What if someone uses my patented invention without my permission?
A patent owner has the right to exclude all others from making, using or selling products or services containing the claimed invention. A patent owner in the United States can choose to license the invention to everyone, selectively to only a fewpeople, or to no one at all. It is perfectly legal in the United States to choose to let your invention go unused for the entire period of the patent.
If someone uses your invention without your permission, you are entitled to stop their use of the invention by seeking a legal injunction in Federal court. In addition, you are entitled to collect damages for any unlicensed use of your invention. Damages are generally calculated based on lost profits that you suffered as a result of the infringement, or if you are not actually producing the product, to the unjust enrichment the infringer received through the unauthorized use of your patent. If the infringer used your technology knowingly and willfully, you may be entitled to receive up to three times the actual damages suffered, plus court costs and attorneys’ fees.
Enforcement of patent rights, however, is often difficult for the underfunded entrepreneur, since it almost always requires hiring an attorney. If the infringement is small – that is, if the damages suffered are modest – then, in fact, it may be impractical to try and force someone to stop using your invention. If the losses due to the infringement are significant, then it may be possible to hire an attorney under a contingency arrangement, in which part or all of the fees are paid by the attorney in exchange for a portion of any damages awarded as a result of a successful settlement or lawsuit.
For example, an inventor (I will call him Harry) contacted me some years ago, angrily explaining that he had invented and patented a special automobile tool for adjusting brake calipers. Harry had not commercialized the tool in any way but was using the tool in his auto repair shop. A few weeks prior to calling me, he found out that a former employee had built a similar tool and was using it in a competing shop around town. After some discussion, Harvey estimated that, based on the time savings produced by the tool and the number of brake jobs which were probably being handled by the former employee, the actual damages that were being suffered as a result of the infringement were on the order of $400 per month.
Now Harry was mad. He was mad because his ex-employee had opened a competing shop across town and had taken some of his customers, but he was particularly sore that his new tool had been copied and was being used to lower the competing price for brake jobs – further stealing business from his shop. Harry wanted to sue this tool thief, and he wanted to sue him immediately.
I said fine, but first let us talk about the economics of the dispute. First of all, the loss was about $400 per month, or roughly $5,000 per year.With 15 years left on the patent, the total loss from this use, assuming there was no increase in use, is about $75,000 over the next 15 years.Depending on interest rates, the present value of this $75,000 probably lies somewhere between $20,000 and $35,000.
In order to file a patent lawsuit in Federal court, you should plan to spend about $25,000 per month for the first year, increasing to a total of as much as $1 to $2 million over the two to three years it takes to litigate a patent. Although about 97% of all patent lawsuits settle before or during trial – usually within the first year – enforcing a patent is very expensive and usually is only worthwhile if the amount in dispute is significantly larger than the cost of litigation.
Since Harry’s total lifetime damages due to this infringement are generously only about $35,000, he would spend more in the first couple of months of a lawsuit than he could possibly hope to recover against this single garage, even with the addition of treble damages. If, however, a tool company were to begin manufacturing the brake tool and add it to their general tool catalog, or if a brake manufacturer were to recommend the tool for adjusting brakes on all cars using their calipers, the money damages of the infringement may be sufficient to warrant legal action. The point of this story about Harry’s brake tool is that there are some low levels of infringement that just cannot be practically stopped using our legal system.
So we are back to the original question: what do you do if someone is using your invention, particularly if the infringement is sufficient to justify immediate litigation? In a situation such as Harry’s, I often suggest having your lawyer send a friendly but stern letter, attaching a copy of the patent. The letter should state that you have been informed but cannot confirm that your patent is being infringed, and if the information is true, that you request that any infringement stop, or that you be contacted if there is interest in a possible patent license. Conclude by stating that if you hear nothing further, you will assume that you have been misinformed or that all further infringement has immediately ceased.
I suggest paying a patent attorney a couple of hundred dollars to send this letter, just because I think an attorney letter is often taken much more seriously, and is more likely to result in a chilling of any infringing activity. By attaching a copy of the patent, you have now put the infringer on notice about the patent, and any further use of that patent will be willful and subject to enhanced damages, in the event of litigation. I like to add language holding open the possibility of a patent license, since anyone who receives a patent threat letter and has reasonable apprehension of impending litigation can file a declaratory judgment action in Federal court. The purpose of the declaratory judgment action in this situation is to remove the threat of future litigation by asking a judge to look at the patent and the accused product and determine whether the patent is, in fact, being infringed. A significant advantage of filing a declaratory judgment action is that the party who files the lawsuit generally gets to choose among available forums or locations for the suit. So by threatening litigation against an out-of-state infringer, you might find yourself at a significant disadvantage of being hauled into court in some distant venue. By adding the language about contacting you if there is interest in a possible license, the reasonable apprehension of impeding litigation is removed and the infringer cannot use your letter to haul you prematurely into Federal court.
Finally, it is important that you not leave a letter to a patent infringer open ended regarding your intentions. You are never required to police your patents by hunting down possible patent infringers, but once you have identified that someone is infringing your patent, you must take steps to stop the infringement or risk losing your rights to collect past damages from the infringement. It is a little like squatters’ rights that might accrue when strangers move onto your land and stay there for some period of time; if you see someone openly using your patent, you have an obligation to assert ownership over the patent and stop the infringement. By allowing the known infringement to continue, over time the infringer may begin to rely on your inaction as implicit permission to continue using your invention.
In the case of the lawyer letter to the infringer, you assert that if you hear nothing further, you will assume that you have been misinformed or that all further infringement has immediately ceased. This language attempts to remove the drawing of any inference by the infringer that future silence is, in fact, permission. Instead, you are attempting to shift the burden of notice to the infringer – if the infringer is using the patent, he or she should let you know, otherwise you will assume that no infringement is occurring. Of course, if the infringement is open, notorious and easy to identify, it may be difficult to rely on your letter to claim that you had no idea that infringement was occurring. But short of filing a lawsuit, this letter has the combined advantage of planting a seed of fear and doubt in the mind of your invention thief that you may commence legal action if infringement continues, reduces the feasibility of the infringer bringing a declaratory judgment action in a foreign state, and possibly keeping open your right to collect past infringement damages in the event that you choose to sue at a later time.
Contact John Ferrell at JFerrell@carrferrell.com if he can further assist you.
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About the Author
John Ferrell is a founding partner of Carr & Ferrell LLP, one of Silicon Valley's foremost technology law firms, and specializes in patent and intellectual property law matters. He is the Chair of the firm's Intellectual Property Practice Group.
jferrell@carrferrell.com
650.812.3408