Patent Demand Letters – You Have One, What Now? (Part 1)
While not as prevalent as it may have been in the go-go days of the early 2000s, in certain industries in the United States, it is only a matter of time before a company will receive a patent demand or cease and desist letter.
While such letters are never pleasant to receive, it is a mistake to go all “Newegg” on the sender until a company has a better sense of the risks and benefits of taking a hard line with the sender. Some letters are safely thrown in the garbage, some require immediate attention, and most fall somewhere in between. To figure out where a letter falls it is best to consider the points below. While it might be determined that the letter can be safely ignored, before taking any positive course of action, it would be wise to fully explore the legitimacy of the letter by using the steps below.
The first step is to determine what the letter in fact alleges and the general context in which it is alleged. The second step requires an assessment of the sender and their motivations. The third step requires a preliminary analysis of your vulnerabilities vis-à-vis the letter. The final step requires a preliminary assessment of the merits of the claims letter and your exposure to, and defenses from, those claims. With the results of these four steps in hand, you will be able to craft the most prudent initial strategy and possibly resolve the matter quickly and cheaply. I will now discuss each step in more detail.
What Are the Allegations, Really?
A good place to start this stage of analysis is to examine the format of the letter itself: Is it written on proper stationary with a real address and signature? Or does it come across as junk mail or even worse, a mass photocopied letter on cheap paper stock? Is it addressed to a real person (e.g., you) or is it addressed to the “IP Department”? Does it note the correct address or did it make it to your desk by sheer luck from the post office? Does the letter contain any attachments, like the copy of the patents alleged to be infringed, claims charts (no matter how superficial), or supporting materials (e.g., your company’s manuals)? If the letter does contain attachments, are they professionally put together and do they look (at least at first glance) like a reasonable amount of care and effort were put into them? Much about the seriousness with which you should take the letter (and in fact, the seriousness with which the sender expects you take the letter) can be gleaned by answers to simple questions.
Who Sent the Letter?
After a superficial physical examination of the letter, the next step is to read it for substance. Can you? Can you understand what the author is saying? Or is it too convoluted and confused to answer these five simple questions:
- Who is the author?
- Why is the author writing to you?
- Why is the author writing to you now (as opposed to in the past or in the future)?
- What does the author want?
- Why does the author think you or your company can give them what they want?
Assuming the letter contains comprehensible answers to the above five questions, the next series of questions bleed into the substance of the claims:
- Do you know the author or their company?
- Have they contacted you previously about this or any other related matter? If so, you had better become familiar with the relevant file.
- Are there specific patents listed in the letter as being infringed?
- Are you referred to a public listing of patents you are alleged to infringe? If so, is the list too large or disorganized to usefully allow you to figure out which patents are relevant to you or your company’s activities?
- Does the author explain why and how the patents are relevant to you or your company’s activities?
- What does the author want you to do? Stop doing something? — Is that a realistic request? Pay money? If money is requested, is there some degree of specificity as to how much? Is that request reasonable?
- Are there other claims made aside from patent infringement? (e.g., theft of trade secret, breach of contract, etc.) If so, are you familiar with those claims or at least the relationships out of which those claims arise?
A final question that leads into the next step is whether the author made any threats, implicit or explicit. Stay tuned for the next article which explores this next step.
1 The Chief Legal Officer of Newegg achieved notoriety for declaring war on anyone who sues his company for patent infringement. https://www.law360.com/articles/784539
David L. Cohen, Esq.
David L. Cohen, P.C. – Kidon IP
123 West 93rd Street
New York, NY 10025
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