I got a threatening letter from an attorney’s office claiming my business violated someone else’s patent. Should I be concerned?
Yes. Your letter may have come from a “non-practicing entity” (sometimes called a “patent troll”). Such a person or company attempts to collect licensing fees for patent violations, but does not actually manufacture products or supply services based on the patents in question. Patent law does not differentiate between non-practicing entities and companies that produce actual products or services. The patent infringement case is still conducted as any other lawsuit in federal court, and the cost of defending such a lawsuit may cost several thousand dollars or more. If a “patent troll” brings a suit against your company, you will have to hire an attorney well versed in intellectual property law to advise you about your options and to respond properly to the lawsuit. The letter may also be from a firm or a company that actually utilizes the patent. In either case, you should contact an attorney with patent defense experience.
What, exactly, is patent infringement?
The United States Patent and Trademark Office (USPTO) grants patents to give patent owners the right to exclude others from making, using, offering to sell or selling a patented invention (or a product made by the patented process) within the United States or from importing it into the United States. You might be “infringing” on a patent owned by someone else if you make, use, offer to sell or sell that patented invention (or a product derived from the patented process) before the term of the patent expires, unless you have received permission from the patent holder and/or provide compensation.
How might my company infringe someone’s patent?
If your company markets, as its own, a product or method that includes each and every element or method step used in a patented product or method, then your company has literally infringed someone else’s patent rights. But, if there is even one element or method step that does not match the patented product or method, then you have not literally infringed that patent.
However, there is another way your company might be found guilty of patent infringement. Even though your product (or method) may not exactly match that of the patent-holder, there is a “doctrine of equivalents” in the law. This doctrine that says you still may be infringing if you have an “equivalent” for every element of the patented product or method that doesn’t exactly match.
The jury will ultimately decide if the patent claims are valid, and your company must prove that these claims are invalid “by clear and convincing evidence,” meaning that the evidence shows it is highly probable that the patent claims are invalid.
What happens if my small business is sued for infringing a patent?
If that happens, a court can order you to stop infringing the patent, and may order you to pay an amount of money in damages. Because such a lawsuit can be significant enough to threaten your business, it is important to consult with a qualified patent attorney.
How would a patent holder prove infringement?
The patent holder must bring a legal action and:
• show proof of patent ownership, usually by providing the patent registration certificate from the USPTO;
• prove that someone has imported, made, used, sold or offered to sell the patent holder’s invention or a product derived from the patented process;
• prove that this infringement harmed the patent holder (by depriving the patent holder of revenue, for example).
However, a “non-practicing entity” or “patent troll” that does not actually produce a product or service, but still owns a legitimate patent for the product or service, also may bring a lawsuit against you. The “troll” might have purchased the patents from the original inventor or may even have invented the product or service, even if it is not currently being produced or used. The law does not discriminate against patent owners that have yet to produce a product; it is expected that production of a product or service may be limited or even non-existent for some time after it is patented. Some companies simply aggregate all types of patents, intending to sue parties that might be prone to settle quickly.
While the law is designed to protect the innovator (who might have limited funds), the non-practicing entity can be viewed as unfairly exploiting the law. Also, because litigation in the area of patents and trademarks is extremely expensive, defendants are often inclined settle rather than take on the massive cost of a lawsuit.