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Responding to a Patent Notice Letter: Key Considerations
Practical Law Legal Update 5-557-0747 (Approx. 4 pages)
Responding to a Patent Notice Letter: Key Considerations
by Practical Law Intellectual Property & Technology
| Law stated as at 07 Feb 2014 • USA (National/Federal) |
A discussion of key considerations for responding to a patent notice (cease and desist) letter. This Legal Update includes links to relevant resources discussing the considerations in more detail.
In some cases, a patent owner sends a notice (cease and desist) letter to an alleged infringer before initiating formal legal action. A well-researched and well-crafted response to a cease and desist letter can often cause the patent owner to significantly compromise its position or drop its claim entirely. In contrast, a poorly crafted response may embolden the patent owner to pursue its claims in litigation.
Key steps that counsel should take before responding to a patent notice letter include:
- Evaluating the patent owner and its counsel.
- Gathering the relevant facts concerning the parties' claims, defenses and remedies.
- Assessing the strength of the parties' claims, defenses and remedies.
- Determining the substance of the response.
For more tips and practical guidance on these and other steps counsel should take, see Practice Note, Patent Litigation: Responding to a Patent Notice Letter.
Evaluate the Patent Owner and Its Counsel
Evaluating the patent owner and its counsel is a critical component of analyzing the risk presented by a notice letter and advising the client on an appropriate response.
Key considerations for evaluating the patent owner include assessing the party's:
- History of patent acquisition, enforcement and licensing.
- Patent portfolio.
- Office locations and key employees.
- Type and scope of operations.
- Ownership structure and related entities.
Key considerations for evaluating the patent owner's counsel include assessing the attorney's:
- Patent and trial experience.
- Particular approach in handling patent matters for the patent owner and other patentees.
For more information on evaluating the patent owner and its counsel, see Practice Note, Patent Litigation: Responding to a Patent Notice Letter: Evaluate the Patent Owner and Its Counsel.
Gather the Relevant Facts
Counsel should gather the relevant facts for performing a complete risk assessment and preparing a substantive response for the client. This includes obtaining relevant:
- Insurance policies and indemnity agreements.
- Agreements and communications involving the patent owner.
- Technical and financial information concerning the accused product.
- Records concerning the patent.
- Materials from prior litigations involving the patent or its owner.
- Prior art that may invalidate the patent.
For more information on gathering the relevant facts, see Practice Note, Patent Litigation: Responding to a Patent Notice Letter: Gather the Relevant Facts.
Assess the Strength of the Parties' Claims, Defenses and Remedies
Counsel should next assess the strength of the parties' claims, defenses and remedies, which may involve:
- Interpreting the patent's key claim terms.
- Evaluating patent infringement and potential defenses.
- Considering other patents that may be asserted against the client.
- Evaluating the patent owner's potential relief and the estimated litigation costs.
- Discounting the potential value and litigation costs to estimate the present value of the patent owner's claim.
For more information on assessing the strength of the parties' claims, defenses and potential remedies, see Practice Note, Patent Litigation: Responding to a Patent Notice Letter: Assess the Strength of the Patent Owner's Claims and the Client's Defenses and Counterclaims. For more on patent infringement claims and defenses generally, see Practice Note, Patent Infringement Claims and Defenses.
Determine the Substance of the Response
Counsel should then confer with the client and agree on the substance of the response, which may include:
- Denying liability.
- Sending a holding letter advising the patent owner that a substantive response will be forthcoming.
- Purchasing or licensing the patent.
- Modifying the accused product to avoid infringement.
- Stopping use of the accused product.
- Requesting more information from the patent owner.
- Not responding to the letter.
- Commencing a preemptive legal action against the patent owner, such as:
- a declaratory judgment action; or
- a USPTO proceeding.
For more information on determining the substance of the response, see Practice Note, Patent Litigation: Responding to a Patent Notice Letter: Determine the Substance of the Response.