By Thomas Dunlap, Partner
Throughout history, companies have come across all kind of legal matters. As we all know, it’s an expected part of the business. Nowadays, however, there´s a new threat that has evolved fast enough to cause potentially serious problems for any enterprise: Patent Troll Lawsuits.
A patent is defined as a license granted by a certified authority that is designed to protect the creator’s rights. A patent could consist of a utility, design, or even a plant patent. By extension of this previous description, a patent troll, also known a “non-practicing-entity” (NPE), is a company which acquires a patent license solely to profit by filing infringement lawsuits against other companies.
A patent license fee can possibly come to cost hundreds of thousands of dollars; hence a lawsuit could result in the loss of millions of dollars for the sued party. Because of this, most companies prefer to settle even if they don’t fully agree on said infringement.
Successfully responding to a lawsuit letter
Every patent lawsuit is different from the rest. In each, however, the company suing for infringement will send an “invitation” for the “infringing” company to pay their licensing fees, claiming they are imposing upon their rights. This so called “invitation” comes with a not-so-hidden-threat, assuring that if their demands are disregarded, it will result in legal action taken towards the company.
This situation presents us with three options: not to respond, respond by explaining the reasons why you feel the lawsuit does not apply, or settle with the patent owner and reach an agreement. Either way, it is mandatory to have basic legal knowledge of what is at stake.
The success or failure faced when fighting this lawsuit will depend on how well informed the accused company is regarding these three focal points: the concept behind what the demanding party is accusing, the marketing that is used to launch and advertise the patent in question. and the legality of every action taken by each party.
Responding to a patent troll’s demand letter is necessary to protect your company from any of the potential scenarios. Even if you feel that the demand is absurd, it is smart to submit a response in which you state why you believe the lawsuit does not apply, and demand more information on the license they hold. It is also wise to conduct some research and gather the following information:
- Knowing the enemy: investigate who is placing the lawsuit: is it a subsidiary, a firm, or a branch of a bigger company? This will help to understand the real purpose of the demands.
- Knowing the background: it’s helpful to analyze previous litigation records of such patent.
- Knowing their portfolio: research any patents they may have. A good way to build a strong case is to know the opposing party’s arsenal.
- Knowing your allies: Getting to know third parties that have been sued by the same patent troll could be very beneficial. It is possible to build a strategy based on previous cases developments and outcomes.
If you are looking for an attorney to consult with regarding a cease and desist letter on your patent, contact one of our licensed attorneys at Dunlap Bennett & Ludwig. We can advise you on all the of the problems that were highlighted here. You can call our office at (866) 755-8745 or submit a contact request form on our website. You can also read more about infringement here.