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Got a cease and desist letter from a patent troll? Do your homework

Jason Schwent, CIPP/US March 31, 2014

In my last post, I detailed some of the first steps you should take if you ever receive a cease and desist letter from a claimed patent owner. (Most important among my tips: Don’t ignore the letter!)

Today I’ll outline some of the methods you can use to explore the claims made in a cease and desist letter and formulate your response. The more research you conduct, the stronger your eventual position will be when faced with a possible infringement claim.

The patent investigation process does not necessarily require a patent attorney (although working with one at this stage is not inappropriate). The Internet provides a wealth of information and can allow you to start putting the pieces together. With respect to each of the pieces of information from the previous step, you should, at a minimum, take the following investigative steps:

  1. Investigate the entity who sent the letter (not the law firm, but the company or individual represented by the law firm).

    - Google the name of the entity threatening you. An incredible amount of information can be learned from simply running a search for “[entity name] and patent infringement.”

    - Are they an ongoing business or is there little or no information concerning them on the Internet? Is it an individual?

    - Have they sued others? If the party has sued others, this will usually come up in Internet searches. What sort of information can you learn about those prior suits?

    - Are there any stories, blog posts, or other information from those who have dealt with this entity in the past? People often take their complaints about litigation to the Internet. See what sort of information is out there concerning the entity and their tactics.
  2. Research the patent(s) mentioned in the letter. The United States Patent and Trademark Office (USPTO) maintains a website that can be used to search for patents. But more recently Google Patents has emerged as an alternative source for information about patents.

    - Read the patent(s). What sort of technology is described in the patent? On the front page of the patent, is there an entity listed as an assignee? This would be an entity that bought the technology from the inventor. Who are they? Are they an ongoing business? (See the first step in investigation).

    - If you Google the patents, is there any mention of the patent(s) being invalid, unenforceable, or the subject of a reexamination (or “reexam”) or an inter partes review (IPR)? If the patent(s) being asserted against you have been found by a court to be invalid or unenforceable, you may not face suit. If the patents are in reexam or an IPR, they are currently being reviewed by the USPTO for validity issues.

    - Are others discussing these patents? Are they mentioning potential “prior art” (or prior inventions that could pre-date the patent(s) being asserted against you)? Are you aware of any prior art through your business that could pre-date the patent(s) being asserted?
  3. Investigate the accused technology. Try to find out everything you can about the technology to begin formulating your arguments and defenses.

    - Determine whether you developed or manufactured the accused technology. If so, who are the key people responsible for that technology? You will want to talk with them about the letter and the accusations.

    - If you did not develop or manufacture the technology, who did? Find the agreement where you acquired the technology and see if the developer or manufacturer has an obligation to indemnify you against claims of patent infringement. While it is not uncommon to find that the developer/manufacturer has agreed to indemnify you for claims of patent infringement, increasingly, vendors and manufacturers are exempting patent infringement claims from their indemnity obligations. If you are indemnified, contact the developer/manufacturer as soon as possible after receiving the cease and desist letter — a delay may adversely affect your indemnity rights.

    - Investigate how valuable the accused technology is to your business. Is it critical technology that would shut your business down if lost? Can you switch to another, non-infringing, although not ideal, substitute? Determining whether the technology is business-critical can help you decide whether you can or want to fight the claims of infringement.
  4. Decide on an action
    Armed with the facts of your investigation, you can best determine how to proceed. Ideally, you would consult with a patent attorney at this point to ensure that you’ve adequately protected yourself. And by doing much of the investigation yourself, you will have allowed the attorney to quickly assess the situation and provide their advice.

Possible responses to a cease and desist letter include:

  • Writing the patent owner back and asking for an explanation of the claims of infringement or evidence to support the claims. If you do not understand the claims being asserted, ask the patent owner to explain them and provide more information.
  • Develop and perfect noninfringement and/or invalidity arguments. One way to do this, though not a requirement, is to obtain a formal legal opinion that the asserted patent(s) are invalid or that you could not be infringing those patent claims. Ideally, you would want to develop a legal argument that you could show to a judge or jury at some later point demonstrating that you undertook the required investigation of patent infringement claims required by the law to prevent a finding of willful infringement.
  • Switch to a non-infringing technology and inform the patent owner that you are no longer using the accused technology. This will not absolve your patent damages for past use, but it will certainly take the wind out of the sales of the patent owner as there will be no possibility of any ongoing damages.
  • Seek licensing information from the patent owner. If the accused technology is critical to your business and you cannot proceed without it, you may want to begin the process of negotiations with the patent owner. Often there are discounts available to those who take a license without forcing the patent owner to begin litigation efforts. You should also use the facts you gathered during your investigation to lower any potential license fees (such as noninfringement positions, invalidity arguments, etc.).

Again, you can certainly undertake some basic research on your own, but it may be helpful for you to work with a patent attorney throughout the investigation process and while formulating your response to the letter.

Jason Schwent is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of the Patent Billy Goat. You can find Jason on Google+Twitter, and reach him at (314) 552-6291 or jschwent@thompsoncoburn.com.