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Six questions whose answers determine your response to IP infringement

Inside Counsel By Gregory P. Sitrick

Following is an excerpt:

You have a patent, and you believe someone is infringing it. There are a number of ways to address the infringement, such as send a cease and desist letter or file a lawsuit. But posturing for litigation is not always the best option. Just because you have rights does not mean that you should run to court to enforce them or even threaten to enforce them. Instead, a strategy to deal with a potential infringer should be well thought out and include an analysis of a variety of factors.

The first question is, “What harm is being done by the potential infringement?” Once you determine the harm of infringement, you can better gauge how to address the problem. For example, is the product or service at issue paramount to you or your company's business, or does the infringement affect you or your company's reputation on a small line of products or services? Are you dealing with a competitor? Do you have obligations to maintain exclusivity for other licensees? If the harm goes to a core issue for you or your company, then you may need to consider a more aggressive strategy. If the harm is merely peripheral to your business, then you can likely address the problem with a more conservative strategy.

The second question is, “How much is at stake?” Although this question is similar to the first question, it focuses on the actual dollars at stake. The answer to this question gives insight into how much litigation could cost and the impact on your business. The more that is at stake, the higher the cost to litigate. The American Intellectual Property Law Association (AIPLA) examined the cost of patent litigation and found, not surprisingly, that the average cost of a case increases as the amount in controversy goes up. The AIPLA found that a case with less than a million dollars in claimed damages costs on average $970,000 to take through trial, whereas a case with $25 million or more in alleged damages costs on average $5.9 million to take through trial.