Top Legal Issues Facing Automotive Suppliers In 2014 - Patents

Executive Summary

Patent litigation case filings by non-practicing entities (NPEs) against practicing entities (manufacturers of products) continue to increase. Although the legislature has enacted reforms in new legislation, businesses still face substantial problems. Various inexpensive methods exist that may be used by practicing entities to defend against and deter non-practicing entities. One method is to seek attorney's fees from nonpracticing entities in exceptional cases. Other patent litigation concerns include avoiding suit from subcontractors by obtaining appropriate licenses. We are at the forefront of developing innovative techniques to handle patent litigation issues, in a cost effective manner.

1. INCREASED PATENT LITIGATION

   The number of patent litigation suits continues to increase. The chart below is data from a PricewaterhouseCoopers Patent Litigation Study released in 2013.

   Given the proliferation of software in the modern automobile, and the frequency of NPE suits involving software-related patents, however, the increase in patent litigation is likely to accelerate further.

   Some actions that automotive suppliers may take to stem the onslaught of patent litigation include clearing products prior to manufacturing or release. Other preventative measures may include increasing patent filings where the patent applications are published in 18 months. Further, each company should adopt innovative litigation strategies involving immediate actions to resolve patent litigation suits.

2. SEEKING ATTORNEY'S FEES FROM NONPRACTICING ENTITIES

   The Federal Circuit recently affirmed an award of $1.6 million in attorney's fees to the defendants in a patent suit in Taurus IP, LLC v. DaimlerChrysler Corp., 726 F.3d 1306 (Fed. Cir. 2013). Attorney's fees may be awarded to a defendant in patent cases when the ligation is objectively baseless and is in subjective bad faith. To be objectively baseless, the patentee's assertions, whether manifested in its infringement allegations or its claim construction positions, "must be such that no reasonable litigant could expect success on the merits." Id. at 1309.

   1. OBJECTIVELY BASELESS

      In Taurus, the Federal Circuit ruled, "Taurus [the nonpracticing entity] improperly asserted and maintained its positions in the litigation." The Federal Circuit reasoned "no reasonable litigant in Taurus's position [after the claim construction] could have expected a finding that a web surfer accessing the accused...