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Based on my patent search, I don't think there is any existing patent that would cover the device I want to create and sell.

But if I am mistaken, and I make a business selling my device, what is the worst case scenario?

For example, I get a cease and desist, have to stop my business but keep my profits?

Or can a patent-holder sue me?

If so, can I be made to hand over my profits from my business leading up to that point?

Or worse, can I be made to pay even more, like for the patent-holder's other losses?

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    You can get sued for anything. I can sue you for being ugly. Doesn't mean a judge will hear the case. – I wrestled a bear once. Sep 6 '17 at 19:55
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It's a fact that anyone can sue anyone in civil court for anything, including patents and Intellectual Property rights.

Have you read about Patent Trolls? See Patent troll - Wikipedia and patent trolls - Google Search.

You could possibly be sued for patent infringement even after being granted a patent for your own invention, because the judgement whether a patent is sufficiently unique and different from any other given patent and can be subjective at times. That's the wiggle room the patent trolls use to sue. They go to court in an attempt to convince the court that the patent office erred and they deserve damages for infringing on their patent and profits. And the court could rule on damages or court costs, and possibly to relinquish profits or pay for losses that a third-party suffers.

Specific legal advice is off-topic on Law SE. So the best thing to do is get real legal advice about the patent process and prior art searches, and, after your patent is granted, what you may have to deal with if you get a C&D letter or are taken to court for infringement.

  • A little less than half of patents that are litigated are ultimately found to be invalid. papers.ssrn.com/sol3/papers.cfm?abstract_id=118149 – ohwilleke Aug 31 '17 at 22:14
  • Didn't know that; so it can be worth it to try and be a patent troll. – BlueDogRanch Sep 1 '17 at 0:09
  • Three patent trolls account for about 15% of all U.S. patent litigation, and there are far more than three patent trolls out there. But, the U.S. Supreme Court in about 15 recent cases mostly reversing pro-patent holder legal doctrines has made it much harder to be a patent troll than it used to be. – ohwilleke Sep 1 '17 at 0:12
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    Another reason you can be sued for infringement, even if you have your own patent, is that YOUR patent doesn't give you the right to make, use, sell or import your own invention -- it gives you the right to prevent others. Many valid patents are granted on improvements to earlier inventions that may still be patented in one or more countries. – Upnorth Sep 1 '17 at 4:34
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Short Answer

Can I be sued for unintentional patent infringement?

The short answer is yes.

Intent can change the precise remedies that are available, but it is not a defense to a patent infringement action.

Long Answer

The question in detail is as follows:

[I]f I am mistaken, and I make a business selling my device, what is the worst case scenario?

For example, I get a cease and desist, have to stop my business but keep my profits? Or can a patent-holder sue me?

If so, can I be made to hand over my profits from my business leading up to that point? Or worse, can I be made to pay even more, like for the patent-holder's other losses?

Injunctive Relief

You have to stop your business upon receiving a cease and desist, or the patent-holder with get an injunction in most cases to force you to do so. This used to be automatic, but under recent case law from the U.S. Supreme Court is not subject to the same analysis as any other injunction request. eBay Inc. v. MercExchange, L.L.C. (U.S. 2006). As explained here:

The owner of a U.S. patent has the right to prevent others from making, using, or selling the claimed invention. If the patentee cannot obtain voluntary termination of an infringing activity or settle the dispute by a license agreement, he or she may seek redress by initiating litigation in a federal district court.

One of the remedies generally sought in such litigation is an injunction. The injunction might be a preliminary injunction pending the outcome of litigation and ultimately a permanent injunction prohibiting infringement of the patent. Refusing to obey an injunction opens one to penalties for contempt of court.

Time Period For Which Money Damages Can Be Awarded

General Rule: Limited To The Patent Term

The right to collect damages started no sooner than the date upon which the patent is granted. There can be no award of damages for activities prior to issuance. Similarly, there can be no award of damages for activities after the patent expires.

Limited Exception For Period Between Publication And Issuance

This is subject to a limited exception that allows for reasonable royalty damages, but not lost profits damages, in cases where the infringer makes a substantially identical invention after having actual knowledge of the published patent application under 35 U.S.C. § 154(d):

(d) PROVISIONAL RIGHTS.—

(1) IN GENERAL.— In addition to other rights provided by this section, a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application for such patent under section 122(b), or in the case of an international application filed under the treaty defined in section 351(a) designating the United States under Article 21(2)(a) of such treaty, or an international design application filed under the treaty defined in section 381(a)(1) designating the United States under Article 5 of such treaty, the date of publication of the application, and ending on the date the patent is issued—

(A)(i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States; or

(ii) if the invention as claimed in the published patent application is a process, uses, offers for sale, or sells in the United States or imports into the United States products made by that process as claimed in the published patent application; and

(B) had actual notice of the published patent application and, in a case in which the right arising under this paragraph is based upon an international application designating the United States that is published in a language other than English, had a translation of the international application into the English language.

(2) RIGHT BASED ON SUBSTANTIALLY IDENTICAL INVENTIONS.— The right under paragraph (1) to obtain a reasonable royalty shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.

(3) TIME LIMITATION ON OBTAINING A REASONABLE ROYALTY.— The right under paragraph (1) to obtain a reasonable royalty shall be available only in an action brought not later than 6 years after the patent is issued. The right under paragraph (1) to obtain a reasonable royalty shall not be affected by the duration of the period described in paragraph (1).

(4) REQUIREMENTS FOR INTERNATIONAL APPLICATIONS—

(A) EFFECTIVE DATE.— The right under paragraph (1) to obtain a reasonable royalty based upon the publication under the treaty defined in section 351(a) of an international application designating the United States shall commence on the date of publication under the treaty of the international application, or, if the publication under the treaty of the international application is in a language other than English, on the date on which the Patent and Trademark Office receives a translation of the publication in the English language.

(B) COPIES.— The Director may require the applicant to provide a copy of the international application and a translation thereof.

Independent invention without knowledge of the patent holder's patent, and infringement in a manner that is not substantially identical are defenses to these provisional rights, even though they are not a defense to a patent that has already been issued. So, in the fact pattern of this question, there would not be a recovery available under 35 U.S.C. § 154(d).

The remedy of 35 U.S.C. § 154(d) is closer to a copyright infringement of a song that there is a right to cover in character, than an ordinary patent infringement claim.

Limited Exception For Failure To Mark Product With Patent Number

But, sometimes the right to collect damages can start later:

After issuance, the patentee is entitled to collect damages from the date that the patented product is marked with a patent number. Failure to mark the product results in damages not being available until the infringer receives actual notice of the patent.

Note, however, that if products are marked with a patent number, the infringer can be liable for money damages even prior to receiving actual knowledge of infringement. Independent invention of a patented idea is not a defense to patent infringement.

Statute of Limitations

The statute of limitations is six years for patent infringement. So, no damages can be awarded on the basis of a infringement by a particular defendant in a lawsuit against that defendant taking place more than six years before a lawsuit against that defendant is filed. The equitable doctrine of laches cannot be used to shorten that six year period. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (U.S. 2017)

Types Of Damages Available

Compensatory Damages

Damages are not based upon the infringer's profits.

They are based on the greater of:

(1) a reasonable royalty for the use made of the invention by the infringer, or

(2) the profits lost by the patent holder.

Both kinds of damages are difficult to prove and generally require expert testimony and extensive discovery. Generally speaking, damages for patent holder lost profits, if proven, are greatly in excess of a reasonable royalty.

In the case of a multi-component product, this has to be localized to the profits lost or royalty that would be due on the component in question only. Samsung Electronics Co. v. Apple, Inc. (U.S. 2016).

Interest

Pre-judgment interest from the date of infringement to the date of judgment can be awarded. Post-judgment interest is also available.

Punitive Damages For Willful Infringement

Punitive damages can be awarded in addition to compensatory damages, set forth above, when the infringement is willful, in the amount of up to two times compensatory damages. One of the reasons to send a cease and desist letter is to attempt to cause post-receipt infringement count as willful for purposes of punitive damages.

Attorneys' Fees In Exceptional Cases

In exceptional cases, the court may award reasonable attorneys' fees to the prevailing party. The U.S. Supreme Court recently held that "exceptional" does not need to rise to the leave of groundless and frivolous or otherwise unethical conduct by the lawyer's for the non-prevailing party. Highmark Inc. v. Allcare Management Systems (U.S. 2014).

Patent Infringement Is An Insurable Risk

From a practical perspective, it is worth noting that it is possible to obtain patent infringement liability insurance, although it isn't cheap.

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    "There can be no award of damages for activities prior to issuance." Really? What happened to giving actual notice of a published patent as the basis for triggering pre-issuance damages under 35 USC § 154(d)? – Upnorth Sep 1 '17 at 4:40
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    @Upnorth Good point. Oversight corrected. – ohwilleke Sep 1 '17 at 6:22

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