Steps to Take if You Receive a Patent Demand Letter (Part 3)

Steps to Take if You Receive a Patent Demand Letter (Part 3) by David L. Cohen

This article is the next piece of my series discussing patent demand letters. Part one, reviewed the initial considerations and steps one should make upon receiving a patent demand letter. Part two explored the subject or content of the letter — i.e., what is the sender asking for? Part three addresses evaluating the merits.

At this stage it might not be worthwhile to perform a full analysis of the letter’s claims, but it is definitely worth performing at least a high-level review.  

First, you should familiarize yourself with the patents that are being asserted.

Step 1) Search USPTO.gov

Search for the patents on the United States Patent and Trademark Office (USPTO) website (www.USPTO.gov). You should look for two things:

  1. Assignment records, i.e., who has filed claims of ownership to the patents;
  2. Priority date. In other words, the date before which anything that exists would be considered prior art that could invalidate the patent. Also look for any disclosure describing the invention.

The priority date is quite an important piece of information because it will go a long way to providing a clear idea of how strong the patents are. Note well: This is not always easy to determine, but it’s worth attempting an initial rough estimate.

If the USPTO does not have the information you need, or if you have an international business and you are concerned that these claims may have impact internationally, or you are dealing with an entity that has international footprints, it is worth checking out the European Patent Office (EPO) website.

Step 2) Patent Claims

Once you have a sense of who owns the patents and the priority date of the relevant patents, and perhaps other members of the patent family, it is worth taking a look at the claims of the patents.

Understanding what the claims truly mean is an art form.  How a court will understand a patent claim is not necessarily written or clearly stated in the patent. However, by reviewing the patent specification — the detailed, technical part of the patent — and then reading the claims of the patent, you can begin to understand what the patent likely covers or at least likely to be argued to cover.

At this juncture, you must evaluate whether or not this patent and its claims can in fact relate to any product or service of yours. If they do, is it a valuable or important part of your product or service?

Step 3) Claim Charts

If the sender was kind enough to send claim charts — charts that purport to explain what the patent means and how you infringe  — you can begin your analysis. Regardless if supplied by the sender, you may wish to generate your own basic claim chart to keep track of your thinking on the patents.  

If, after completing your review of the sender’s claim charts and/or your attempt to create your own charts,  the patents appear to be gibberish, then it’s safe to assume that you are probably dealing with someone who is attempting to leverage the legal system to force payment in return for them to leave you alone. This type of individual is ‘affectionately’ referred to as a “patent troll.

Note well: It is always a mistake to assume that all companies who assert patents as their primary business model (known in the literature as “patent assertion entities” or PAEs) are patent trolls.  First, many PAEs, in fact, have good or better than good patents, and if treated with respect will be reasonable. Secondly and more importantly, unless you have a budget the size of Google and its ilk, treating all PAEs as trolls will blind you to your vulnerabilities and can lead to much needless financial pain and business suffering.

Returning to your analysis, if the claim does make at least some sense and attaches to your product or service in a way which hadn’t been previously disclosed, you should immediately consider your vulnerabilities. For example, a determined patent-holder could take actions, like filing a lawsuit in such a way that could damage your business through negative publicity, injunctions, and internal business reviews.

Lastly, it is important to discern whether the patent-owner filed a lawsuit and has commenced the legal process or whether the letter serves solely as notification.

Step 4) Insurance Coverage

Another important consideration at this stage is whether you have insurance for these types of situations. To determine your risk, you should ask:

  • Do you have suppliers who may indemnify you?
  • Are you a supplier who may have to indemnify someone from the same patent if they’re served against them?
  • Is this a field where multiple parties may receive similar letters?
  • Do you have relationships with those parties and can you form an alliance if needed?
  • Have you looked at the owners’ litigation history and are they sophisticated?
  • Do you have a commercial relationship with the patent-owner?
  • Does your company have some sort of insurance-type relationship with a service provider than can help you in these circumstances?

Once you have evaluated all of these factors, you can begin to decide your next steps. My next blog series will explore how to respond to a patent demand letter and the pros and cons of different courses of action.

David L. Cohen

David L. Cohen, Esq.

David L. Cohen, P.C. – Kidon IP
123 West 93rd Street
New York, NY 10025
dl.cohen.pc@kidonip.com
(917) 596-1974