Accused of Patent Infringement
Take a deep breath,
and fight off the urge to panic.
This may sound silly, but there are many people who panic in this type of situation. There are a number of reasons why you shouldn't panic.
Reasons why you shouldn't panic.
First, many companies believe they can scare another company into paying royalties or stopping manufacture of a product by sending a threatening letter. The threatening company may only have a weak case or none at all.
Second, many companies know that they can scare a smaller company, because the smaller company may not have the financial resources to survive a protracted lawsuit. Most lawsuits settle before going to court, especially when the threatening party is shown a flaw in their case.
Third, the threatening company may be manufacturing a product which is different than what is described in the patent. A patent holder can only sue on the invention described in the claims of the patent, not on the product they are manufacturing.
Fourth, many companies will hire an attorney who is instructed to continue a case as long as the opposing counsel doesn't find a particular defense which the threatening company knows will greatly weaken or destroy their case.
After taking that deep breath, call a patent attorney. Send them a copy of the material you received. Sometimes, the matter can be settled when the patent attorney reviews the patent application. Most of the time, it is best for the patent attorney to obtain the file history of the patent application. The file history provides information on whether the claims are broad enough to cover your companies product.
If you received a complaint from a federal court, the patent attorney will have to answer the complaint in 20 days. This is not a super expensive proposition, but you must answer the complaint, or risk a default judgement.
If the patent attorney reviews the patent and cannot find a defense to infringement, you can still hire another patent attorney for a second opinion. If both attorneys agree, you probably should think of settling. However, when hiring a patent attorney, make sure they are familiar with your product or have a working knowledge of your product. If the patent attorney doesn't understand your product, do not hire them! This is where practical engineering experience is a real necessity.
If your product does infringe a patent, there are several options to choose from. You may offer to pay a royalty to continue manufacturing the product. You may offer to manufacture the patent holder's product at your facility. Your company may have manufacturing economies of scale which the patent holder does not. There may be other win-win arrangements which can be worked out depending on the situation.
With the exception of licensing and contract disputes, patent matters are handled by the federal court system. This is very helpful for the litigating parties; you don't have to hire a local patent attorney to handle your case. If you don't like the patent attorneys in your city or they're just too expensive, you can go elsewhere. The out-of-state attorney can hire one of the firms in your city as "local counsel" to file any legal papers. If you are being sued out-of-state you may hire a patent attorney in your city. Your patent attorney will then hire a "local counsel" to file papers in the other city.
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