The U.S. Patent system was envisioned by the Founding Fathers who included the concept in the original U.S. Constitution that was ratified in 1789. The Bill of Rights – the first ten Amendments to the Constitution – which provide such basic rights as Freedom of Speech, Due Process, and Habeas Corpus, was not ratified until 1791. So, securing a patent on an invention is a right that actually precedes most of the rights that define the American legal system.
A patent is valid for 20 years from the date of application. It gives the inventor a 20-year monopoly that is guaranteed by the U.S. government. If a business makes or sells a product or service that uses the invention covered by a patent, and that business does not own the patent, or is not licensing the patent from the inventor, that is patent infringement. If proven in court, the inventor is entitled to damages for the illegal use of his or her or its intellectual property.
A patent is an asset. Companies that own patents have a section on their Balance Sheets called “Intangible Assets” under which they include the value of their patents as well as other intangible assets such as trademarks, service marks, copyrights, technology, and know-how. And since it is an asset, a patent can be bought or sold. In fact, thousands of patents are sold and bought every year in the U.S. – inventor to business or business to business.
Enforcing an infringed patent is a civil matter. There are no Patent Cops. It is the patent owner’s responsibility to enforce his or her or its patent. And that can be a complicated and expensive process. When a large corporation owns a patent, it has all the resources it needs to enforce its patents. When Apple sued Samsung back in 2012 for infringement of its iPhone patents, both sides had the resources to spend whatever they needed on their legal teams. When an independent inventor’s patent is infringed, however, that is not the case.
When a patent is infringed, and it can be proven in court – patent infringement trials are conduced in U.S. District Courts – the patentee is entitled to “reasonable royalties” or what the infringer would have paid in royalties had the infringer licensed the patent in the first place. Inventors and universities that do not “practice” their patents – they do not produce or sell a product or service based on that patent – are only entitled to reasonable royalties. However, a business that is practicing a patent has two additional remedies. The infringer can also sue for lost profits based on the sales the patent owner lost to the infringing products. A company that practices its patent can also seek “injunctive relief” – a court order banning the company making or selling the infringing product or service from selling the product in the U.S.
In the Apple-Samsung patent infringement lawsuit in 2012, Apple won the case and asked the U.S. District Judge for an injunction banning sales of the infringing Samsung products in the U.S. In a controversial ruling, the judge did not grant Apple injunctive relief. That decision was overturned on appeal, but by the time the Appellate Court handed down its ruling, the infringing Samsung products were no longer on the market.
Every business that owns a patent should be looking at the products that directly compete with its patent- protected products. That is where most of the business-to-business infringement occurs. A company copies a product of its competitor, and in the process infringes the patent or patents that cover that product. An inventor who does not produce or sell a product or service based on his or her patent should regularly be looking in the marketplace for products or services that infringe his or her patent.
While a corporation that believes its patent has been infringed can simply engage a patent litigation law firm to represent its interests, a small business or independent inventor cannot usually afford the hundreds of thousands – yes, hundreds of thousands – of dollars it takes to file and try a patent infringement lawsuit in the federal court system.
Fortunately for inventors and small businesses, there is an option. Patent assertion firms are businesses that specialize in representing patent owners on a contingency basis. They both finance and manage a comprehensive patent assertion campaign against the infringer or infringers on behalf of the patentee, and share in the revenue they produce with the client, the patent owner.
However, before you approach a patent assertion firm about infringement of your patent, you will need to document that infringement, and that is done in the form of a Claim Chart. A Claim Chart is a two-column document that includes the independent claim from the patent that is being infringed on the left side, with evidence supporting the infringement on the right side along with links to the source of the infringement evidence. A Claim Chart follows a very specific form, and without a properly prepared Claim Chart, no patent litigation law firm or patent assertion firm will consider your claim of infringement.
A patent brokerage firm or patent attorney can prepare Claim Charts that will document your infringement, and every patent broker has relationships with patent assertion firms. Also, a patent broker can provide advice and guidance with the enforcement of your patent rights.
Alec Schibanoff, Vice President, IPOfferings
IPOfferings can help small and large businesses, universities and other patent owners determine the value of their patents and other intellectual property, then assist in the development and implementation of a strategy to optimize and monetize those assets.