WSID #9: When the toll collector comes knocking

This article is part of the “What Should I Do (WSID)?” series where I discuss various scenarios involving intellectual property and business. Topic suggestions are always welcome.

“I just received a notification letter saying my product infringes on someone’s patent! What should I do?”

It can be scary to receive a letter, full of legalese, from an unknown party. The letter may have originated from a law firm, an operating product company, or a patent enforcement company (sometimes known as a Non-Practicing Entity or NPE). These letters usually will include a reference to the owner of one or more patents, and may or may not include an explanation why these patents may be relevant to you (depending on the requirements in your home state).

Before you panic, I’ve listed below Four Proactive Steps you can take in this situation. Beware, though, how you document your findings as you go through the steps below. Written notes and communications may come to light during any subsequent legal action—for example, you don’t want to have an email that says, “Holy c*$%, our product is definitely infringing on patents X, Y and Z!” to be found by the opposing side during the discovery phase of a patent litigation.

1. Know your adversary
   Not all patent assertion entities are the same. Each entity operates in unique ways, with different tactics and appetite for playing hardball. Start by finding the answers to the following questions:1. Is the sender of the notification letter a well-known enforcer of patents? A quick Google Search may reveal additional information about the entity.

   2. Is the sender involved in litigation involving the same patents or other patent portfolios (this information is readily available through services such as RPX)?

   3. Who owns the patents in question (look at, for example, Google Patents or the US Patent and Trademark Office Assignment Search)?

   If the letter came from a law firm representing a patent owner, be sure to talk with your own counsel before responding to the letter.

2. Research the patents involved
   You can locate and review the file history of the patents as well as any related patents and applications (such as through USPTO’s Patent Application Information Retrieval portal or World Intellectual Property Organization’s PatentScope). A patent professional, such as a patent attorney or patent agent, can help you understand the strength of the asserted patents.Particularly if the patents have been involved in prior litigation (see the RPX link above), then you can find additional information about how the patent claims had previously been interpreted by the courts, which can be very useful information as you continue your analysis.
3. Understand your own product and patent protection status
   If you have good patent counsel, then you should be confident that your products are well protected by your own patents and you well understand the intellectual property owned by others that surround your own patent portfolio.If you’re not sure about your product and the patent landscape surrounding your product, then immediately consult a patent prosecution professional to shore up your own patent protection.

   You might also look for workarounds and/or avoidance options:

   1. Can you easily modify your product in order to get as far away from the asserted patent claims as possible?

   2. Again, don’t put in writing any statements like “here’s a way to modify our product so that it won’t infringe Patent No. X,XXX,XXX.”

4. Examine your optionsOption A. Ignore the letter
   1. If the results of your research into items 1 and 2 resulted in the finding that: a) the letter sender is known to be involved in a lot of frivolous law suits that get dismissed with snide comments from the judge; or b) the patents in question have been challenged and weakened in the courts and/or at the USPTO in PTAB proceedings, then ignoring the letter may be a safe option for the time being.

   2. Just be sure that you have done your homework (see Items I, II and III above) and that ignoring the letter is a conscious decision rather than “paralysis by analysis.”

   Option B. Ask the sender to give you more detailed information.
   This approach can be very effective, particularly for NPEs who may have sent notification letters to dozens of companies at the same time. Simply call (not email) the contact person listed on the notification letter and ask for more detailed information regarding why specifically your company has been contacted. Without commenting on the received letter, ask the NPE to send you additional information related to the matter. A few different things could happen here:

   1. You may not hear back from the letter sender again;

   2. The letter sender may insist on a NDA before going into more detailed discussions. You can push back and say that any discussion of the matter can and should be kept to publicly available information. In any case, if they do send a NDA, then blame your attorney for future delays.

   3. The letter sender may want to schedule a phone call or meeting.

   Part of the tactic here is to stall, stall, stall. The point here is to engage enough with the NPE such that they will neither view you as a pushover target for a “nuisance value” settlement (basically that you’d be willing to pay a minimal settlement to make the NPE go away) nor a hostile litigation target.

   You do have to be careful here how you proceed, what you put in writing, the wording you use, etc. Consulting a professional at this juncture would be very helpful.

   Option C. Research past and current defendants.
   With what kind of entities has the NPE been involved in litigation? Were the cases settled out of court of proceeded to full-blown litigation?

   If you know anyone at any of the past defendant entities, you might reach out to them. Unless there are any confidentiality restrictions, entrepreneurs will often share war stories with other entrepreneurs.

I recently heard a prominent patent professional say, “In patents, inaction IS an action.” I completely agree—even if you decide to ignore a notification letter from a patent troll, make that a conscious decision, not a default inaction because it’s easier right now to figuratively bury your head in the sand. There are proactive steps you can take in order to stay in control of the situation.

I’ll be discussing more ways to deal with a variety of situations involving intellectual property in this “What Should I Do (WSID)” series. Topic suggestions are always welcome.

About the Author and Disclaimer: Yoriko Morita has worked with innovators in a variety of contexts, in a law firm working for inventors, as in-house IP director, and as a licensing professional. She currently helps clients with such IP-related questions, as well as developing integrated business/technology/patent strategies, through her company, Patents Integrated. The contents of this article are intended to be informational only, not legal advice. The reading of this article does not establish an agent-client privilege between you and Patents Integrated, and Patents Integrated is not responsible for any damages arising from your use of the information in this article under any circumstance. Your use of the information in this article is at your own risk, and you should seek the advice of a licensed legal professional regarding your own specific situation.