By Daniel H. Brean, The Webb Law Firm
It is a sad fact, but success often breeds opportunistic lawsuits. The technology sector seems especially vulnerable to this phenomenon, and the litigation de jour is patent litigation. Startups have never been targeted with patent infringement lawsuits more than they are today. Companies that dance in the footsteps of elephants (i.e., tech giants) and show promise as new competitors may find themselves being sued for infringement by a well-funded plaintiff. Additionally, when startups garner enough attention they can find themselves targeted for patent infringement by patent assertion entities, or “patent trolls,” who are not market participants but merely own patents and attempt to enforce them in order to monetize them. Patent trolls send demand letters and file lawsuits to pursue these monetization efforts. The end result of these actions can be suppression of competition and stymied innovation.
Receiving a demand letter or a complaint for patent infringement can be intimidating. The technology and the law at issue is often highly complex, and the burden and expense of litigating can render a dispute a “bet the company” scenario. Most patent trolls are looking for at least tens of thousands of dollars to settle cases early on, with the settlement demands increasing if the litigation proceeds past the initial stages. Ultimately, they will seek millions of dollars in damages for the cases that go to trial. Operating companies may be seeking even more money, mandatory licensing schemes, and might also want to get an injunction to stop a company from making, using, and selling its technology. Often these demands are made with barebones analysis and paper thin allegations, relying on the expense and hassle of defending an uncertain and vaguely-defined case to lead most companies to try to resolve matters outside of formal legal proceedings.
While there is no doubt a place for legitimate disputes regarding the scope of patent claims and the need to enforce patents, curbing abusive patent litigation is so important to this country that all three branches of our federal government are taking steps to help stem the tide. Congress has been considering legislation to reduce patent infringement litigation abuse for the past few years, and seems to be nearing the passage of such reform. Such legislation would, among other things, potentially increase the burden of filing lawsuits by requiring more specificity about the alleged infringement from the patent owner when the case is filed. The Supreme Court is set to consider this term whether there are better ways to make those who file baseless lawsuits pay the legal fees incurred by their targets who defend themselves and prevail in the litigation. And President Obama recently issued several executive orders to improve the quality of issued patents, and even worked with the Patent Office to launch a website with information to assist those who may find themselves threatened with patent infringement allegations (http://www.uspto.gov/patentlitigation). Getting up to speed on patent litigation via this website is a must for any new or small technology company.
This new website explains the basics of how to tell if a patent is infringed and how to tell if it is valid. It identifies some options to fight a lawsuit or to challenge the validity of a patent in a proceeding at the Patent Office. It provides information on how to learn who has been sued or threatened with litigation over a particular patent, and how to find the court documents or demand letters in those related cases, along with crowd-sourced discussions about the patent owners and the patents in some cases. It includes guidelines for how to understand and respond to both demand letters and complaints. There is also a glossary of patent terminology and there are links to resources for legal research. Finally, the website provides guidance on when you may need to seek legal help and how to find qualified counsel.
Hopefully, you never find yourself targeted with spurious patent infringement claims, but if you ever do, do not allow yourself to be blindsided or intimidated when faced with an allegation of patent infringement. Once a demand letter is sent or a lawsuit is filed, a lot can happen very fast and legal assistance may be necessary. Knowledge is power, so empower yourself to defend against infringement allegations that have no merit.
Daniel H. Brean is a senior intellectual property attorney with The Webb Law Firm in Pittsburgh, PA. He is an experienced patent litigator and patent prosecutor, working primarily with mechanical, electrical, and software technologies. Dan also has considerable expertise in the area of industrial design protection and design patents, frequently publishing and speaking on these topics. Questions or comments for Dan may be directed to firstname.lastname@example.org or (412) 471-8815. The opinions expressed in this article are solely those of the author, and should not be attributed to The Webb Law Firm or any client thereof.