Keep your enemies closer: Managing patent infringement risk

The majority of patent infringement suits come from your closest competitors.   A patent infringement lawsuit, a request to cease and desist your activities, and excessive demands for lost profits and back royalties may require large expenses or changes in your business practices that can put you out of business.

A best practice is to carefully monitor the activities of your competitors with your IP lawyer under the veil of attorney-client privilege so that appropriate action may be taken if needed.  After identifying your closest competitors, you should keep current on their patent filing activities so that any risks can be identified, analyzed and minimized. 

For example, you can proactively change your product line based on the IP of your competitors to avoid infringement.  In some cases, a minor change can make the difference between infringement and noninfringement. 

Furthermore, if you have been monitoring patent application publication activity, you may make a third party submission of prior art under 37 CFR 1.99 within two months from the date of publication as long as the patent has not been allowed.  The Examiner will consider the third party submission in determining the patentability and the scope of your competitor’s invention.  The submission may help prevent your competitor’s patent from issuing and/or narrow the claims before the patent issues.

When a patent has issued, noninfringement opinions and invalidity opinions may be essential to limit damages if your competitor files a patent infringement suit against you in the future.  It is also a good idea to clear your product by way of a freedom to operate opinion.

You may also consider patent infringement insurance in negating any further risk, especially if you operate in a high-tech industry.