A corporate decision to enforce intellectual assets requires careful consideration. The company’s business objectives must always be kept in mind. Typically intellectual asset enforcement because it is so highly specialized is more expensive than other types of business litigation. Anyone undertaking intellectual asset enforcement efforts should be qualified to conduct quality work and secure a positive business outcome.
At every step along the road of intellectual asset enforcement, business goals will serve as a company’s guiding light. An economic analysis of potential cost of enforcement versus the value of the intellectual asset will be a decisive factor in determining whether or not the company decides to enforce its asset. A risk assessment must be conducted before proceeding with this course of action.
The type of intellectual asset involved determines the appropriate and sometimes optional forums for enforcement efforts. Patent infringement actions must be conducted in federal court can sometimes be conducted in the United States Intellectual Trade Commission, the ITC. Patent interference actions are connected in the US patent and trademark office. Trademark enforcement efforts, depending on the circumstances, can take place in federal district court, the ITC, or the United States patent and trademark office. Trademark rights can also be enforced with the US customs service. Treat secret misappropriation or other business tort claims can be brought in either federal district court or state court, depending on the circumstances. Copyright infringement actions are brought in federal district court.
The process of enforcing IP domestically starts when an intellectual asset owner learns a potentially infringing activity. At this time a set of initial decisions need to be made: Does your company want to sue the potential infringer or attempt to negotiate a license agreement? If your company wants to sue, what do they expect to gain from the lawsuit? Does a company desire past monetary damages? Does a company desire future revenues in the form of licensing royalties? Do they want to obtain market exclusivity? Do they want to protect the integrity of the product? Identifying the business goals is essential before investing the time, money and effort in enforcement, which can run of bills of many millions of dollars and take years to complete.
The business goals of the potentially infringing company will also provide answers to questions such as: Is the infringing company even interested in obtaining a license to make, use, or sell the product at issue? How important is the infringing product to the company, i.e., can the company take the product off the market to avoid litigation and not be to financially hurt? Is it technically and financially feasible, and market wise, to attempt to design around the protect product and provide a similar, though not exact, competitive product? Is the infringing company’s only option to keep the infringing product on the market as long as possible because the company does not have another product on the market from which they can obtain any income?
These questions are best answered after a thorough investigation of all the relevant influencing factors. This may require that a pre-enforcement investigation be conducted. The resulting economic analysis assesses the potential overall cost of enforcement versus the value of the intellectual property issue and will inform the decision of whether to sue or not.
A monetary value should be placed on several uncertain factors in this economic analysis. Trial is the most frequently underestimated cost in an intellectual asset enforcement case. Trials are hard on a company. They consume the time and energy of upper management, of the technical people directly involved with the products at issue, the attorneys both in-house and intellectual property litigation counsel, and the clerical and professional support that gets stressed out by court driven document production and preparation. Distraction upsets schedules from top to bottom. Things will take twice as long as expected and do not be surprised by a predictable cost increase.
Once a pre-enforcement investigation has been conducted and the decision taken to proceed with litigation, the next step is to assess the strength of the intellectual asset in question. You need the strongest position possible and one not open to attack and potential loss. If there any loopholes found during the assessment, these can be dealt with before you go to court. The strength of patents, for example, can be evaluated in several ways: by updating any prior art and patentability searches, by searching patent documents and other technically related publications, and by conducting a prosecution history study to be aware of the course of prosecution and ensure all the necessary procedural requirements were complied with during prosecution. Re-examination / reissue proceedings may preemptively address suspect circumstances that may surface, such as statutory bar date issues, missed procedural steps, or potential inequitable conduct challenges. The outcome of such proceedings can frequently strengthen a patent position in the courtroom and effectively blunt an alleged infringer’s defenses during litigation. Recognize, however, that reissue / re-examination proceeding can also produce unfavorable results if the claims are invalidated during these proceedings. Evidence may also be uncovered that would advise against assertion of a lawsuit.
The next step before going to court is to assess the allegedly infringing product. As much information as possible should be obtained regarding the potentially infringing product including, if possible, marketing brochures that have been publicly distributed by the alleged infringer. How much does this product really infringe the intellectual asset at issue? The patent owner may be able to obtain a sample of the product from the market or a tradeshow, or sufficient information may be obtained from technical brochures and sales literature, which are sometimes were reasonably obtainable. Internet searches can also be very effective in these types of investigations.
Other information nation needed before going to court is together as much information as possible on the potential infringer’s activities: those directly related to the infringement and more general activities as well. Because of potential infringer would most likely not hand over detailed business information, you may not want to alert to potential defendant of the impending lawsuit. This kind of information can also be obtained from mutual customers, from your own sales department, which probably follows competitors’ activities closely, and from sales literature, trade shows, and product data sheets.
The more information you gather on the potential infringer the better. For example you may discover existing intellectual assets that the potential defendant owns that could be asserted against your company. Early discovery such information allows your company to be adequately prepared to address these issues. At the same time, while gathering general information on the opposition, you may discover information indicating they would be very likely to settle if sued, which may prompt notification that you intend to sue as way to initiate settlement or negotiation discussions.
Another activity is to make sure that you interview and prepare potential witnesses such as inventors of the asset, holders of the patent at issue, and the attorney who prosecuted the relevant intellectual asset. These people should be interviewed to gather and assess both helpful and possibly adverse information to prepare for what might be expected of them during litigation.
Beyond the scope of this book are some litigation specifics to contemplate. These should be discussed with the company’s litigation team and include: (1) The specific location of the court. Frequently the patent owner will be able to choose a court location based on factors that are beneficial to it, consistent with judicial rulings on venue. (2) Who to sue. The way intellectual asset laws are written frequently allows a choice of who to sue. A plaintiff can choose a defendant, perhaps one with the deepest pockets or the one causing the most market damage. Often a plaintiff will not choose to sue distributors, retailers, and customers with whom it hopes to maintain or establish an ongoing relationship. (3) When to sue. Depending upon the facts, when you actually file the lawsuit can be a fundamental part of the strategy of enforcement. It can be brought as soon as a potentially infringing product hits the market or later after revenues and damages are higher. (4) Whether or not to utilize an Inter-Partes Review (IPR) of the art before litigation proceeds. Inter-Partes Review (IPR) is known as an effective, relatively low cost (compared to district court litigation) and quick method used by defendants as a defense strategy in district court cases to get the patent invalidated. This is done about 80 percent of the time.
The other part of the litigation strategy is whether or not to file a preliminary injunction. A preliminary injunction temporarily prevents the infringer from selling or making any more the product until after the end of the trial. The preliminary injunction is best requested shortly after filing the lawsuit, so preparation of a preliminary injunction motion should be completed before the lawsuit is filed.
Again there are a multitude of strategic and tactical decisions regarding litigation that must be considered. In any of these intellectual asset efforts, cost-effectiveness is a major concern. The principal sources of wasted litigation dollars stem from: Unfocused litigation strategy during the early stages of litigation; failure to keep the litigation perspective aligned with the company’s business objectives; and failure of litigation counsel to keep the corporate counsel informed of developments in the case in terms of both legal and financial terms.