Patent litigation can be really expensive. The 2015 Report of theEconomic Survey, for example, reports an average cost of $873,000 for patent cases with less than $1 million at risk and $2 million for cases with $1 million to $10 million at risk. Many patent disputescannot bear that sort of expense.
In many areas of commercial law, parties have turned to arbitration to save time and money. The same is true for the right sorts of patent-related disputes.
Patent arbitration did not begin well, however. Some courts found patent issues were “inappropriate for arbitration proceedings and should be decided by a court of law, given the great public interest in challenging invalid patents.” But Congress enacted 35 U.S.C. § 294 to allow parties to save time and money by arbitrating any contractual dispute relating to patent validity or infringement.
The arbitration is governed by the Federal Arbitration Act. The arbitrator must consider defenses under 35 U.S.C. § 282. These include (1) noninfringement; (2) invalidity; (3) unenforceability; (4) failure to comply with 35 U.S.C. § 112—including, for example, failure to meet written description, definiteness, and enablement requirements; and (5) failure to comply with any requirement of 35 U.S.C. § 251, which, among other things, prohibits broadening the scope of reissued patents.
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