III. Prepare for Battle

In Parts I and II of this series, we discussed how to evaluate and respond to licensing demands and search for internal solutions. In this post we’ll discuss what to do when such efforts fail and litigation seems imminent.

Should one obtain a non-infringement opinion? Perhaps during product development, if one fears a particular patent, but after that it’s probably not worth the cost. In the U.S., failure to obtain an opinion may help support a finding willful infringement and enhanced damages. But most demands won’t go to trial and obtaining an opinion does not guarantee protection from enhanced damages.

It might be more helpful to explore potential cooperation with similarly-situated parties. If multiple parties share common issues, they may share legal costs and coordinate strategy by entering into a Joint Defense Agreement. However, before sharing information, be sure to enter into a Common Interest Agreement to help preserve confidentiality with respect to third parties. Continue reading →

II. Search for Solutions

In Part I of this series, we discussed how to evaluate and respond to a licensing demand, acknowledging the demand but requesting further information. Often that will be the end of the matter. This post will discuss what to do when the demanding party persists.

Try to pass the buck, if possible. If use of the patents arises from compliance with a customer’s requirements or specifications, talk with your business unit about requesting the customer to license the patents directly or reimburse your company for the cost of licensing.

If the patents relate to parts your company purchased, send each supplier a demand to either license the patents or defend and indemnify. Even if you have no signed agreements with the suppliers containing indemnification provisions, it still may be worth a try. Many jurisdictions recognize an implied warranty of non-infringement in connection with sales of goods, such as those found at UCC, Section 2-312(3) and UNCISG, Article 42. Ask your business unit to help exert pressure on the suppliers. And, consider switching to licensed suppliers if possible. Continue reading →

I. Evaluate and Respond to the Demand

According to a 2011 patent litigation study, the median patent infringement award in U.S. courts over the past 16 years was $5.1 million – and that doesn’t include attorney fees. Fortunately, most demands can be disposed of by in-house counsel, without licensing or litigation. This is the first of three posts discussing basic strategies for companies to resolve licensing demands internally at little or no cost.

The first step is to evaluate the severity of the demand. Examine the demand letter. Does it target your company specifically or appear to be part of a mass-mailing? Is it addressed to a named individual or “Dear General Counsel”? Does it identify specific products or refer broadly to a vague category of products? Is it phrased as a cordial invitation to “license early” or a firm notice of infringement?

Perform a Google search on the patent owner and patents. Are they well-known and feared or small and obscure? Have they been involved in prior litigation and licensing with major companies or is your company the first target? Are the patents registered where your company has substantial manufacturing or sales or not? Continue reading →