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Proactively Defending Against Patent Lawsuits


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: March 3, 2014 @ 7:19 pm
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While there are no guarantees in life, there may be some things that you can do in order to proactively protect yourself against the threat of a patent lawsuit.

There is no better way to prepare yourself for what may be lurking behind the next corner than knowing your business and the market in which you operated. Knowledge of the patent activity in your market is a critical first step to developing a proactive plan that will insulate you to the greatest extent possible. Of course, the first thing you need to do is to monitor the patent filings in your technology markets.

By keeping an eye on the publication of patent application in your sector you can spot potentially problematic patent application in advance of them ever issuing. While it may not be appropriate in every situation, if a patent application seems to be particularly dangerous you can elect to submit prior art to the examiner so that it can be taken into considering. This is called a third-party pre-issuance submission, which can be made in any non-provisional utility, design, and plant application, as well as in any continuing application. A third-party preissuance submission includes a concise description of the asserted relevance of each document submitted. There are strict time limits within which to file though. A third-party submission can be filed prior to the earlier of: (1) The date a notice of allowance; OR (2) The later of: (i) 6 months after the date on which the application is first published by the USPTO, or (ii) The date of the first rejection of any claim by the examiner. Thus, keeping a vigilant watch on patent filings is critical for those who may want the option to at least consider third-party pre-issuance submissions as an option.

Filing a third-party pre issuance submission is not a one-size fits all approach. By filing prior art ahead of the patent being granted you may just be giving the applicant the opportunity to amend claims and obtain a stronger patent. Of course, you may also make it impossible for any patent to issue, or at least impossible for a commercially relevant patent to issue. If you have very strong prior art that seriously calls into question the claims sought and the invention disclosed it would be far cheaper to challenge the patent prior to issuance than wait and see what claims issue and then pick a fight, whether in some form of post-grant proceeding or in litigation. Still, third-party pre-issuance submissions have not been very popular. In fact, during the first 15 months one could make a third party preissuance submission there were only 1,228 such submissions filed, while at the same time there were never fewer than 584,998 applications at the Patent Office awaiting first action.

The theory here is this: The more you understand about trends, and the patent filings of others in your space, the greater the ability you have to protect your interests and take action when necessary, including even before a patent issues when picking a fight will be most economical.



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Given that pre-issuance submissions are not very popular this means that the overwhelming majority of potential infringement targets are waiting, likely waiting until they get a demand letter or sued for patent infringement. For those who missed the opportunity to file a third-party pre-issuance submission, or strategically choose not to go that path, there is still another option available that doesn’t force you to play the part of the deer during hunting season just waiting to be shot by the hunter. As it turns out, those that assert patents are generally repeat litigants, so once they appear in your market, they are likely to have multiple cases and remain active for some time. This is true whether the patent owner is pursuing a well thought out licensing program based on quality technology and patents, or whether the patent owner is an unscrupulously entity that seeks to use judicial inefficiencies to force nominal settlements.

Rather than wait around to be pursued those interested in a more proactive strategy might consider seeking out either potentially dangerous patents, which may or may not be stealth patents that are difficult to find. Innography will host a free webinar on this topic at 2pm Eastern on Tuesday, March 4, 2014, titled Patent Landscape: Unearthing Stealth and Dangerous Patents. A stealth patent is one that doesn’t use the typical terminology one might expect in a patent covering the same or similar technology. These patents sometimes intentionally hide the technological substance so they can slide under the radar, whether it be under the radar of the patent examiner or under the radar of those in the industry who may otherwise be poised to take notice and challenge the patent application or recently issued patent.

Dangerous patents are those that have been litigated before, have been sold to a company that frequently sues infringers, or is owned by someone who frequently sells patents, which means that the patent in question is more likely to hit the market at some point and wind up in the hands of an individual or entity that may well sue you. Of course, not all dangerous patents are created equally. There will be some patents that are frequently cited in other patents, which could signal that the patent is of foundational importance. A stealth patent that is also a dangerous patent could also signal a consciousness from the outset to use the patent as a sword rather than a shield.

By keeping an eye on stealth and dangerous patents managing the future risk presented is much easier. By proactively monitoring the landscape of published applications and granted patents you may be able to engage in design work-arounds to avoid the most dangerous patents. You may also be able to actively identify patents and pending patent application that are ripe for licensing or acquisition at an early stage, perhaps before the patent even issues or before the patent works its way into the hands of a litigious patent owner. Even if you cannot acquire rights through licensing or acquire all dangerous patents, if you have a meaningful patent footprint that gives you the right to do a variety of things you may well be able to defend based upon having broad based rights to engage in what it is that you are accused of doing.

One of the problems presented by non-practicing entities of various kinds is that because they do not engage in making, selling or importing anything in particular having a defensive patent portfolio that allows you to bring a counter-suit would not be at all useful. But if you look at the numbers, as the Government Accountability Office (GAO) has, you realize that 80% of patent infringement litigations are brought by manufacturing companies. Therefore, by maintaining vigilance you may also be able to identify patents that could be acquired and which will give you the opportunity to retaliate with your own patent infringement suit should you get infringed.

Another proactive measure is to monitor patent assignments generally speaking to see if you can identify trends. Watch how assignments increase in numbers over time, and this will likely provide clues about the patent assertion entities (PAEs) that are about to become active in your space.

Yet another proactive measure is to identify the patent brokers that specialize in your market, and stay in touch regarding the patents that they see coming up for sale. If they know what type of patents you are looking for a good patent broker should be able to assist you in acquiring patents that most closely match your products and service offerings. Larger manufacturing companies may find value in joining a consortium that acquires large numbers of patent rights and offers licenses to those who are members of the consortium.

Finally, you can and should consider obtaining insurance.  There are policies available to protect a variety of situations, including alleged patent infringement defense costs.  Premiums will likely be more than you want to pay, but that is true for all insurance. According to statistics from the AIPLA an average patent infringement defense can easily cost over $2 million, so if you operate in a litigious marketplace infringement insurance that will cover defense costs is probably a wise investment. This is particularly true in the litigation climate today where it can costs many tens of thousands of dollars, if not several hundreds of thousands of dollars, to hire attorneys to represent you in a patent infringement defense. That defense cost frequently forces many who are accused of infringement to settle for $25,000 or $50,000 instead of paying more to defend. Unfortunately, once you demonstrate you are willing to pay you will likely be labeled an easy target and then others who wish to exploit judicial inefficiencies and high defense costs will start to appear. Thus, paying ransom, or what some Federal Courts have called “extortion like” payments is probably not in your best interest. Sadly, if you don’t have insurance and you haven’t otherwise engaged in a strategy likely to avoid troublesome patents you may find yourself cutting that ransom check because it is the only solution.

If you are interested in monitoring the patent landscape I recommend signing up for the free Innography webinar. You have nothing to lose but time, and you might gain some helpful insights. They will be discussing their unique semantic search tool that allows researchers to find up to 1,000 semantically relevant patents in seconds, including those stealth patents that might not otherwise be findable. Of course, finding stealth patents and dangerous patents, is really only a piece of the puzzle, although a very important piece. What you really want to know is whether the patent owner who has a relevant patent is likely going to come after you. This requires information about patent ownership. Innography also has a tool that provides the latest information on assignee information and data.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patent Trolls, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

2 comments
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  1. A couple of hints:

    Many patent database websites will let you create an “agent”, which will automatically notify you by e-mail when a patent application which meets your criteria is published. Freepatentsonline provides this service free, gratis, and for naught. Simply providing an IPC classification and the names of your competitors (as assignees) will place most of the applications you should be aware of in your mailbox. It’s quite user-friendly, too.

    Second, if you have any ideas which you do not intend to commercialize, or think they are too trivial to be worthy of a patent, it might be a good idea to write them up and deposit them in an archive like ip.com. Then you can pop them out as prior art in a third-party-observation if your competitor appears to be getting ideas above his station.

    I have also found that our competitors nearly always put their head of R&D in the list of inventors. With a little research you can find out who is working for whom, and locate “stealth” patent applications by using the inventors’ name as a key (bad luck if John Smith is top engineer in Acme Widgets, good luck if you are looking for John Quincy St Clair as head of engineering – and I suggest you look up that last name…)

  2. The private insurance sector is continuously creating new coverages to respond to the challenges of PAE’s seeking to monitize their patent holdings as well as those actual producers seeking to do likewise. Don’t assume that a check of prices and available coverages done more than six months ago is reflective of present offerings.
    Frequently a small entity taking the risk of IP litigation (either on the offense or defense) is like betting the company’s survival.
    On the lighter side, look at it this way: “IP insurance is a lot like a parachute; if it’s not there the first time you need it, it’s not likely you’ll be needing it again”.