Patent Demand Letters - Escalation or Litigation (Part 5)

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If the patent demand letter situation escalates and you may be sued for infringement, you have options to consider.

  1. Consider filing a lawsuit for declaratory judgment (DJ).

In certain cases you may file a lawsuit against a patent owner for declaration that you are not infringing on any valid patents. Knowing the patent owner’s litigation history is crucial when considering this option.

Pro: If you believe the patent owner is likely to file a lawsuit, filing for a DJ may allow you to file in your home court and gain an advantage in preparation and timing.

Con:  It it can backfire if the patent owner had no real intention of filing. The patent owner is now an aggrieved party, and they may stiffen their spine and resolve to retaliate.

  1. Consider seeking to invalidate the patent through non-court means.

It may be possible to file an Inter Partes Review in the USA, an Opposition in the EU, or a nullity proceeding in other courts.

Pro: This could be a cost-effective alternative to litigation that ties up the patent owner in significant legal costs and procedures for quite some time.

Con: if the patent survives the challenge, the owner may aggressively pursue the claim, seeking to recoup the costs of defending itself against you on top of any licensing or royalty fees that you owe.

  1. Consider obtaining an opinion letter.

A non-infringement letter explains why the accused product or product line does not infringe on the patent in question.

A validity letter explains why the patent in question is invalid in light of existing prior arguments.

Pro: Very useful insurance against a claim of willful infringement.

Con: Very expensive. Attorneys charge a lot to give an opinion since they are not only risking their reputations but also setting themselves up for deposition and patent trial testimony, which have a lot of opportunity costs.

NB: Your litigator should not write the opinion letter, since the author might be called to testify.

  1. Consider seeking out others also claimed to be liable by the patent letter.

You may want to seek assurances from your suppliers. You may also want to notify your insurance carrier, your customers, and other competitors in the space.

Pro: Creating a joint defense arrangement where you can compare notes and pool your resources to dispose of spurious claims. It also can allow for a quicker resolution of a dispute if the patent owner knows all of their targets have teamed up.

Con: Others may shift the blame to you. Suppliers or customers may say it’s your infringement, not theirs. Beware – patent owners are very sophisticated and may play targets against each other by settling with one quickly and cheaply, using the funds to go after the others.

  1. Consider your public relations strategy.

Develop a customer communication strategy regarding the dispute. If you’re a manufacturer of an accused product, competitors or perhaps even the patent owner may advertise the infringement.

Pro: Stay ahead of the narrative and develop the story on your own terms.

Con: Could anger and embolden the patent owner. Also expensive and perhaps unnecessary.

Patent disputes can be ugly, scary, and costly, but if you are informed and prepared you can weather the storm gracefully.

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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