IP for Your Business: Handling Patent Assertions
The patent assertion letter has become a part of doing business. If you make something, sell something or offer a service, you eventually will be accused of patent infringement.
But that does not change the fact that getting a patent assertion letter is upsetting and disruptive. And if it is your first letter, it can be terrifying. So, what should you do when you receive a letter accusing your best-selling product of infringing a patent?
Do Not Hide
Too many companies fail to respond to the assertion letter hoping the patentholder will go away. That rarely works. It is almost always better to communicate with your accuser rather than remaining silent.
Some companies take a slightly different approach, ignoring first letters and only responding to second letters. This has the advantage of weeding out less persistent and serious patentees. But it also exposes those companies to more lawsuits. Some patentees will file suit if their first letter is ignored.
You should hire counsel to help understand the assertion, gauge any liability and prepare your response. Counsel can also be valuable in identifying potential improprieties in the prosecution of the patent which can lead to the patent being held unenforceable. And counsel can help you identify prior art, although you should also use internal resources to identify prior art from the industry or from your company's prior products and services, in addition to patent prior art.
Finally, having counsel send your response letter lends your response credibility.
Your initial response may just acknowledge that you respect the intellectual property of others and that you are investigating the claims, but responding is important if you want to avoid lawsuits.
Eventually, you will need to prepare a substantive response. The biggest strategic decisions in this letter are how many of your defenses you should disclose and how fully you should describe your defenses. This is another place where your counsel's experience and advice can be invaluable.
Also, if you are interested in discussing licensing terms or if you do not want to foreclose amicable resolution, ask the patentee for its terms.
Consider an Opinion Letter
To the extent that you have any infringement concerns, you should consider the value of seeking an opinion letter from counsel. In an opinion letter, counsel will explain any reasons that you do not infringe the asserted patents, any reasons that the patents are invalid, and any reasons that the patents are unenforceable.
Although opinion letters are no longer necessary in every, or even most, cases they can still be very valuable in protecting your company against willful infringement charges.
Consider Asserting Your Patents
If your accuser is a competitor, consider asserting your patent portfolio against your competitor, assuming you identify infringements. While your accuser will claim that your assertions are simply retaliatory, that does not mean they will not be taken seriously. And a cross-license is usually far cheaper than paying license fees.
Consider a Litigation Hold
Work with your counsel to determine whether and when you need to institute a legal hold. A legal hold is a program to prevent destruction of information that may be relevant to a pending or a potential litigation that might normally occur as part of the normal course of your business, including based upon any document retention policies you may have.
Prepare Your Case
Last, but not least, prepare your case. All of the work you do after receiving the letter should be at least partially focused upon preparing your defense.
As you are responding to the patentholder, you should be beginning to understand the patent and its prosecution history. And along with that, you should be comparing your accused product or process to the patent claims to identify all of the ways your product or process does not fall within the scope of the claims.
Additionally, you should begin reaching out to your employees who may be able to identify prior art – public examples or description of the patented invention that were made public before the patent was filed.
The earlier you begin to assemble these materials and defenses, the more prepared you will be for settlement discussions or litigation itself.
R. David Donoghue is a partner in the Intellectual Property Group of Holland & Knight in Chicago, Ill. and writes the Chicago IP Litigation Blog, www.chicagoiplitigation.com. He may be contacted at (312) 578-6553 or email@example.com.
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