Wealth of Ideas Newsletter, March 2010

This month and next, we offer a two-part series about the unique and comprehensive package of services that not only enforces your patent, it may also strengthen it in the process – and all at no upfront cost to the patent owner!

Since General Patent is not a law firm, we engage a law firm to litigate each patent infringement lawsuit we undertake on behalf of a patent owner. However, successful patent enforcement is more than simply engaging a law firm and filing a lawsuit.

Patent enforcement is a complex and comprehensive effort that approaches the objective from several angles. For each patent enforcement client, GPC provides some combination of these services based on the patent owner’s specific situation and needs, but the patent owner is not billed for any of these services.

1. Evaluate the Viability of the Patent Infringement Claim: It only makes sense to pursue a patent infringement claim if several conditions are met:

a. Merits: The claim must have merit. That is, we must be able to prove patent infringement. Bringing a frivolous lawsuit will fail to produce a financial return, and it is unethical and illegal. We take great pains to verify your infringement claim before we consider filing a suit. We will not make unrealistic promises or sugar-coat what we perceive to be a hole in the infringement theory. We are honest with ourselves and with our clients. If we believe your patent is not being infringed, we will explain why so you do not spend years chasing a mirage.

b. Validity: Although every patent is presumed to be valid, its validity is tentative. Patent examiners in the Patent Office have limited time to examine claims of patent applications. They also may not have found non-patent prior art. Once we enter into litigation, and millions of dollars are at stake, defendants spare no cost looking for prior art. They invariably find much more than the patent examiner at the PTO found when the patent was issued. A defendant may file for reexamination by submitting to the PTO newly found prior art and asking the Patent Office to invalidate the patent in view of this prior art. Or the defendant may file a motion for summary judgment asking the judge to invalidate the patent before the lawsuit ever gets heard by a jury.

When we consider undertaking a patent infringement case for enforcement, we need to ascertain the validity of the patent and the likelihood it can be invalidated in reexamination or by a motion for summary judgment. We may commission a validity search and look at not only patent prior art, but prior art the examiner at the PTO might have missed. There is no point in filing a lawsuit if it is likely the patent will be invalidated. Sometimes, when we find problematic prior art that will put the validity of the patent in question, we recommend submitting the patent for reexamination. If the patent is invalidated, we have saved you, the patent owner, considerable aggravation as well as years that would have been spent in a litigation that was doomed to fail.

If, however, the patent survives reexamination, it may emerge stronger than before. At General Patent, we are not in pursuit of a quick profit. We take a long view of the business, so we often spend years building and strengthening a patent portfolio through continuations, continuations-in-part (CIP) and reexaminations before we actually file a lawsuit. Our strategy is to optimize the return on your intellectual property over the long term.

c. Financial Return: Before General Patent invests hundreds of thousands or millions of dollars in patent litigation, we need to make sure there is the potential for a significant enough recovery to make the investment worthwhile. Once we develop an infringement theory, we may do a market study to estimate the sales of the infringing products or services.

d. Other Factors: We also need to take a look at market fragmentation. That is, how many companies will we have to sue to recover most of the damages? We also need to determine if there was willfulness on the part of the infringer(s) and if breach of contract or misappropriation of trade secrets are involved.

2. Determine Who the Infringers Are: A patent owner often comes to us about just one company that is suspected of infringing his (or her or its) patent. We are often able to uncover additional infringers. The more infringers there are, the more financially viable it becomes to pursue a patent enforcement campaign, and the more profitable it is for the patent owner. Also, once we have either won at trial or reached a settlement agreement with one infringer, it may become easier to pursue other infringers.

3. Minimize the Patent Owner’s Potential Liability: Every patent owner that decides to assert his patent runs the risk of counter-lawsuits from the infringers. In rare cases, the defendant wins the lawsuit and asks for reimbursement of attorney fees. If granted, these may be assessed against the plaintiff. General Patent created – as part of our unique patent enforcement model – a methodology that substantially reduces risk and liability for you, the patent owner. We may recommend that the patent(s) be transferred to a special entity – an LLC (Limited Liability Company) that we set up – and the LLC becomes the plaintiff in all patent infringement litigation. The original patent owner has an ownership interest in the LLC along with other parties.

However, if you are practicing your invention, it may be unwise to assign patents to an LLC as it could lead to your forgoing lost profits and the threat of a permanent injunction as a potent weapon against the infringer. All these issues are considered and discussed with you before making a final decision.

4. Select a Law Firm or Firms: General Patent has worked with many law firms over the last 20-plus years to litigate lawsuits on behalf of our clients, so we have first-hand experience with these IP litigators. Selecting the right law firm – the firm with the right legal and technological expertise, and the right mix of talent and resources for the lawsuit it will be litigating – is critical to a successful outcome. When there are multiple infringers, it may be necessary to engage more than one law firm as some firms may have conflicts of interest.

The patent owner who has never been involved in patent infringement litigation cannot be expected to have the expertise required to select the right law firm. General Patent and its experienced in-house patent litigators select the best firm for each specific client.

5. Supervise and Coordinate the Work of the Law Firm(s): General Patent’s staff attorneys are experienced patent litigators who in their prior careers were partners in major law firms and/or managed corporate legal departments. They have litigated and supervised litigation of many patent infringement lawsuits.

Our in-house legal staff works closely with outside litigation counsel. We actively participate in devising an optimal litigation strategy, we are involved in day-to-day tactical decisions, and we review and often contribute to legal briefs before they are filed in court. We oversee and supervise the work of outside litigation counsel on a daily basis. And because our in-house attorneys are experienced litigators themselves, they know what to expect and they know what matters. If the patent-in-suit is forced into reexamination, we will hire a patent practitioner to prosecute reexamination at the Patent Office.

6. Provide Strategic Direction: Before a patent infringement lawsuit is filed, and after commencement of litigation, several key decisions need to be made. GPC’s legal staff and the attorneys litigating the case make these critical choices. A few of these strategic decisions include which venue (court location) will be most favorable to the plaintiff, which infringer should be sued first (if there are several infringers), and whether to file in a federal court or before the ITC (International Trade Commission) or both.

7. Manage Reexamination of the Patent: If the patent-in-suit is forced into reexamination by the Patent Office, General Patent handles the entire process. That includes engaging a patent attorney or patent agent to defend the patent before the Patent Office and paying for the process. In some cases, however, we may decide it is strategically advantageous to put the patent into reexamination voluntarily because it may come out of reexamination a stronger patent with reduced prior art issues.

8. Supervise Patent Continuation(s): If the client has a pending patent application, General Patent may recommend that a continuation or continuations-in-part (CIP) of the parent patent be filed with the Patent Office. This could result in the issuance of additional patents containing different claims. This may significantly strengthen the legal protection afforded by the patent portfolio. These new patents with their new claims could create additional licensing and enforcement opportunities. Should we file for continuation(s), GPC engages a patent attorney to prosecute these continuation(s) and pays all costs associated with these filings.

In the April issue of Wealth of Ideas, we will cover the litigation expenses GPC underwrites, settlement and licensing negotiations, maintaining our clients’ patents, and monitoring royalty payments.

Read "The GPC Suite of Services, Part II"