Patent Litigation – A Nightmare for Business
by Intellectual Property Attorney Bill Honaker, the IP Guy
Have you ever awoke in the middle of the night in a cold sweat, with your heart racing, and a terrible feeling of dread and panic?
That’s what being sued for patent infringement feels like. It is a real nightmare.
The financial 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 costs which keep you from running your business. Patent litigation has years of endless meetings, depositions, document productions, days in court, and continued uncertainty.
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.
Sophisticated searching software is available to make these discoveries quick and inexpensive. First search your competitors. If nothing is found, conduct a broader search. If a patent is located, it must be 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.
You must hire a very specialized patent attorney when determining whether your product is clear of patent infringement. Your patent counsel needs litigation experience, Patent Office experience and solid business skills to guide you.
Very few patent attorneys meet these demanding qualifications. To practice before the United States Patent Office, an attorney has to be registered. To be registered, an attorney must pass a very stringent examination and have the technical or scientific background to qualify to take the 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 or 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 marketplace.
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 is legally easier to argue 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 changes to the product can be made 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, etc.
4. Explore the possibility of a license.
You may be able to get a license to 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 can be reached, such as a license.
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. Literally walking away from the courthouse, I said: “it must feel good to have won” to which our client responded: “Not at all, we won the battle but lost the war. Our company is now bankrupt as a result of the litigation costs, and our being completely distracted from running our business over two years of litigation.”
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 should be used as a last resort. The real 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.
Have questions about trademarks, patents, copyrights, trade secrets, or other types of Intellectual Property? Let’s talk and assess your IP today.