The story always sounds the same. Our client receives a letter from a purported patent owner alleging that he is infringing the owner’s patent and, as a result, owes the patent owner a license fee. Sometimes the license fee is minimal other times it is exorbitant. Typically, the letter outlines the patents involved utilizing technical language to describe the underlying process, product, or technology. The letter always closes with the same threat: pay up or see you in court.
This type of letter can be from one of two types of authors – a patent owner who actively utilizes its patent for the commercialization of a product, or a company that acquires patents solely for the purpose of suing other companies rather than utilizing the patents in the market. The latter are commonly known as “patent trolls.”
“Patent troll” is a controversial term with numerous definitions that has gained popularity within the last decade as these companies have made their presence more and more prominent in the marketplace. For simplicity purposes, I will use the term throughout this article.
Patent trolls make money from collecting these “license fees” in response to a demand letter, as a result of settlement negotiations, or pursuant to a jury verdict, not from selling any product or technology embodied in the patent that they own. Many companies pay the demanded license fees without questioning the validity of the underlying allegations in order to avoid the costs associated with a lawsuit.
Often times the allegations are centered around operations or processes that are common in any workplace. Another common approach is for patent trolls to focus on a particular industry within a particular geographic area. It is not uncommon for several similarly-sized competitors to receive the same demand letter at the same time. For example, several of our clients have recently received a demand letter related to scanning devices used in connection with computers and e-mail – a practice common in many workplaces.
If you receive a letter claiming you are infringing someone’s patent, contact your attorney. There are several potential lines of defense against a “patent troll” that some brief research by an attorney can uncover. Knowing whether the owner has previously filed suit against an infringer, deciphering the record owner of the patent, determining whether or not you are actually operating in a manner that would constitute infringement, requesting specific information related to the alleged infringement, and evaluating the validity of the claims of the patent can help determine what the appropriate response, if any, should be.
Receiving a letter threatening to file a lawsuit against you is always upsetting. But contacting your attorney and doing a little research may save you from hours of stress related to a lawsuit and thousands of dollars in license and attorney’s fees.
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