Patent Litigation: A Business Nightmare

by Intellectual Property Attorney Bill Honaker, the IP Guy

Are You Losing Sleep?

Have you ever woken in the middle of the night in a cold sweat, heart racing, and a terrible feeling of dread?

That’s what being sued for patent infringement feels like. It’s a real nightmare.

The cost is astronomical. A recent survey by the American Intellectual Property Association stated that the median cost to litigate a patent case is $3,000,000. In addition to the out-of- pocket costs, there is also the distraction which keep you from running your business. Patent litigation means years of endless meetings, depositions, document productions, days in court, and ongoing uncertainty.

Patent litigation will increase as marijuana related businesses grow and continue to enter the mainstream. More businesses will get patents. They are valuable business assets that protect margins and market share. They do this by preventing competition. Presently, there are a relatively small number of marijuana related patents. This makes the problem of patent litigation easier in the short term. But this will change.

So, how can you avoid this nightmare?

1. Find out if any patents cover your product.

You need to determine if you have any potential patent issues before you invest time and money in the product. The ideal time is when you have the idea for the product – BEFORE you launch.

You have to do a patent search to see if you are infringing a patent. Sophisticated software is available to make these searches quick and affordable. First search your competitors. If nothing is found, conduct a broader search. If a patent is located, have it evaluated by Patent Counsel.

2. Hire a business-minded patent attorney, registered before the United States Patent Office, with litigation experience, and extensive experience in evaluating patents.

Hire a specialized patent attorney to be certain that your product is clear of infringement. Your patent counsel needs litigation experience, Patent Office experience and solid business skills to guide you.

Very few patent attorneys meet these qualifications. To practice before the United States Patent Office, an attorney has to be registered. To be registered, an attorney must have the appropriate technical or scientific background, and pass a stringent examination. Unfortunately, registered patent attorneys typically focus on obtaining patents, and typically do not litigate. Some attorneys focus on litigating Patent matters, but have never written a patent application, nor practiced before the United States Patent Office.

The hardest skill to find is business acumen. You want a business-minded attorney giving you advice, someone who understands what it’s like to run a business and work in a competitive market.

3. Evaluate the patents you’ve located.

A patent is typically challenged in two ways. The first is to determine whether your product is outside the scope of the patent claims. The second is to argue that the patent should not have been issued, that it is invalid.

It’s legally easier to argue that your product is outside the claim scope. In the initial stage of product development, this provides an opportunity to design around the patent claims. With the assistance of patent counsel, the claims can be interpreted, and you can make changes to the product to avoid the patent.

If your product is within the claim scope, the next step is to determine if the patent is invalid. This step involves a thorough investigation of related technology disclosures before the patent was filed. These disclosures can come in the form of other patents, publications, publicly known information, or other sources.

4. Explore the possibility of a license.

You may be able to license the patent. Patent litigation is expensive and risky for the patent owner as well as the accused infringer. If communication channels are open, especially between the business owners, many times an amicable result may be reached.

5. Never lose sight of the fact that Patent litigation is generally a business decision. A business result is always better than litigation.

As a young lawyer, I learned a very valuable lesson about Patent litigation. We had just won a lengthy court battle in which our client was accused of patent infringement. As we were leaving the courthouse, I said, “It must feel good to have won.” The client responded, “Not at all, we won the case, but our business is bankrupt.”

It was at that moment I realized I was in someone else’s bad dream.

In the end, an ounce of prevention is worth a pound of cure. Litigation is the last resort. Time and energy should be spent doing your homework, hiring talented, experienced experts and focusing on what’s best for your business.

Keep those things in mind as you go to bed, and you’ll sleep better, I promise.

Sweet dreams.

Have questions about trademarks, patents, copyrights, trade secrets, or other types of Intellectual Property? Let’s talk and assess your IP today.

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