If you receive a patent demand letter, you can choose from many courses of action, but each has pros and cons. Today we will discuss some immediate considerations to consider.
Doing nothing is an option, but a risky one.
Pro: Some patent owners are not committed to actually filing lawsuits. They cast a wide net with lots of demand letters, knowing some recipients will pay nominal amounts to make it go away. If you ignore it, there’s a chance there will be no serious follow-up.
Con: Ignoring a patent demand letter may lead the patent owner to file a lawsuit to get your attention.
Provide prompt acknowledgement.
Patent demand letters typically call for a response in a short period of time. Contact should be made within the deadline, if only to acknowledge receipt and offer a response in due course.
Pro: Contact usually satisfies the patent owner that their concerns are not being ignored, even if it may take months or years for them to get a substantive response.
Con: It shows that you are aware and paying attention, which sets you up for willfulness claims if a response is too long in coming, or if you then proceed to ignore the patent owner.
Identify and assemble all key documents and data related to this dispute and take immediate steps to preserve and back up any evidence in your possession.
Pro: You will be well-prepared to respond, and protected against charges of spoliation. The destruction of evidence after notice of dispute, even if by accident, can result in severe problems in any subsequent litigation.
Con: This process is expensive, burdensome and potentially unnecessary in the case of a simple NPE assertion.
Consider whether it is necessary to hire outside counsel.
Pro: Expert knowledge. A patent lawyer can help you understand the patent, assess the risks you may face in a lawsuit, advise you about potential defenses, and accurately estimate the fees and costs your defense could incur.
Con: Potentially significant costs and the impression that “lawyering up” may make on the patent owner.
Consider requesting more information.
Pro: It buys time to investigate the seriousness of the situation and assess your exposure. This delay tactic allows you to gather your thoughts and prepare, even if you know what the outcome is likely to be.
Con: Requesting more information rather than a straight denial may lead a patent owner to assume, perhaps incorrectly, that you’re unsure if you infringed, or worse, that you think you may have infringed. It may encourage the patent owner to pursue a claim which they otherwise would have let lie. Moreover, the patent owner has no obligation to respond, or respond adequately, except for the case of special standards-essential patents.
Consider applying to license the patent.
For standard-essential patent disputes, this may be required as a first step.
Pro: You do not have to license the patent; ultimately you can always refuse if the terms are unacceptable.
Con: License costs can sometimes outweigh the cost of litigating the claim. You also demonstrate knowledge of the patent claims, which could lead to claims of willfulness. Licensing may also require a non-disclosure agreement, which leaves you vulnerable should the patent owner have some basis to argue that you breached the NDA.
In the next post, we will evaluate what options are available to you if, or when, the dispute escalates.
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