What to do if you’re accused of patent infringement
Just as you are looking forward to the weekend, you receive a cease-and-desist letter accusing your company of patent infringement. Or, worse, you receive a summons and complaint. You have been sued. There goes the weekend.
As CEO, CTO or in-house lawyer, you may have only cursory experience with patents. It never occurred to you that what you sell could have been patented by others. And, until now, you had never heard of the company that owns the patent. What do you do?
Remember that anything you put in writing, other than to your lawyers, is potentially discoverable. So be careful of that email you are writing that says “looks like we might infringe.” Don’t write anything you wouldn’t want to see on the front page of The New York Times.
What you will need is the advice of an experienced team of patent attorneys. But first understanding something preliminarily about the patent, your risks and your options, will make it easier to have a productive discussion with your attorneys.
Gather product info. Gather information about how long you have made, used or sold your product, and where your product is sold. If your company has any patents of its own that cover those products, collect copies. They may be prior art, show your prior use of the invention, or provide the basis for a counterclaim against the patent owner.
Gather patent info. Using the U.S. Patent and Trademark Office’s database at www.uspto.gov, you (or your attorneys) can verify whether the patent is still in force. If the required maintenance fees are past due or the patent term has expired, the patent owner cannot enforce the patent. You can also search the USPTO’s database or Google Patents to see whether the patent owner has other patents or applications. If your company operates outside of the United States, check (or have your attorneys check) whether there are patents in foreign jurisdictions (many patent offices have searchable websites or you can use Google Patents).
Preliminary analysis. If the threatened patent is still in force, review the “Claims” section (the last few pages of a U.S. patent) and consider potential claim element(s) absent from your product. The claims of the patent define the legal rights that the patent owner can assert. Generally, if your product does not include all of the elements of a particular claim, then you likely do not infringe that claim. You may be liable for divided infringement in conjunction with a third party, so understand your supply chain or where you fit in the supply chain, and collect agreements with suppliers and customers.
Claim interpretation is a legal as well as technical analysis, so you should discuss your review with your attorneys, even if you are confident that you do not infringe any patent claims. Providing the information above will give your attorneys a starting point to analyze the claims and reduce the time they spend getting up to speed to understand the patent and your product.
Options to move forward
After reviewing with your attorneys, one option is to open discussions with the patent owner. Never sign any agreement with the patent owner without first discussing it with your attorneys—even a confidentiality agreement. It may seem reasonable to sign a confidentiality agreement so that you and the patent owner can have frank discussions. However, sometimes these agreements go too far and include “non-aggression” terms that limit your options in litigation, including your right to challenge the patent’s validity.
Commercial terms that parties discuss often include a royalty rate on the revenues of the product, territorial scope of license rights, exclusivity and a price to purchase the patent outright.
You may also modify your product to avoid infringement, e.g., “design around” the patent. Consult with your attorneys to discuss whether you may still be found to infringe the patent under the “doctrine of equivalents” by performing substantially the same function, in substantially the same way, to achieve substantially the same result.
Another option is to challenge the patent in court or before the USPTO. For example, you can file a petition for Inter Partes Review or Post Grant Review of the patent at the USPTO, or file suit in a federal court. Your attorneys can help you understand what procedures are available to you, and the likely costs and timelines, which vary greatly from patent to patent.
In the case of a cease-and-desist letter or an offer to license, can you just ignore the patent owner? Here again, experienced patent attorneys can guide you through the pros and cons. Factors to consider are how likely is the patent owner to sue you, the differences between your product and the patent claims, the range of damages a court might award the patent owner, the costs you could incur if a court ordered you to stop selling the product (i.e., an injunction), and your company’s overall level of risk tolerance.
Armed with the right information and advice, you can decide how best to move forward and get back to focusing on your business—and hopefully enjoy your next weekend a little more.