One of the biggest nightmares for a startup company or a new effort is getting a letter
in the mail accusing them of infringement, or worse yet, getting served with a copy of
a complaint that's already been filed in federal district court.
If you or your startup company is sued for patent infringement, there are a number of
things to keep in mind.
Most patent infringement lawsuits never proceed to trial.
In fact, data that I've seen suggests that well over 90 percent of all patent infringement
litigation filed in the United States settles or is resolved by motion prior to trial.
So the statistics that you read about the cost and expense and duration of patent litigation
might be true for some cases.
But when you're looking at that kind of data, make sure you understand whether it does or
does not include cases that resolve before trial.
There are a number of procedural options for resolving cases prior to trial.
Usually the best for both parties is settlement.
Normally, patent infringement is a business matter.
I think you infringe my patent.
You think you don't.
You think my patent's invalid.
I think my patent's valid.
I think that your presence in the marketplace is cause me to lose sales.
And I can calculate how many sales I think I'm losing.
From all that, we can roughly calculate what's the damage, even if I'm right.
And there's a number somewhere in the middle that can normally be reached that results
in a settlement.
Sometimes you'll have bargaining chips, like another patent that you're not practicing
that I might want.
And perhaps you can give me that patent and I'll give you a license under mine in exchange.
There are a wide variety of ways to settle cases, and each one is completely dependent
upon the unique circumstances of the particular parties involved and their history and the
product marketplace.
But if a case does not settle, then it must proceed through the litigation process.
Normally, the first important stage in the litigation process is what's called the Markman
hearing.
This is a hearing where the court determines the meaning of terms in the claim.
Typically, it occurs maybe between 9 months and 18 months after the filing of the lawsuit,
although different courts have different timelines.
Once the court has determine the meaning of the terms in the claims, it's quite often
the case that everybody knows that infringement is going to be found or is not going to be
found, because the issue was what is the meaning of the term in the claim.
So with some frequency, maybe a year to 18 months into the lawsuit, the Markman hearing
is conducted.
The judge rules on the Markman hearing, issues the meaning of the claim.
The parties file cross-summary judgment motions, and the court can now resolve the lawsuit
either completely or partially on motion before the case goes to trial.
If somebody accuses you of infringement, you really need to seek consult with patent counsel,
litigation patent counsel, because there are many things that can go wrong and the filing
of a lawsuit is the start of a very lengthy expensive, and procedurally complex process.
Infringement risk is the greatest risk from a patent perspective of any startup effort…
…Every time you do diligence, for example, if you're going to raise money, if you're
gonna do an initial public offering, or if you're to get acquired by a strategic partner,
every one of those processes involves detailed exploration of infringement risk.
So in any startup effort, way at the beginning of the process, before you've invest amounts
of money and emotional energy and time, you need to study the infringement risk profile
and decide is this a product area or a process area where there's freedom for me to operate,
or am I going down a tunnel that has no end and I should, therefore, go invent something
different?