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Intellectual Property Litigation in the Federal Courts

Intellectual property disputes are typically litigated in the federal courts created under Article III of the United States Constitution.  The US federal court system includes thirteen federal circuit courts for the various U.S. territories along with the Court of Appeals for the Federal Circuit, which has exclusive jurisdiction over patent and other intellectual property appeals.  Except for the D.C. Circuit, there are several federal district courts covering sub-territories.

Federal courts have subject matter jurisdiction in cases that relate to federal issues, including intellectual property conflicts.  In patent and copyright disputes this subject matter jurisdiction excludes state courts.  Federal and state courts have concurrent jurisdiction over trademark matters, however, most such cases are heard by federal courts.  In addition to subject matter jurisdiction, the court must also have personal jurisdiction over the particular defendant and also be an appropriate venue to hear the dispute, considering matters of convenience and fairness to the defendant.

On the other hand, where there is no federal issue, such as, for example, in most contract, products liability, and trade secret litigation, subject matter jurisdiction will only vest in federal courts if there is diversity of citizenship between parties and the amount in controversy exceeds $75,000.  Federal courts also do not possess automatic subject matter jurisdiction where the federal issues are tangential to what are essentially non-federal claims.  For example, the interpretation of a patent license or the ownership of a trademark or copyright may not arise under the federal patent, trademark, or copyright laws.

Filing a complaint in a United States federal district court commences the lawsuit.  The complaint includes a statement setting forth the court’s subject matter and personal jurisdiction, the factual basis of the claim, and the type of relief sought.  Typically, the pleading need only provide a general notice as to the claims asserted, which may be pleaded alternatively or hypothetically.

The defendant must respond to the complaint with an answer or by motion within twenty days of service of the complaint.  Motions may seek dismissal of the complaint or of one or more asserted claims.  The answer may include admissions, direct denials and denials in the form of allegations that the defendant lacks sufficient information to form an opinion.

In litigation, discovery may be extremely broad since it is intended to provide all parties with ample opportunity in advance of trial to collect all relevant evidence.  Thus, each side can learn the other side’s case and thereby avoid any possible surprise at the time of trial.  The parties normally exchange initially certain discovery information, including the names of witnesses knowledgeable about the case, and documents that are relevant.

Following the close of discovery, a pretrial order is entered which governs the documents and testimony which may be introduced at trial.  The extensive discovery is intended to ensure that all information that is likely to be introduced as evidence at trial has already been disclosed and exchanged between the litigants.  The parties will submit their respective proposed findings of fact and conclusions of law in the case of a non-jury trial or proposed jury instructions where the trial will be heard by a jury.

Prior to trial, injunctive relief may be sought in many intellectual property cases.  The most common remedies sought include a temporary restraining order or a preliminary injunction.  A TRO and a preliminary injunction require the same showing. Generally the moving party must establish a likelihood of success on the merits and that it shall suffer irreparable harm if the court does not maintain the status quo by the issuance of an immediate injunction.  Other criteria may include a balancing of the respective hardships upon the parties and the public interest.

Given the costs and risks of litigation, most cases are either settled or decided in advance of trial.  For example, the parties may enter into a private agreement settling their dispute, and the case is dismissed by stipulation either with or without prejudice. Alternatively, the parties may consent to the entry of a final judgment, which is a type of contract enforceable by contempt sanctions.

A case may also be decided on its merits prior to trial by a motion for summary judgment.  Upon review of the respective parties’ proofs in the form of affidavits, documents, depositions, and other discovery, the court may find that there is no genuine issue of material fact on one or more issues and, therefore, enter judgment on such issues. While a decision on a motion for summary judgment may not decide contested factual issues and thereby substitute for a trial of those issues, judges have been increasingly sympathetic to such motions.

In the federal district court level the Federal Rules of Civil Procedure and the local rules for the particular district court govern civil law suits.  The trial is governed by the Federal Rules of Evidence, which limit the types of evidence that may be heard.  The parties are entitled to elect a trial by jury in intellectual property cases.  At the trial, evidence consists of oral testimony, documents and discovery.

court decision is rendered which must set forth specific findings of fact and conclusions of law. A separate judgment document is then entered. Generally, an appeal may be taken only from a final decision of the trial court.

There are generally two ways in which a case comes before the United States Supreme Court: by an appeal and by means of a writ of certiorari.  Appeals from federal circuit courts of appeals are limited to those cases where a circuit court has held a state statute unconstitutional or otherwise invalid under federal law.  Review of the decisions of federal and state courts under the certiorari procedure is discretionary and in only a very few of the cases when petitions for certiorari presented to the court does the court actually review the decision below.  In the intellectual property area, the Supreme Court acts to enunciate the broad principles of law which must then be filled in by the lower courts.