Other defenses—less frequently applied—include the affirmative defenses of inequitable conduct, patent exhaustion, patent misuse, and laches. Each is described below.
Notably, challenges to validity and infringement are merely challenges to the plaintiff’s prima facie case. They are not affirmative defenses.
Defenses & Remedies
The Patent Act allows courts to grant an injunction to prevent patent infringement. The statute states that the injunction should be granted “in accordance with the principles of equity.” In eBay Inc. v. MercExchange, L.L.C., the Court indicated that the granting of an injunction should not be automatic.
The Patent Act provides that a patentee is entitled to damages "adequate to compensate for the infringement." This amount is measured as lost profits or a reasonable royalty.
Lost profits must be reasonably foreseeable to be recoverable as damages. So, to recover foreseeable lost profits, a patentee must establish causation in fact. This entails establishing that “but for” the infringement, the patentee would have earned the increased profits.
Courts use two methods to calculate a reasonable royalty. The first method occurs where courts determine a proportion of the infringer’s projected profits for the infringing product. The second method occurs where courts explore a hypothetical negotiation between a willing licensor and a willing licensee of the patent.
Treble damages are possible in egregious cases of infringement, typified by willful misconduct.
Laches applies where the plaintiff knew (or should have known) of facts sufficient to bring a claim against the defendant yet delayed filing suit for a time period that was unreasonable and inexcusable.