If you receive a letter accusing your company of infringement, many questions race through your head. What should you do next? How do you know if you’ve been sued? How will this impact your business? Here are some answers.
If I receive a letter accusing my company of infringement, what should I do?
Once you are notified (or otherwise become aware) of a patent, you should take several steps to ensure that you are not infringing a valid and enforceable patent. If you are found to infringe in bad faith, you may be liable for double or triple damages and/or the attorneys’ fees incurred by the patentee in enforcing the patent. Consequently, a company or person that receives a letter accusing it of infringement should contact qualified patent counsel immediately.
The accusatory letter may also create the possibility of filing a declaratory judgment action before responding. Declaratory judgment lawsuits are a mechanism to “clear the air,” and are brought by one accused of patent infringement against the patent owner to determine whether the patent is valid or infringed. Such actions can allow the accused party to secure a favorable forum for litigation, which can provide a negotiating advantage.
How do I know if I have been sued and what do I do?
In many cases, a patent owner will file a complaint, but wait to serve it. In fact, sometimes a patent owner will file a lawsuit, contact an alleged infringer and negotiate with the alleged infringer for months—all without serving the alleged infringer with the complaint or even telling the alleged infringer about it.
Database searches are available to check whether a federal court lawsuit has been initiated. Similarly, electronic watch services can notify companies automatically when they are sued in federal court.
Where will the litigation be?
A patent lawsuit may be filed in a federal district court in any state that has jurisdiction over the infringer. Infringers generally can be sued wherever the infringer is incorporated, or has a regular and established place of business, and is making, using, or selling the accused products or methods. There are also proceedings before the International Trade Commission (ITC) that can be used to stop the importation of infringing products.
How long will litigation take?
The length of time a patent litigation can take depends primarily on the court (or judge) that has responsibility for the case, the complexity of the case, the goals and motivations of the parties, and the behavior of the parties. In some jurisdictions, a lawsuit will be concluded in 12 to 18 months; in other jurisdictions, it can take several years or more. Of course, many cases are resolved earlier by settlement.
What will litigation cost?
Costs can be difficult to estimate in advance. The cost of a patent litigation is usually affected by the same factors that affect its length. In addition, many cases may be resolved before trial, either by settlement or by entry of summary judgment, if the judge believes there are no material factual issues in dispute. Because of these factors, a patent case can cost very little (if settled early) or as much as several million dollars (if tried to verdict).
How much will a lawsuit interfere with company business?
Patent litigation is always disruptive for both the patent owner and the accused infringer. The costs can be high, including time spent by engineers and management. The distraction can be significant. There may also be an impact in the marketplace or among investors, based on publicity associated with the suit.
Interested in learning more? Visit our litigation page.