By Attorney Roger Maxwell
Special to THELAW.TV
Abraham Lincoln once praised the patent laws for having "secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things." Innovation is the engine that drives much of the country's economy, and vulnerable startups depend on patents for valuation, protection, and reward for their ingenuity.
Assuming that you have a valid patent that is a useful business tool, you shouldn't be surprised when someone infringes it. As there is no "patent police," the burden of making the infringer either stop or pay you is your company's burden. If you think someone is infringing on your patent, here are five things you should immediately do to comply with diligence statutes and preserve your rights.
1. Build your patent "family" by filing multiple continuations. A continuation is a patent application that follows, claims priority to, and has slight modification from an earlier filed patent application. The issued patent will be the "parent" and the continuation will be the "child." Having a child allows you to address issues that come up during patent negotiations. And then file a continuation of the "child," seeking a "grandchild." A string of continuations can be filed for the life of the parent patent, which is 20 years from the date of filing. This enables the patent holder to draft new claims with an infringer's product in front of them. With a strong patent family, you can tell an infringer you think they're infringing the parent, you're even more certain they're infringing the child, and there is a grandchild pending that will address any other issues. At the end of the day, they will lose, and they'd be smart to settle sooner rather than later, when you'll be inclined to give them a better deal.
2. Prepare a claim chart. An infringer will likely argue that there is no infringement. Develop a claim chart to memorialize the infringement and enable you to counter those arguments. A standard claim chart looks like this:
Meaning of the Claim Language
A system comprising:
Discussed in paragraphs x, y and z of the specification.
Discussed in detail in paragraph x.
Element x' at www.infringer.com/product
Element B; and
Discussed in detail in paragraph y.
Element y' at www.infringer.com/product
Discussed in detail in paragraph z.
Element z' at www.infringer.com/product
You should make a claim chart for each infringed patent claim. Counting parent claims, child claims and grandchildren claims, there could be many claim charts. Quite often, the act of preparing a claim chart will alert you to things you should do in the children. For example, you may see that paragraph W in the specification does a better job of describing the infringer's element Z' than paragraph Z does. You can then modify the language of element C in the claims of a child to use language from paragraph W rather than paragraph Z. So you make a stronger case of infringement. Likewise, the infringer may raise issues that you can fix in a child, thereby making an even stronger case for infringement.
3. Construct a damages case. You need to be prepared to make a compelling case that the infringement is hurting you, and the infringer should pay. There are two steps:
Step one: Make sure the infringer has the money to pay you. If the infringer is a public company, you can often obtain financial information from government documents (e.g., the U.S. Securities and Exchange Commission). If the infringer is a private company, you can perform a "deep" internet search with a search engine that accesses more information than commonly used search engines. Consider investment funds and insurance policies as possible sources of money.
Step two: Develop at least one case as to why the infringer should pay you money and what the royalty should be. Here are a few possible cases:
- You suffered $X in lost sales because of the infringement.
- Your sales prices were eroded in the amount of $X because of the infringement.
- You lost $X because you weren't able to sell products for higher prices because of the infringement.
- You lost $X because you couldn't sell tag-along unpatented products because of the infringement.
- Your corporate growth was restricted in the amount of $X because of the infringement and ensuing litigation.
- A reasonable royalty would be Y percent so to enable you to recapture the expense of product development and obtain a return that is commensurate with the product's expected life.
- A reasonable royalty would be Y percent to enable you to capture an appropriate share of profit generated by the infringer.
- A reasonable royalty would be Y percent based on activity in a comparable market.
- The total profits of the infringer are $Z, all of which you are entitled to if you own a design patent.
4. Use an unserved lawsuit as leverage to impel the infringer's cooperation. Do you have a good infringement case, based on tip 2, and substantial damages, based on tip 3? Then your next step is to file a patent infringement lawsuit in a court that gives you the advantage. This is called a favorable forum. Don't serve the lawsuit, but instead tell the infringer that you'll simply let the lawsuit fade away if they cooperate with you.
5. Instead of serving the lawsuit, send a "cease and desist" letter to the infringer. Finally, initiate the dispute process by telling the infringer in writing to stop infringing your patent. Their likely response will be to ask for a meeting, which you will want to do armed with your patent family. If the infringer tries to get a declaratory judgment against you – likely in an unfavorable forum for you – you have a pre-existing patent infringement lawsuit complaint pending in a favorable forum. You then serve that lawsuit since the infringer is clearly not cooperating, which will makes things harder and more expensive for them.
The author, Roger Maxwell, is a patent attorney and general counsel of technology start-up HipLogiq.