Introduction on How to Avoid Patent Infringement
Learning how to avoid patent infringement is crucial to an inventor,
entrepreneur or small business. It is best to spend a little time and
money avoiding patent infringement rather than defending a costly,
time-consuming patent infringement lawsuit later. Considering that the
concept of patent infringement can be complex and confusing to many, it is
easy to understand why many choose to bury their head in the sand rather
than investigate the potential infringement issues up-front – a path that
can sometimes bankrupt even the healthiest small business. It is never
too late to take the necessary steps to avoid patent infringement whether
you are developing a product or have been manufacturing a product for many
Reasons to Avoid Patent Infringement Lawsuit
Below are some reasons to take investigate whether you have any patent
infringement issues prior to producing a product (or continuing to produce a
- Costly. A patent infringement lawsuit is
extremely expensive compared to other types of lawsuits. A patent
infringement lawsuit typically will cost $1 Million or more in legal
fees alone. It is not uncommon for even simple patent infringement
lawsuits to end up costing a company $2 – $5 Million. If you lose
the lawsuit, you will then be responsible for paying damages to the
patent owner along with the potential for treble damages and attorney’s
fees. The attorneys’ fees alone can put many small businesses out
of business when the lawsuit could have been avoided by spending $5,000
– $15,000 hiring a patent attorney to review a patent for patent
infringement issues. Finally, many insurance policies do not cover
patent infringement requiring you to pay the legal fees and damages
yourself (speak with your insurance representative).
- Injunction. A patent owner may be able to get
a preliminary injunction early in a lawsuit that stops the manufacture
and sale of the alleged infringing product. An injunction can be
costly to defend against and the “unknown” of whether the injunction
will be granted can be negative to your business planning (and your
- Time Consuming. A patent infringement lawsuit
requires the officers and technical people of the company to participate
heavily in litigation decisions. While one may believe that the
lawyers will do most of the work, it is fair to say that the client will
end up doing approximately 10-20% of the total work involved in a
lawsuit. The time you spend on the lawsuit could be spent
developing your business further or finding new customers.
- Customers May be Sued. Some patent owners may
sue your customers which can be very destructive to your business
relationships. It can also be expensive for you since you may have
an indemnification clause with your customer where you agree to pay
their legal fees and any damages.
- Identify Non-Infringing Alternatives. By
identifying potential infringement issues up-front, you can then
determine how to best design your product to avoid infringing upon one
or more patents. The longer you wait in the product development
process, the harder it will be to redesign your product when a patent
infringement issue is identified.
Common Mistakes Made by Companies
- We Know About All Patents in Our Industry. One of the most common mistakes a company makes is taking the attitude
that they know all of the products that exist and their related patents.
This fails to consider the technology that may be developed by a competitor
that hasn’t been commercialized yet. It also fails to consider that a
small company with limited geographic reach may have a patented product.
- The Patent Owner Will Not Sue Us. Another mistake made is companies believing a smaller company will not
sue them. This view fails to consider that a small company may be very
tenacious in defending its intellectual property. This view also fails
to consider that the patent owner may later sell the patent rights to a
larger company that can afford a patent infringement lawsuit. Finally,
there has been an increase in the number of infringement attorneys willing
to take patent infringement lawsuits on a contingency arrangement.
Tips to Avoid Patent Infringement
A. Start Early and Keep Your Diligence
Do not delay one day with your efforts to avoid patent infringement.
The best place to begin your infringement review is during the product
concept stage (i.e. prior to developing a prototype). This is the
stage when usually more than one alternative exists. By identifying
potential infringement issues at this stage, you can weed out product
designs which carry a high risk of liability.
B. Keep Your Head Above the Sand
Some people will intentionally avoid becoming aware of a patent of a
competitor believing this will help them later. The fact is, ignoring
a patent will not help you later in litigation and it can potentially result
in a judgment finding that you have intentionally infringed upon a patent.
It is best to respect the intellectual property rights of others by becoming
aware of and understanding their rights.
C. Find Patent(s) You May Be Infringing Upon
You should identify what patent(s) exist that you could be infringing
- Online Patent Search. You can search for
patents via the U.S. Patent Office or
by using Michael Neustel’s software product titled
PatentHunter (free 60 day
trial). When doing your patent search, you will want to search for
patents related to your technology using keywords describing your
product and by also searching the assignee records for patents owned by
specific competitors. Keep in mind that some smaller companies may
not assign a patent to their company, so you will have to search by any
known inventor names (e.g. often times the owner of a small company will
be an inventor on the patent). In addition, some larger companies
use separate intellectual property holding companies that own their
patents so searching by company name may not result in the patent being
- Review Competitor’s Product. In addition to
performing a patent search for patents related to your new product, you
should also review all known competitor products for any patent notices.
Most companies that have a patent on a product will conspicuously mark
the product with the patent number (e.g. U.S. Patent No. 6,854,555).
If the competitor’s product does not have a patent number directly on
it, check the packaging, marketing materials and website for any patent
notices. After you have identified a patent number of interest,
you can perform a
patent number search to view the patent.
- Contact Competitor. If you have reason to believe
that a competitor has a patent on a related product but cannot find the
patent via an online patent search or the competitor’s product, you may
want to consider contacting the competitor to see if they have a patent.
Keep in mind that by contacting a competitor you are immediately putting
your company “on the radar” and they will diligently watch your future
product developments (i.e. you should only contact them if you have a
solid reason for believing they have a patent you cannot find).
If they say the product is patented but refuse to provide you with a
patent number, they are most likely not being truthful since patents are
public knowledge and there is no reason to withhold such information if
it is true.
D. Preliminary Patent Infringement “Screening” of Patents by You
After you identify one or more patents related to your product, you will
want to do a preliminary patent infringement “screening” before sending the
patents to your patent lawyer for review. Sending all of the patents
you found can be very costly as a formal patent infringement review by a patent attorney
can cost between $5,000 – $15,000+ per patent reviewed. To perform a
preliminary screening of a patent, do the following steps:
Step 1. Determine if Patent Term Expired.
United States, a utility
patent automatically expires 20 years
after the earliest effective filing date. A design
automatically expires 14 years after the issue date. To determine if a
patent term is expired, you will need to determine the earliest effective
filing date and then calculate the expiration date from there. You can
to determine the expiration date for a patent.
Step 2. Maintenance Fees Paid?
If the patent
term has not expired, you will then want to check with the USPTO to see if
the required maintenance fees have been paid. There are three
maintenance fees due for utility patents (design patents do not have
maintenance fees): 3 years, 7 years and 11 years. If the patent owner
has failed to pay a required maintenance fee, the patent is no longer valid
and you can practice the invention without infringing upon the patent.
Step 3. Self-Review of Patent Claims.
patent has not expired (see previous two steps), then you will want to
review the patent claims
which define the “meets and
bounds” of the patent protection. The patent claims are located at the
end of the patent and are consecutively numbered starting with 1 and
continuing so forth. It is important to note that while a patent may
disclose Invention A, Invention B and Invention C, if the patent claims only
protect Invention B you will not have to worry about infringement if your
product relates only to Invention A or C. Reviewing patent claims can
be difficult, but with the assistance of a patent attorney you should be
able to grasp the concept of what to look for.
- IMPORTANT NOTE: Keep in mind that any internal communications
regarding the patent and the patent claims are most likely
not covered by the attorney-client work
privileged – i.e. if a patent infringement lawsuit is filed the patent
owner will be able to discover all e-mails, notes, letters and
conversations relating to the patent not involving your patent attorney.
Hence, it is important to be extremely careful as to what is said within
internal communications and preferably keep communications to a minimum.
For example, while it may seem obvious some people will make statements
such as “This patent looks very close to our product” when they do not
truly know if the patent is close. When in doubt, it is always
best to retain a patent attorney to assist you with the infringement
E. Infringement Review by Your Patent Attorney
If your your self-review of the patent indicates there may be some
potential infringement issues, you should immediately contact your patent
attorney who can help you determine if you do in fact have patent
infringement issues. Below is a recommended approach of working with
your patent attorney to determine if you have infringement issues involving
. Preliminary Infringement Review
by a Patent Attorney.
If you believe there may be any
potential infringement issues with a patent, you should immediately have
your patent attorney perform a preliminary patent infringement review
of the patent to see if they believe there are reasonable arguments for
patent infringement by the patent owner. This is not a formal legal
opinion and is simply a way to keep your up-front legal fees down prior to
doing a complete patent infringement review. The legal fees for a
preliminary patent infringement review can range anywhere form $600 to
Phase 2. Formal Infringement Review by a Patent Attorney.
If your patent attorney believes the patent should be investigated closer,
then you will want to retain your patent attorney to perform a formal patent
infringement review which involves reviewing the USPTO file history for the
patent and possibly considering validity issues. While a formal patent
infringement review can be costly (e.g. $5,000 to $15,000+), it is still
significantly cheaper than the legal fees you would be paying to defend
yourself if a patent infringement lawsuit is threatened or filed by a patent
Phase 3. Patent Invalidity Review.
formal review by your patent attorney reveals that there may be patent
infringement issues for your product, you will then want to determine if the
patent is valid or not. Some patents are invalid because the
technology was used or known years prior to the filing of the patent
application. You will want to bring any known patents, products or
publications that existed prior to the patent owner filing their patent
application which could help invalidate the patent.
How Neustel Law Offices Can Help
Patent infringement can be an intimidating concept for entrepreneurs and
small businesses. However, with a little education by your patent
attorney and following the steps indicated above, you should significantly
reduce your potential risk for infringing upon another company’s patent.
Neustel Law Offices provides cost effective patent infringement review
services for its clients including helping clients perform their own
preliminary patent infringement screenings. If you are interested in
our patent infringement review services, contact us at 1-701-281-8822 or
. You can also
request a free
to learn more about our law firm.