• Plaintiffs increasingly tear products into pieces to prove infringement in patent lawsuits • Since 2013, teardown data cited in 113 patent infringement complaints, Bloomberg Law data show

Patent holders increasingly are resorting to a blunt option in lawsuits: disassembling products to show they are infringing.

Federal courts have raised the bar in patent infringement cases in recent years, leading more plaintiffs to break apart allegedly infringing products to help prove their cases, intellectual property attorneys told Bloomberg Law. Uncovering material evidence of patent infringement can help plaintiffs decide whether to go to court, fend off defendants’ bids to get cases dismissed, or formulate infringement arguments in ways that defendants can’t leverage against them, the attorneys said.

Before, it was enough to say “I have a patent, it’s valid, you infringe,” Fabio Marino, practice chair of the intellectual property and technology litigation group at Polsinelli LLP in Palto Alto, Calif., told Bloomberg Law. “It’s become more recognized that you need to do a more thorough investigation and include more details on infringement in filing of the initial complaint.”

By breaking down physical bits or software code of allegedly infringing products, plaintiffs can figure out if a product uses technology that is covered by claims of their patents. Plaintiffs could then include patent claim charts, and images or illustrations of torn-apart products, in their complaints to demonstrate infringement.

The use of teardown data in patent infringement lawsuits has escalated in recent years. Teardown data has been used by plaintiffs in 140 patent infringement lawsuits in U.S. district courts since 2004—and in 113 such disputes in the last five years alone, Bloomberg Law data show. In one prominent case, Qualcomm Corp. has relied on semiconductor teardown materials and iPhone reverse engineering to frame its infringement contentions against Apple Inc. over patent royalties, according to court documents.

Changing Table Stakes

The importance of teardown data in litigation has risen as the adoption of local patent rules is becoming widespread across district courts, Michael Zoppo, a principal in Fish & Richardson PC’s New York office, said.

Local patent rules in some jurisdictions, such as the Northern District of California, call for plaintiffs to disclose clear-cut infringement allegations, including with charts explaining patent claims and details of allegedly infringing products. Such requirements supplement federal and local civil law procedures governing district court litigation.

“I am seeing plaintiffs do more work earlier in the case and that includes reverse engineering and more a detailed disclosure of how there is infringement,” Zoppo said. “You’ll also always see defendants trying to box plaintiffs into what they disclose early in the case.”

So far, just under a third of 94 U.S. district courts have adopted local patent rules, but more are following suit, Zoppo said. Other districts that already have local rules include New Jersey and Northern District of Illinois.

Two U.S. Supreme Court rulings—Bell Atlantic Corp. v. Twomblyin 2007 andAshcroft v. Iqbalin 2009—raised litigation pleading standards requiring that allegations in a complaint must establish a ‘plausible’ claim. Pre-suit investigations by plaintiffs have increased during the last five years as a side effect of those enhanced standards and defendants increasingly seeking early dismissals of lawsuits by citing inadequacies such as a lack of infringement detail, Marino said.

“Now you have to say a lot more and if you don’t people are more willing to challenge it,” Marino said. “That’s why you are seeing a lot more of the thorough investigations.”

For Canadian company TechInsights Inc., which reverse engineers products to offer data for use in patent litigation and licensing negotiations, the change means some of its clients are doing more homework upfront, Mike McLean, TechInsights’ senior vice president of IP services, said. “There’s a segment of our clients that did not do that diligence and that has changed as a result of the new rules.”

Litigation Strategy

Teardowns caught on over two decades ago, when semiconductor companies started reverse engineering their rivals’ microchip circuits, such as by examining them under high-intensity microscopes. Subsequently, the hardware focus shifted to extracting and reverse engineering software source code as intellectual property litigation increasingly involved software-driven industries, said Harry Direen, an independent expert who has torn down everything from e-readers and tablets to oilfield flow meters.

Taking apart a product can help potential plaintiffs decide whether they want to launch an expensive infringement case.

“Whether it is the International Trade Commission or district court, clients may want to spend that money upfront because they want to avoid a case where there they don’t have strong merits,” Goutam Patnaik, a partner at Washington-based Pepper Hamilton LLP, said.

Such pre-suit intelligence is particularly helpful if patent holders want to mount a legal fight in court with firms that finance litigation, Marino said.

“In that context, leaving aside the pleading standards, you really have to do more investigation to file because you are convincing someone to give you millions of dollars,” Marino said.

Teardowns are also used to calculate apportionment of damages awarded for infringement, Celine Crowson, a Washington D.C.-based partner at Hogan Lovells, said. It can help answer questions, she said, such as, “How much of the claimed patented subject matter relates to what portion of a chipset or a device?”

Getting Ducks in A Row

Plaintiffs also use teardowns to help formulate infringement theories that can withstand a counterattack by a defendant trying to invalidate a patent, Zoppo said.

“If you can get all the ducks in a row, then you know the parameters you need to work into when the other side gives you a piece of prior art,” Zoppo said. “You know what you can say and can’t say.”

Defendants conduct teardowns as well, Darren E. Donnelly, a Mountain View, Calif.-based attorney at Fenwick & West LLP, said. Defendants take apart products to illustrate that some patents shouldn’t never have been granted because they cover existing technology.

“Use case two is, figuring out whether or not some item of prior art actually has all of the patent claims you need to invalidate,” Donnelly said.

The party that can present the most detailed evidence is likely to succeed in a patent infringement dispute, Fish & Richardson’s Zoppo said. “So you’re seeing, particularly in a higher stakes case, parties willing to spend that money and time to get the most thorough analysis possible.”

To contact the reporter on this story: Malathi Nayak in Washington atmnayak@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine atkperine@bloomberglaw.com