A Half-Dozen Tips for IP Litigation

A Half-Dozen Tips for IP Litigation

January 12, 2006

By: Mark Vorder-Bruegge

Smart businesses recognize the importance of intangible assets, especially patents, trade secrets, and other intellectual property. The ?new economy? increasingly  rewards companies who provide innovation - hungry markets with high-value, high-margin products and services. Litigation sometimes is necessary to protect those products and services, but it can be a lose-lose proposition for both sides due to its expense, complexity, and unpredictability. Here are a half-dozen tips to improve your chances if you are sued or must sue:

One: Don't assume that your company automatically owns the creative output of employees. Every employee with inventive, customer or other competitive knowledge should be under an express contract prescribing ownership of all intellectual property and controlling use of confidential information. And administer these contracts fairly. Companies have difficulty enforcing non-disclosure, assignment, and non-compete agreements when a breaching employee can point to breaches by the employer.

Two: Create and enforce specific procedures to identify and document the inventions, methods, and other information within your business that qualify for patent or other legal protection. Ensure continuous collaboration by both technical and legal experts in this process. Documentation of the time, scope, and practice of an invention may be crucial if patent protection is received but challenged in subsequent litigation against an infringer. Documentation of how trade secrets are protected may be crucial to future relief for theft.

Three: Before seeking patent protection for an invention, thoroughly investigate all prior art, including existing patents, industry practice, and technical  publications world-wide.  This is difficult, but don't be tempted to put it off until the patent issues and you are contemplating enforcement against an infringer. Issued patents are only presumptively valid. By the time of an infringement suit, you will have invested huge sums in commercialization and legal enforcement, and the stakes for an accused infringer probably will be high. The infringer will do an exhaustive search for prior art, and if your patent is invalidated in any one litigation matter, it is useless against all other infringers and your entire investment may well be rendered a waste.

Four: Before you file a suit for patent infringement, determine your damages. In many other types of lawsuits, intuitive estimates of damages are reliable and it is typical to defer detailed calculations until late stages. But this is often untrue in patent infringement cases, which can be very expensive to litigate. You do not want to spend one million dollars getting a case ready for trial, only to discover that you can never recover that amount in damages. In cases brought during the last years of a patent's term, a substantial damage prospect is essential to justify the litigation. Look at each potential lawsuit like a proposed investment (which it is).

Five: Have an experienced trial lawyer handle your intellectual property case. Very few judges, and virtually no jurors, have extensive experience with intellectual property law or the underlying technologies. Success at trial requires the ability to tell an understandable story to the jury, primarily through witnesses, and to expose fallacies in opposing stories through cross-examination and impeachment. The smartest intellectual property specialist in the world will be of little use if the specialist does not know how to try a case.

Six: If your company is sued for stealing a competitor's trade secret, tortuously interfering with someone's non-disclosure or non-compete agreement, disparaging another firm's products, unfair competition or the like, check your liability and director-officer insurance coverages very carefully -- with specialized coverage counsel, if necessary. While pure patent infringement claims are rarely insured, the wrongdoing alleged in other types of intellectual property suits may fall within standard commercial insurance contracts. There is rarely any downside to notifying an insurance carrier of a filed or threatened suit, especially if your policy gives you control or input in the selection of your defense counsel.

Following these half-dozen tips will not necessarily guarantee success, but they should help you avoid some of the common pitfalls in intellectual property litigation.