William H. Honaker, member, Dickson Wright

Patent Litigation: Avoiding A Nightmare

By William H. Honaker
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William H. Honaker, member, Dickson Wright

There are usually only losers in patent litigation, so the best strategy is avoidance.

EXECUTIVE SUMMARY

Patent litigation is very expensive and should be avoided if at all possible. It was recently reported that the median cost is $3 million. Steps can be taken to avoid patent litigation, or if unavoidable, to keep the costs down.

Have you ever woken in the middle of the night in a cold sweat, heart racing, and a terrible feeling of dread?

That’s what being sued for patent infringement feels like. It’s a real nightmare.

The cost is astronomical. A recent survey by the American Intellectual Property Law Association “2017 Report of the Economic Survey” stated that the median cost to litigate a patent case is $3,000,000. In addition to the out-of- pocket costs, there are also the distraction costs which keep you from running your business. Patent litigation means years of endless meetings, depositions, document productions, days in court, and continued uncertainty.

So, how can you avoid this nightmare or at least keep the cost down?

  1. The Best Approach Is to Avoid It All Together

    1. Find out if any patents cover your product.

      You need to determine if you have any potential patent issues before you invest time and money in the product. The ideal time is when you have the idea for the product – BEFORE you launch.

      You have to do a patent search to see if you are infringing a patent. Sophisticated software is available to make these searches quick and affordable. First search your competitors. If nothing is found, conduct a broader search. If a patent is located, have it evaluated by patent counsel.

    2. Hire a business-minded patent attorney, registered before the United States Patent Office, with litigation experience and extensive experience in evaluating patents.

      Hire a specialized patent attorney to be certain that your product is clear of infringement. Your patent counsel needs litigation experience, Patent Office experience and solid business skills to guide you.

      Very few patent attorneys meet these demanding qualifications. To practice before the United States Patent Office, an attorney has to be registered. To be registered, an attorney must have the appropriate technical or scientific background and pass a stringent examination. Unfortunately, registered patent attorneys typically focus on obtaining patents, and typically do not litigate. Some attorneys focus on litigating Patent matters, but have never written a patent application, nor practiced before the United States Patent Office.

      The hardest skill to find is business acumen. You want a business-minded attorney giving you advice, someone who understands what it’s like to run a business and work in a competitive market.

    3. Evaluate the patents you’ve located.

      A patent is typically challenged in two ways. The first is to determine whether your product is outside the scope of the patent claims. The second is to argue that the patent should not have been issued, that it is invalid.

      It is legally easier to argue that your product is outside the claim scope. In the initial stage of product development, this provides an opportunity to design around the patent claims. With the assistance of patent counsel, the claims can be interpreted, and you can make changes to the product to avoid the patent.

      If your product is within the claim scope, the next step is to determine if the patent is invalid. This step involves a thorough investigation of related technology disclosures that were known before the patent was filed. These disclosures can come in the form of other patents, publications, publicly known information, or other sources.

    4. Explore the possibility of a license.

      You may be able to license the patent. Patent litigation is expensive and risky for the patent owner as well as the accused infringer. If communication channels are open, especially between the business owners, many times an amicable result may be reached.

  2. Consider an Inter Parties Review (IPR)

    An IPR is a possible option to a typical court trial. They are less expensive than a trial. The American Intellectual Property Law Association (AIPLA) [spell out before abbreviation] reports that the median cost is $250,000, compared to the $3,000,000 for a court trial. But, IPRs are limited to determining whether the claims are patentable, not whether there is infringement.

    An IPR is a proceeding conducted before the Patent Trial and Appeal Board (PTAB) to review the patentability of a patent’s claims. The claims can only be challenged under 35 USC §102, i.e. the claimed invention is not new or under 35 USC §103, the claimed invention is obvious. Additionally, these challenges can only be based upon patents or printed publications.

    The standard for review in an IPR is lower than the standard of review in a trial court. In a trial court the patent is presumed valid and therefore requires a higher standard of proof to invalidate the patent, i.e. by clear and convincing evidence. But, since the IPR is a review of the patent by the USPTO, there is no presumption of validity and the standard is the lower standard i.e. a preponderance of the evidence. This different standard of proof can make an IPR more desirable. But, you must have good patents or printed publications that show the patent claims are either old or obvious.

    The standard for review in an IPR is lower than the standard of review in a trial court. In a trial court the patent is presumed valid and therefore requires a higher standard of proof to invalidate the patent, i.e. by clear and convincing evidence. But, since the IPR is a review of the patent by the USPTO, there is no presumption of validity and the standard is the lower standard i.e. a preponderance of the evidence. This different standard of proof can make an IPR more desirable. But, you must have good patents or printed publications that show the patent claims are either old or obvious.

    IPRs are also relatively quicker than a trial, concluding within 12 months or 18 months for good cause shown after institution of the IPR. To institute an IPR, the petitioner must show a reasonable likelihood of success with regard to at least one claim.

    An IPR proceeding does have risks. After the PTAB renders a final decision, the petitioner may not assert in a later District Court or ITC action that a claim is invalid on any ground that was or reasonably could have been raised in the IPR. In other words, you cannot make the same arguments in a later lawsuit.

  3. Never lose sight of the fact that Patent litigation is generally a business decision. A business result is always better than litigation.

    You should always keep your communication channels open and look for opportunities to settle. Patent lawsuits tend to settle and sometimes in unexpected ways. For example, a client sued for patent infringement kept the communication channels open. After some discussion, the patent owner agreed to drop the lawsuit in exchange for our client giving them their premier booth space at the Chicago Tool Show. WOW! What a way to avoid a nightmare. Without communication, this fairly unusual settlement would never have happened.

Conclusion

As a young lawyer, I learned a very valuable lesson about Patent litigation. We had just won a lengthy court battle in which our client was accused of patent infringement. Literally walking away from the courthouse, I said: “it must feel good to have won.” The client responded: “Not at all, we won the case, but our business is bankrupt.”

It was at that moment I realized I was in someone else’s bad dream.

In the end, an ounce of prevention is worth a pound of cure. Litigation is the last resort. Time and energy should be spent doing your homework, hiring talented, experienced experts and focusing on what’s best for your business.

Keep those things in mind as you go to bed, and you’ll sleep better, I promise.

Sweet dreams.

About The Author

William H. Honaker, member, Dickson Wright

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