Five Tactics for Cybersecurity Companies to Defeat Patent Infringement Claims | Fish & Richardson

Navigating patent infringement claims requires a deep understanding of both the legal landscape and the specifics of the technology at stake, especially in the fast-evolving cybersecurity sector. Creative litigation strategies are crucial for defending against infringement claims and minimizing disruption to ongoing innovation. But even in cutting-edge industries like cybersecurity, tried-and-true litigation maneuvers can still deliver big wins.

Here are five litigation tactics cybersecurity companies can use to defeat patent infringement claims.

1. Challenge the court’s jurisdiction

Defendants in patent infringement actions often file motions to dismiss for lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure to challenge the court’s authority to exercise jurisdiction over them. The challenge can be based on insufficient contacts with the forum state, meaning the defendant does not have enough of a connection to the state where the court is located to justify the court’s authority over them. The court will evaluate whether the defendant has sufficient minimum contacts with the forum state to justify exercising jurisdiction. If the court finds that personal jurisdiction is lacking, it will dismiss the case, or the court may transfer the case to a jurisdiction where the defendant can be properly sued.

Example: A cybersecurity company based in California is sued in a federal court in Texas for patent infringement. The company has no offices, employees, or business activities in Texas, and the alleged infringing products were designed in California and manufactured entirely outside of Texas. The company moves to dismiss for lack of personal jurisdiction under Rule 12(b)(2), arguing that it has no relevant contacts with Texas that would allow the Texas court to exercise jurisdiction over it. The court would then assess whether the company has the necessary minimum contacts with Texas to establish personal jurisdiction. If it finds that such contacts are insufficient, the court will dismiss the case as to the company.

2. Argue that venue is improper

A motion to dismiss for improper venue under Rule 12(b)(3) is a procedural tool that allows a defendant to challenge the plaintiff’s choice of venue, asserting that the case should not proceed in the court where it was filed because the venue chosen by the plaintiff does not comply with the statutory requirements for proper venue. Under 28 U.S.C. § 1391, a civil action may be brought:

1. In a district in which any defendant resides, if all defendants are residents of the state in which the district is located
2. In a district in which a substantial part of the events or omissions giving rise to the claim occurred
3. If there is no district in which an action may otherwise be brought, any district in which any defendant is subject to the court’s personal jurisdiction with respect to the action

If the court finds the venue improper, it has discretion to either dismiss the case or, under 28 U.S.C. § 1406, transfer it to any district or division where it could have been brought.

Example: A cybersecurity company based in San Jose, California, with offices in Austin, Texas, is sued for patent infringement in a federal court in the Western District of Texas, Waco Division. The company moves to dismiss for improper venue under Rule 12(b)(3), arguing that none of the alleged infringing activities occurred in Texas, and the company has no significant presence within the Waco Division. If the court agrees with the defendant on one or both of its arguments, the court may dismiss the case or transfer it to a more appropriate venue, such as the Western District of Texas, Austin Division, or the Northern District of California.

3. Move to transfer the matter to a different court

A motion to transfer under 28 U.S.C. § 1404(a) is a procedural request by a party to transfer a case to a different federal District Court “for the convenience of the parties and witnesses” and “in the interest of justice.” Courts consider several public and private interest factors to decide whether to grant such a motion.

• The private interest factors generally include:
• The relative ease of access to sources of proof (i.e., evidence)
• The availability of compulsory process to secure the attendance of witnesses
• The cost of attendance for willing witnesses
• All other practical problems that make trial of a case easy, expeditious, and inexpensive

The public interest factors generally include:

• The administrative difficulties flowing from court congestion
• The local interest in having localized interests decided at home
• The familiarity of the forum with the law that will govern the case
• The avoidance of unnecessary problems of conflict of laws or in the application of foreign law

If the court finds that the transfer is warranted, it will order the case to be transferred to the proposed transferee district.

Example: A cybersecurity company based in San Jose, California, is sued in a federal court in the Western District of Texas for patent infringement. The company’s research and development, manufacturing facilities, and key witnesses are all located in California. The defendant moves to transfer under § 1404(a), arguing that the case should be moved to the Northern District of California because it would be more convenient for the parties and witnesses, and the evidence is primarily located there. The company also asserts that the Northern District of California has a strong local interest in resolving the dispute because the alleged infringing activities occurred there. The court would then evaluate whether transferring the case to California would serve the convenience of the parties and witnesses and promote the interest of justice. If the court agrees, it will transfer the case to the Northern District of California.

4. Attack the legal sufficiency of the plaintiff’s patent

A motion to dismiss for failure to state a claim under Rule 12(b)(6) due to patent claims being ineligible subject matter under 35 U.S.C. § 101 is a procedural tool that allows a defendant to challenge the legal sufficiency of a plaintiff’s patent claims. The defendant argues that the patent should not have been granted because the patent claims are not directed to any of the categories of patent-eligible subject matter under § 101 (i.e., process, machine, manufacture, or composition of matter) but instead to ineligible subject matter (laws of nature, natural phenomena, and abstract ideas). This litigation tactic is especially common in the cybersecurity industry and other software-heavy fields.

The court evaluates whether the patent claims are directed to ineligible subject matter under § 101 by applying a two-step framework that the Supreme Court established in the landmark case of Alice Corp. v. CLS Bank International. At Alice Step 1 the court determines whether the claims are directed to a law of nature, natural phenomenon, or abstract idea; if so, at Alice Step 2 the court determines whether the elements of the claim transform the nature of the claim into a patent-eligible application (i.e., an “inventive concept”). If the court finds the patent claims patent-ineligible, the claims will be held to be invalid and the court will dismiss the case. If the court finds the claims patent-eligible or that further factual development is necessary, it will deny the motion.

Example: A cybersecurity company holds a patent for a method of organizing human activities using a generic computer system. The company sues a competitor in a federal court alleging patent infringement. The defendant moves to dismiss under Rule 12(b)(6), arguing that the asserted patent claims are directed to an abstract idea of organizing human activities without any inventive concept that transforms it into patent-eligible subject matter under 35 U.S.C. § 101. The defendant asserts that the method merely involves conventional steps implemented on a generic computer. The court then applies the Alice two-step framework to determine whether the claims are directed to an abstract idea and, if so, whether they contain an inventive concept sufficient to transform the abstract idea into a patent-eligible invention. If the court agrees with the defendant, it will dismiss the case for failure to state a claim.

5. Launch a counter strike at the patent office

Inter Partes Review (IPR) is a mechanism to challenge the validity of a patent after it has been granted. It is conducted before the U.S. Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) and can be a strategic tool for defendants in patent infringement cases to invalidate the patent claims asserted against them. The petitioner (usually the defendant in a separate patent infringement case in District Court) can challenge the validity of one or more claims of a patent based on prior art consisting of patents or printed publications. The challenge is typically based on issues of novelty (35 U.S.C. § 102) or obviousness (35 U.S.C. § 103).

A petitioner must file an IPR petition within one year of being served with a complaint alleging infringement of the patent the petitioner seeks to challenge in IPR. The petitioner files a petition at the PTAB detailing the prior art grounds for challenging the validity of the claims. The PTAB reviews the petition and decides whether to institute an IPR based on whether there is a reasonable likelihood that the petitioner will prevail with respect to at least one of the challenged claims. If the IPR is instituted, the process involves a discovery period, the filing of briefs, and potentially an oral hearing. Within one year of instituting the IPR, the PTAB issues a final written decision on whether the challenged claims are unpatentable.

IPRs offer several strategic advantages over traditional District Court litigation:

• IPR can be less expensive and faster than litigation in federal District Courts.
• The PTAB uses the “preponderance of the evidence” standard, which is lower than the “clear and convincing evidence” standard used in District Court, which generally means that it is easier for a patent challenger to obtain a decision of unpatentability.
• The PTAB is staffed with technically skilled administrative patent judges who are trained in patent law and the relevant technology.

Example: A cybersecurity company is sued in District Court for patent infringement by a competitor who holds a patent on a method for data encryption. The defendant believes that the patented method is not novel and is obvious in light of prior art. The defendant petitions for IPR at the PTAB, citing several prior patents and publications that describe similar encryption methods. The PTAB reviews the petition and decides to institute the IPR. During the IPR process, the PTAB examines the prior art and the arguments presented by both parties. If the PTAB ultimately finds that the challenged claims are unpatentable, the patent infringement case in District Court may be weakened or even dismissed.

Defending against patent infringement claims requires not only a thorough understanding of the technology involved, but a litigation strategy tailored to the specifics of each case. Even in rapidly evolving industries like cybersecurity, companies that find themselves as defendants in patent litigation can use one or more of the tactics above as part of that strategy.

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