SO A PATENT ISSUES,NOW WHAT?

BY:KIRBY DRAKE

Perspiration + Time + Money = Patent

• “Genius is one percent inspiration and ninety-nine percent perspiration” - Thomas Alva Edison

• Many patent applications filed each year but only 1 out of 3 actually issues into a patent

Making Use of Patent After Issuance

• 20 years of patent term – make perspiration and time worthwhile

• Most patents retired to file cabinet and not source of revenue generating activities

• 15-20% of all patents do not have their first maintenance fee paid – go abandoned

Options for Making Use of Patent

• Litigation• Licensing• Spinout or start-up business• Partnerships, joint ventures

Litigation

• Only about 1% of patents even litigated• Whether litigated depends on technical

area, what competitors are doing, ease of identifying infringement, how much money involved

• Want reasonable confidence before going into litigation

Litigation

• Elements of Typical Patent Litigation:• Infringement• Validity• Enforceability• Damages

• Trial by jury or judge• Risk versus reward

Infringement Considerations

• A patent is not infringed – can only infringe a specific claim in a patent

• Specification may describe a device but irrelevant if patent does not accurately claim the device (or a component thereof)

• If an independent claim is not infringed, cannot infringe claims depending from it

• Can only infringe a patent that is in force

Infringement Considerations

• Patent can be invalid because of prior art that patent examination process did not find

• Patent can be invalid because patent holder offered claimed invention for sale and did not timely file for patent

• Patent can be invalid because of lack of written description, lack of enablement, or other defects in the claims

Evaluating Patent Allegations

• Patent litigation is very expensive• Unusual to recoup attorneys’ fees or costs• Patent holder has no duty to grant license• Need only prove infringement by

preponderance of the evidence (e.g., 51%) but invalidity must be proven by clear and convincing evidence

• Patents generally presumed valid

Evaluating Patent Allegations

• Acquire – secure rights to patent (license or purchase) to leverage exclusivity of patent

• Attack – destroy patent by defending yourself (if patent holder refuses to negotiate, patent too weak to justify acquiring, but patent relates to field warranting protection)

• Avoid – take nominal license and continue core business with minimal interruption

• Delay – nominal response to demand letter

Defending Against Patent Allegations

• Understand potential economic and strategic impact of allegations• Nuisance suit or allegation?• Allegation by a direct competitor?• Risk of injunction?• Potential damages and possibility of redesign to

avoid infringement (including costs and time to implement)?

• Any patents available to assert against accuser?

• Options for resolution?

Evaluating Patent Allegations

• Assemble team to help with evaluating allegations• Attorneys• Responsible product managers• R&D• Sales and marketing• Information technology (IT)

Defending Against Patent Allegations

• Determine scope and meaning of claims• Assess whether product could infringe

claims• Evaluate whether patent is valid• Assess potential impact on business

should patent be valid and infringed

Defending Against Patent Allegations

• Determine importance of allegedly infringing product to business• Cost to discontinue use • Using a non-infringing alternative • Designing around the patent

Defending Against Patent Allegations

• Operate from position of strength• Learn what patents or other IP may be

available to assert against accuser• Evaluate all possible defenses – invalidity,

infringement, enforceability

• Strong invalidity or unenforceability defense helpful to put in better negotiating position

Freedom to Operate

• Determine whether there are patents that will prevent/limit ability to proceed in technology area

• Identify IP rights, relevant jurisdictions, expiration dates, how issued claims may be construed and whether claims may be invalid

• If possible infringement, may obtain freedom to operate through license negotiation

Freedom to Operate

• Patent protection limited to country where rights are obtained

• Patent may not be in force if patent holder has not made proper maintenance payments or patent has expired

• Patent issued in different countries may have broader or narrower claims

Unlitigated Patents – Still Valuable

• Defensive measures• Deterrent to block others• Create a patent thicket• Signaling purposes• Generate revenue through licensing and

other business relationships

Licensing

• Generate revenue• Establish credibility of patent and

business• Well-known licensing programs

• IBM• Qualcomm• Texas Instruments

• May not be an overnight success

Other Ways to Monetize Patents

• Start-ups• Spinoffs/spinouts• Partnerships• Joint ventures