Who are the major players in a patent infringement action? Part One

by Thompson Coburn LLP
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With different technology and different parties involved, no two patent infringement actions are completely alike. But that doesn’t mean there aren’t commonalities between them. For instance, while the parties to every patent may be different, the roles played by those parties (and those assisting them) are generally the same for every litigation.

Knowing these roles and understanding how they operate can help you anticipate conduct in the litigation as well as formulate a successful plan for your own role in the action.

  1. Patent owner
    Perhaps the most important participant in patent litigation is the patent owner. Whether the patent owner is the inventor (or the company who paid for the inventor’s work) or a later third party who simply acquired the technology, it is the patent owner who drives the patent litigation.

    It’s the patent owner who usually threatens or brings suit. It’s the patent owner who usually grants license. And it’s the patent owner to whom you will likely pay damages if found to infringe.

    Patent owners can have varying motivations depending on who they are and how they are situated. For instance, a competitor of yours who developed patented technology that it feels you are infringing may be less concerned with monetary damages it can collect from you and more concerned with removing you from the marketplace or stopping you from using their technology. In contrast, a classic non-practicing patent assertion entity is going to be motivated entirely by monetary considerations. Tactics for negotiating and litigating with these two very different entities will differ greatly. Thus, it is important for you to understand who the patent owner is and what they hope to accomplish.
  2. Exclusive licensee
    Sometimes the party bringing suit is not the owner of the patent — it’s actually a party who has received an exclusive license to the patented technology.

    In the case of individual inventors, the patent owner may not have the capital or wherewithal to exploit the technology and may instead decide to license the technology to another entity to commercially develop. Or, in the case of larger, more sophisticated patent owners, the patent owner may, for tax or other benefits, arrange for a subsidiary to assert all of the patents held by a particular corporate conglomerate. That subsidiary will then give an exclusive license to the patented technology to another subsidiary who is actually practicing the invention in its business.

    And, again, sometimes large patent assertion entities prefer to use separate spinoff subsidiaries to conduct each litigation on their behalf. This strategy makes it difficult for defendants to determine the true owner of the technology at issue. But just as with the patent owner, if the exclusive licensee is conducting the litigation, that entity is in the driver’s seat. It’s still advantageous to explore the possible motives of the underlying patent owner, as it could be relevant to litigation strategy.
  3. Your vendor/supplier
    Next on the list is the company, vendor, or distributor who provided the accused technology to you. While you may have developed the technology internally (and we’ll address that later), many times the technology at issue was developed by someone else and is merely being used by you or your customers.

    If you are involved in possible patent litigation, it is critical to determine whether the technology at issue was developed by someone else. If so, you may be able to get that developer to pay for your patent litigation through an indemnity obligation. Many licensing and sales contracts with technology manufacturers or developers include clauses that require the manufacturer or developer to indemnify the buyer from any later claims that the technology manufactured or developed infringes someone else’s intellectual property rights.

    Even if there is no indemnity obligation, you are still going to want to work with the vendor/supplier as they will likely maintain all of the pertinent information on how the accused technology was developed, how it works, and whether it’s been modified over time. Such information is critical to developing arguments about noninfringement, and potentially, invalidity.

In my next post, I’ll continue the list of the major players in a patent infringement action.

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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