8 Things You Can Do When You Are Accused Of Patent Infringement
So you have received a cease and desist letter accusing your products to be infringing one or more patents. The patent owner is demanding that you immediately stop selling your products and provide sales information regarding the accused product in 10 days. Here are 8 things that you can do now.
- Check if you have insurance coverage to cover the cost of defense. Most insurance policies exclude coverage for defending a patent infringement lawsuit. However, in some cases where the complaint includes other claims in addition to patent infringement, there may be coverage to cover the cost of defense.
- Seek indemnification from your suppliers. Generally, the Uniform Commercial Code (UCC) protects protect buyers from sellers who sell them infringing products. The UCC provides that the sellers have to indemnify the buyers and are responsible for the liabilities caused by the infringement. Check with your suppliers if they will defend on your behalf. If not, you may have an indemnification claim against your suppliers.
- Assess the threat level. Who sent the cease and desist letter? Is it from an attorney or a non-attorney? Does the patent holder have any history of filing a patent infringement lawsuit? You can decide on how much action you should take depending on the threat level.
- Check the status of the patent. Is the patent still active? Has the patent maintenance fees been paid?
- Check if the patent is really infringed. To determine whether the patent is infringed, the claim must be properly construed to determine its scope and meaning. The claim must then be compared with the accused device or process. If each limitation in the asserted claim can be found present in the accused device or process, then there is infringement. If the accused device or process is missing one of the elements in the asserted claim, then there is no infringement.
- Obtain a legal opinion from a qualified patent counsel. If your patent counsel says there is no infringement and you decide to continue selling the product, the legal opinion of non-infringement can minimize your liabilities if the patent is later found to be infringed.
- Check if the patent is valid. Many software patents have been invalidated under Alice vs. CLS Bank case as not being patentable subject matter. Many patents have also been invalidated because the invention has existed before the patent was filed. You can look for prior art either by doing the patent search yourself or hiring a professional searcher. Most law firms practicing Patent Law provide professional patent search services.
- Compare the cost to settle versus the cost to defend. If the accused product is not profitable, you can consider complying with the demands of the patent owner. If the accused product is profitable, you should compare your present and future profits with the cost of defense. Remember, patent litigation can cost thousands if not millions of dollars. You can also try negotiating a license in exchange for your ability to continue selling the accused product.
If you need assistance with a patent infringement matter, call Roland Tong, at 949-298-6867 or email Mr. Tong at [email protected]. Mr. Tong has been handling patent disputes since 2001. He has represented a wide range of clients from start-up companies to Fortune 500 companies and in various technical fields.