One of the most chilling moments for small businesses is being hit with a cease and desist letter - more specifically, being hit with a claim for a patent infringement. Panic, stress, and frustration set in. But it's important to not overreact and come up with a game plan. What are your options when you're accused of infringing a patent?
The first thing to do when receiving a cease and desist letter is to validate the claims of the letter. Are you actually infringing the patent in question? This may be a question that you should ask a patent attorney and have him or her conduct an infringement analysis.
During the infringement analysis, you (or your attorney) should identify the registered patent in question and review its prosecution history. Then you (or your attorney) should prepare a claims chart by taking a look at each of the claims and determining whether you are meeting every element of the claims. If you are not infringing, then the next thing you can do is to respond to the cease and desist letter and assert that you are not infringing.
If you are infringing, then you have the following options:
1. Become a Licensee
This is probably what the patent owner wants you to do. You will have to enter into a licensing agreement (that will probably be provided by the patent owner). The licensing agreement will define the scope of which you can practice what is claimed in the patent. While you're ultimately free to enter into a licensing agreement, the downside is that you probably don't have a lot of leverage in negotiating.
2. Purchase the Patent
I call this the "Twitter approach." Instead of dealing with litigation or going into a big dispute, Twitter purchased a bunch of IBM patents when they were accused of infringing IBM patents a few years ago. Remember that most of the times, patent owners enforce patents because they want money. So giving them enough money and purchasing the patent outright may be your fastest ticket to a resolution.
3. Challenge the Patent
One defense to a patent infringement claim is that the patent in question is not a valid patent. This may be the most difficult option, but you can challenge a patent in two ways: a) post grant review; and 2) inter partes review (IPR).
Post grant review is appropriate to review the patentability of one or more claims in a patent on any ground that could be raised under § 282(b)(2) or (3). Post grant review applies to patents that issued from first-to-file applications. You can file a petition for a post grant review within 9 months after it is granted or it is reissued. You can file the petition on grounds that one or more claims is more likely than not patentable. For petitions filed on or after March 19, 2013, the request fee is $12,000 plus a fee of $250.00 for each claim over 20, and the post-institution fee is $18,000 plus a fee of $550.00 for each claim over 15. A post grant review takes approximately one year.
IPR is appropriate to review the patentability on a ground that can be raised under Sections 102 and 103. IPR applies to all patents. You can file a petition for a IPR within 9 months after it is granted or it is reissued, or after a post grant review (if one was instituted). You can file the petition upon showing that there is a reasonable likelihood that the petitioner would prevail with respect to at least one claim. For petitions filed on or after March 19, 2013, the request fee is $9,000 plus a fee of $200.00 for each claim over 20, and the post-institution fee is $14,000 plus a fee of $400.00 for each claim over 15. IPRs take approximately one year.
In sum, the best thing to do if you receive a cease and desist letter is to talk to an attorney. He or she will be able to explain your options more in depth.