To understand the judicial process related to patent infringement concerning U.S. patents, it helps to know a bit about the U.S. court system. There are two systems in the U.S.: federal and state courts. Federal courts include the U.S. District Courts, the U.S. Courts of Appeals and the U.S. Supreme Court. They have jurisdiction over cases that arise under the U.S. Constitution, the laws of the United States and the treaties made under the authority of the United States. Because the U.S. Constitution establishes a patent system to protect inventors, the federal court system hears patent infringement cases, too.
Here's the process: As with most federal cases, those involving patent infringement begin in one of the U.S. District Courts. Patentees who bring an infringement case to one of the District Courts will present their argument to a federal judge, who will determine issues of law and make a judgment. If either the patentee or patent defendant is dissatisfied with the outcome in a U.S. District Court, either party may appeal the case to an appellate court. Most federal cases go into one of the 12 regional federal appeals courts, but patent cases go to the U.S. Court of Appeals for the Federal Circuit, which sits in Washington, D.C. If either party remains unhappy after this court's decision, he can submit a petition for writ of certiorari -- a document asking the Supreme Court to review the decision of a lower court. The Supreme Court may or may not hear the case.
In any of these courts, patent infringement lawyers go toe to toe. Lawyers for the patentee will argue that the infringer is using an invention without a license. The defense will argue that the new product, process or device isn't an infringement. Generally, the defendant's counsel first tries to prove that there is no infringement. This is done by reading the language of the claims. If the court determines that what the defendant is making doesn't fall within the language of any of the patent claims, it may decide there's no infringement. If the defendant's product does fall within the claims, he will then question the validity of the original patent. If the patent is invalid, there can be no infringement.
All of this seems distasteful, but it can get worse. Some individuals and organizations, known as nonpracticing entities (NPEs) or patent trolls, buy patents for the sole purpose of seeking payment from companies they claim are infringing on those patents. NPEs don't invent anything themselves. They generate revenue by getting companies to either settle based on the fear of patent litigation costs or pay them royalties. It's a lucrative business because financial awards in patent cases can be substantial. They may also go after bankrupt companies just for their patents. (Remember NTP and its battles with RIM? Some might call NTP a patent troll.)
We'll talk more about the financial side of patent infringement next.