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The Supreme Court's decision in <i>Festo</i> has been hailed by many as being one of the most significant cases to impact the patent system. <i>Festo Corp. v. Shoektsu Kinzoku Kogyo Kabushiki Co., Ltd.</i>, 122 S.Ct. 1831 (2002). Some say that more significant than <i>Festo</i> is <i>Johnson</i>, in which the Federal Circuit held that subject matter disclosed but not claimed in a patent cannot be covered by the doctrine of equivalents. See <i>Johnson & Johnston Associates Inc. v. R.E. Service Co.</i>, 285 F.3d 1046 (Fed. Cir. 2002) (<i>en banc</i>).
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Over the years, I have worked with many in-house counsel as their outside litigation counsel. These experiences serve as the basis for this article, which discusses some of the things that in-house counsel can do with respect to their outside counsel to improve their company's chances of prevailing in patent litigation.
Generally, patent attorneys and patent agents are aware that under its regulations, the Patent and Trademark Office (USPTO) allows certain parties, such as small businesses (referred to generally as "small entities"), to pay reduced fees. This can be a big benefit to small businesses and individual inventors, many of whom have only limited funds with which to prosecute a patent. Most attorneys and agents evaluate a client for small entity status based on the "500 employee rule" — if the client has fewer than 500 employees, they are a small entity. This rule serves well for a quick "ball park" determination and the elimination of large clients from eligibility, however determining whether a party truly qualifies as a small entity is more complicated. For example, in certain circumstances, a company that qualifies as a small business under the Small Business Administration's (SBA) guidelines might not necessarily qualify as a small entity for the purpose of paying reduced USPTO fees. Improperly claiming small entity status can open the patent to attack during litigation, and the cost of defending against such a claim can easily exceed the savings on government fees.