Defending Patent Licensing Demands (III of III)

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.

Consider filing a request for patent re-examination. In the U.S., interpartes re-examination has resulted in cancellation of all claims in 44% of cases and confirmation of all claims in just 11%. Ex-parte re-examination is less successful, but also less costly. If one is considering re-examination, you may wish to first present the unfiled application to opposing counsel during negotiations, as a bargaining chip.

Has the patentee engaging in illegal licensing practices, such as tying arrangements or demanding royalties beyond the scope of the patents? If so, be sure to inform opposing counsel that if an action is filed you will raise patent misuse as an affirmative defense, which could result in invalidation of the relevant patents.

Can your company make a plausible demand for cross-licensing? Work with your engineers to see if you can put together a case, but don’t expect it to be easy. One can’t simply invite them to cross-license; you’ll need to convince them they are using your patents and have no option.

If litigation is inevitable, consider mediation. Even if it seems negotiations have reached an insurmountable stalemate, a skilled mediator can often employ effective methods unavailable to the parties. Arbitration may also be considered, but don’t be too fast to believe those who claim it is faster, cheaper or better than litigation; that’s not always true.

Finally, if the matter just won’t go away, it may be time to retain counsel. Get preliminary opinions and fee quotes from a few firms. Seek attorneys who are experienced at patent litigation, familiar with the technology and understand your concerns and objectives. Discuss with management the risks, process and potential costs, and whether to send explanatory letters to customers or issue a press release.

Some licensing demands can be extremely costly and burdensome. However, most only wish to convey that appearance and can be cheaply and simply resolved by applying the principles described in these posts.


If you have any questions, please contact our Taiwan patent attorneys.

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