Have you received a patent infringement cease-and-desist letter?
Patent cease-and-desist letters come in various forms. Some patent infringement letters contain aggressive language. Others take a softer tone. Either way, they generally demand that the recipient take a license or stop selling products accused of infringement. How do you reply to a patent infringement letter? Should you take a license or stop selling the goods? What if you want to continue selling your products without a patent license?
Keep in mind that a patent owner (“patentee”) is not obligated to send a warning letter to an accused infringer before filing a lawsuit. Instead, a patent owner may go straight to court, serving you with a complaint for patent infringement.
How to respond to a patent cease-and-desist letter
Most business owners do not anticipate receiving a letter claiming patent infringement, so it’s almost always disruptive when it happens. Do not allow your emotions to control how you respond to a cease-and-desist letter. Stay calm, and plan a wise and cost effective response.
Since the patent owner could have already sued you for patent infringement, think of the cease-and-desist letter as an opportunity to reach an amicable resolution. Not all patent enforcement efforts are abusive. The patent owner may be seeking a reasonable solution. Even if they aren’t being reasonable, nothing prevents you from formulating a cost-effective strategy for response. Here are some thoughts to consider with your patent attorney in responding to a licensing offer or cease-and-desist letter.
What does the Patent Owner want?
If possible, find out the patent owner’s demand as early as possible. If, for example, the owner wants a one-time payment, then it’s best to know that upfront. The amount of the lump sum might not justify you spending high legal fees in having your patent attorney investigate the infringement argument.
Is the patent owner looking to license the patent for a reasonable royalty? If the patent owner is seeking a license, you should seriously consider the financial implications of the deal along with the legal merits of the case.
If the cease-and-desist letter does not allow for any resolutions other an agreement to stop all sales of accused products, then evaluate the costs of litigation and your probability of success. Knowing upfront whether the proposed deal is a royalty versus an injunction will be very useful in planning next steps.
What are your patent infringement defenses?
The two primary defenses to patent infringement are invalidity and noninfringement. To argue that the patent is invalid is to say the patent claims nothing new. Noninfringement is a defense tied specifically to your product, namely, that your particular product is missing a required claimed feature. Each defense carries different implications for the accused infringer.
NonInfringement: A Product-Specific Approach
The noninfringement defense consists of comparing the patent claims (found at the end of the written specification) to a particular accused product. Starting with each independent claim, the analysis focuses on whether at least one claim element is missing from the accused product. This analysis should be conducted by or with your patent attorney since the nuances of the doctrine of equivalence should be considered.
The noninfringement approach is specific to each accused product. It is entirely possible for a competitor’s product to infringe while your product does not infringe. Your product may give rise to different noninfringement arguments than those of those of your competitors. Accordingly, a patent owner may still try to enforce its patent against only certain competitors.
If your accused product clearly lacks one or more claim elements recited in each independent claim, then a response letter detailing the absence of these features may possibly defuse the conflict. A well drafted noninfringement reply letter increases the risk for the patent owner/plaintiff of a Rule 11 attorney violation or payment of your attorney’s fees in view of recent U.S. Supreme Court cases on awarding attorney’s fees in patent litigation.
Invalidity: An Industry-Wide Approach
In contrast to non-infringement, an accused infringer can argue that the patent is invalid due to prior art that existed before the patent application was filed. In other words, the patented invention was not new as of the application filing date.
Invalidity requires a comparison of the claims to the prior art, which may include patents, printed publications, public use and prior sales. The accused infringer is on the offense with this approach as a successful outcome results in invalidated claims that can no longer be enforced against the entire industry. All accused and potential infringers as well as any newcomers to the industry will benefit from invalidated claims.
If you have a strong invalidity defense, one option is to reply with a letter. If a patent infringement complaint has already been filed, you can counterclaim for patent invalidity. New options for challenging patents have been made available under recent patent reform laws called the America Invents Act (AIA). Advantages of these post-grant (as opposed to pending applications) proceedings include:
- speed (resolution between 1 to 1.5 years)
- reduced costs compared to federal court litigation
- high rate of success (both in the institution and outcome of proceedings)
- technical caliber of the judges of the Patent Trial and Appeal Board (PTAB)
- staying a co-pending patent infringement lawsuit to curb legal fees while the patent-in-suit is challenged before the PTAB
- estoppel effects of certain positions and outcomes rendered in one proceeding (i.e., PTAB) that limit the same parties in a different proceeding (i.e., district court)
Plan next steps
Before sending a substantive reply to the patent infringement letter, you need to have the above homework done by an experienced patent attorney with current or prior patent litigation experience. You need to know where you stand with respect to noninfringement and invalidity. Having at least one of these defenses will give you leverage in pursuing an amicable resolution.
Unless you are making a settlement offer with the proper marking, your written communications to the other side will not be confidential. So be careful with your words. The patent owner may be able to use your statements against you.