December 4, 2009
by Rakesh M. Amin and Ajay Pathak
The maxim [a]n ounce of prevention is worth a pound of cure is well-known and should be heeded in the context of high-stakes patent infringement litigation. Even in uncomplicated patent infringement cases, the fees and costs alone (through to trial) can easily exceed $500,000 to $750,000. Such expenditures do not even begin to account for potential damage awards and punitive damages that can be as high as three times (i.e., treble) the damage award for willful infringement. Damage awards can run into the hundreds of thousands and even millions of dollars. Once a party has been hauled into court, that defendant is forced to expend its valuable focus, energy, resources, time and money in defending itself.
At that point, the high stakes involved may finally grab the defendants full attention. In a scramble, some accused infringers may try to avoid future liability by simply capitulating. However, promising not to engage in future infringement alone may not be sufficient to satisfy a plaintiffs redress sought for past infringement. The defendant is still on the hook for past damages, sometimes including treble punitive damages. Multi-million dollar damage awards are common in patent cases.
Nevertheless, even when a defendant has capitulated, the defendant will likely be forced to pull product off shelves, be enjoined from further infringement and/or be required to secure an expensive license, for example. Simply operating under the belief that it wont or cant happen to my company can be a risky proposition. Last year alone, nearly 7,000 companies and individuals were named as defendants in patent infringement lawsuits.
However, one important tool in a companys arsenal to avoid or mitigate patent infringement liability is to be proactive. For example, a company can obtain a freedom to operate opinion (FTOO) from an experienced and qualified patent attorney. Typically, in order to provide a competent FTOO, the responsible patent attorney will direct a search to identify relevant unexpired U.S. patents that could be asserted against a companys existing or proposed product or service.
In effect, with respect to a specified product or service, the FTOO is designed to analyze a companys potential exposure to patent infringement litigation and/or liability. In some circumstances, the FTOO can provide the company with relevant information so that it can take appropriate proactive steps to avoid or reduce its exposure to patent infringement liability.
For example, once aware of a relevant and potentially problematic blocking patent, a company may be able to redesign an existing (or proposed) product or service to mitigate damages (or avoid patent infringement liability altogether). If a redesign is not possible, other options such as invalidation, non-infringement and/or un-enforceability grounds can be explored. Sometimes, a company can dissuade an otherwise would-be patent infringement plaintiff from bringing suit in the first place. In some cases, the company may secure a license. Also, a competent and timely opinion of counsel can avoid or reduce a punitive damage award because the company can demonstrate that it acted with sufficient precaution. With timely knowledge, the company can be better prepared to defend itself against or negotiate with a stronger hand against a potential patent infringement plaintiff. Sometimes, the FTOO can also provide valuable reassurances to an investor, a buyer or a purchaser seeking to surmise a companys exposure to patent infringement liability.
So an obvious question then is: What is involved in securing an FTOO? For illustrative purposes, lets assume a companys specified proposed (or existing) product or service requires analysis of potential patent infringement liability. In broad terms, FTOO analysis begins with a proper search designed to identify potentially relevant blocking patents of concern. More specifically, the proper search will focus on relevant features of the companys specified product or service (in question) looking for blocking patents that cover/encompass the same. By that inquiry, the search will then flag those patents that could encompass the companys specified product or service. This search could identify several hundred patents.
Then, a patent attorney will compare the companys specified product or service against each of the flagged patents identified. Where the comparison demonstrates sufficient grounds for non-infringement, a previously flagged patent will be eliminated from further consideration. This comparison will usually narrow the number of relevant blocking patents to just those that have not been fully eliminated from further consideration. Typically, the attorney will then request additional details regarding the companys specific product or service (in question) seeking to further eliminate as many of these remaining patents as possible.
For those flagged blocking patents ultimately remaining (i.e., not eliminated), the company can then exercise various options (when appropriate) including: re-design; invalidation; non-infringement; un-enforceability; and licensing, with requisite guidance from the patent attorney. Regardless of what action is finally taken, the company can make informed decisions and select a course of action hopefully well before being sued for patent infringement.
Nevertheless, a company that obtains an FTOO can still be sued for patent infringement. No FTOO can guarantee an aggressive (or overly aggressive) patent owner wont act unreasonably. What then? The opinion letter can often significantly bolster a companys position in litigation or negotiations because the company has timely built its valuable knowledge base.
Further, the cost of a freedom to operate study varies depending on the complexity of the particular product or service for which an FTOO is sought, the number of patents flagged, etc. However, a competent patent attorney can provide relevant analysis at a fraction of the cost of a full-blown patent litigation. In the high-stakes patent litigation arena, the ounce of prevention may just be the timely FTOO analysis coupled with proactive steps taken.
Rakesh Amin and Ajay Pathak are members at Amin Talati LLC, which provides a full range of counseling, prosecution, licensing and litigation services in all fields of FDA, FTC and intellectual property. Visit AminTalati.com or call (312)327-3382 for more information.
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