Options for Accused Patent Infringers

Aggressive Patent Owner?
“Gorilla” by Ross Elliott from Flickr (Creative Commons License)

In the hierarchy of mail that business owners hate to receive, including annoying junk mail and requisite bills, the most frightening mail might be letters from lawyers. And among letters from lawyers, one of the most petrifying letters you can receive is a law firm informing you that you are infringing one or more of their client’s patents.

Fighting patent infringement allegations can be expensive depending on the number of patents asserted and the claims contained in them, the size and aggressiveness of the patent holder, and the technology involved. Accused infringers can expect to pay anywhere from $100k to $6M (depending on their law firm) defending the litigation and hiring expert witnesses.  And while none of the options below are inexpensive, it is worthwhile to consider your options to resolve the accusations against you.

Options to Defend

“After this, I give up. Probably.” by Curtis Alan Jackson from Flickr (Creative Commons License)

When you’re threatened with a patent enforcement action, consider the following options to subdue the patent enforcement threat:

Settlement/Licensing Agreement. This may be a first option or the end-result of proceedings under one or more of the other options below. Whether to license early or after legal proceedings depends on the merits of the infringement allegations, the offered or negotiated settlement amount, and the extent of the license and settlement terms.

Ex Parte Reexamination. A ex parte reexamination proceeding attacks the validity of an issued patent and includes a request to the United States Patent and Trademark Office (USPTO) that a patent be reexamined in light of existing inventions (aka “prior art”) that presents a substantial new question of patentability as regards to one or more claims of the patent. Ex parte reexamination proceedings in the USPTO can be cost effective because once you have filed your request for reexamination, and the reexamination is initiated, your involvement in the ex parte reexam proceeding is finished and the patent owner must bear the costs associated with proving to the USPTO Patent Trial and Appeal Board (PTAB) that it was entitled to a patent.

The government fees for a reexamination start at $12,000 for a large entity and $6,000 for a small entity. The attorney’s fees for preparing a request for reexamination start at between $5,000 and $15,000 depending on the number of patent claims requested to be reexamined, the quantity of prior art submitted, and complexity of the technology.

Advantages of a reexam include examination by patent examiners experienced in both the technology and the law, an absence of a presumption of validity for the patent, and the broadest reasonable claim interpretation standard used in the proceeding likely allows the claims to read on more prior art. One drawback is that the ex parte reexam presents no settlement leverage once it has been filed. And, there is no guarantee that a district court will stay concurrent litigation if it’s initiated by the patent owner, and wait until the reexam is complete.

Inter Partes Review (IPR).  This is an adversarial proceeding before the Patent Trial and Appeal Board (PTAB) and also attacks the validity of an issued patent but borrows from both ex parte reexam and federal district court proceedings. If instituted, IPR proceedings allow both the petitioner (you) and the patent owner to present evidence and arguments relevant to the validity of a patent. The attorney fees for this are not substantially different from patent infringement litigation.

A primary advantage is the possibility of settling with the patent owner and termination of the proceeding if the merits of the review have yet to be decided. And the PTAB may elect to not terminate the proceeding if the proceeding has substantially progressed. Thus, there is pressure on the patent owner to settle if it has poor arguments for validity. A downside to the IPR proceeding are the government fees. The government fees alone are $9,000 filing fee and a $14,000 post institution fee.

Declaratory Judgment Action. If the patent owner has created declaratory judgement jurisdiction for itself, you can file in your local district court seeking a declaration of non-infringement or a ruling that the patent(s) are invalid. The filing fees are lower than the other options, but as with any litigation, the attorney fees and expert witness fees are significant. A district court action may also allow you to bring a claim under the Arizona Patent Troll Prevention Act.

Every legal situation is different and must be evaluated on its own merits. If you have been contacted regarding a threat of patent enforcement, please contact us regarding representation. We have registered patent attorneys in skilled in all technologies and attorneys licensed in Arizona, Connecticut, and New York.  Venjuris PC can handle federal intellectual property matters in any U.S. state and assist with international matters. For even more information, be sure to connect with us on Facebook too.

Post written by patent attorney Michael Campillo and edited by social media attorney Ruth Carter.

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