Infringing patents may be very lucrative or extremely expensive, depending on which side of the fence you sit on. Recent US court cases relating to high tech sectors have clearly demonstrated this. In 2006, the now famous BlackBerry® case[1], was settled for US$612.5 million. A year later, in Lucent Techs., Inc. v. Gateway, Inc.[2] a jury in a U.S. District Court awarded a US$1.52 billion penalty for patent infringement.  In 2008, Spansion filed a lawsuit[3] seeking the exclusion of well over one hundred million mp3 players, cell phones, digital cameras and other consumer electronic devices containing Samsung's allegedly infringing flash memory components. More recently, the court in i4i Ltd. Partnership v. Microsoft Corp.[4], awarded the former US$290 million in damages and a permanent injunction against Microsoft for the infringement of an i4i Ltd. patent.

As the above case examples illustrate, patents have the potential to generate significant profits for companies whose patents have been infringed and ruin companies who have to pay substantial damage awards for patents they have infringed.

Contrary to popular belief, the mere possession of a patent does not protect its owner from infringing a third-party’s patent. In fact, it is interesting to note that in all of the above-mentioned examples the companies accused of infringement owned patents relating to the various technologies in question. Thus, while many companies actively patent their inventions, a number of them would also greatly benefit from a patent infringement risk assessment.  Such an analysis reduces the risk of infringing third-party owned patents by ensuring that a company’s new product or method does not possess any infringing elements.

A patent infringement risk assessment generally begins with a thorough search to identify all third-party patents and patent applications that might be infringed by the innovation/invention. A freedom to operate opinion can then be prepared to provide the company with an assessment of the potential risks. Then, one or more of the following options can be considered:

• Evaluate the validity of the third-party’s patent. Indeed, if the  patent can be shown to be invalid,  it cannot be infringed. However, this option does not eliminate all the risks since the process to invalidate a patent can be lengthy, costly and the result is not guaranteed.
• Modify the innovation/invention in such a way that it is no longer encompassed by the third-party’s patent.
• Buy the patent or obtain a license from its owner.
• Enter in a cross-licensing agreement if both companies own patents that are of mutual interest.
• Participate in a “patent pool”, which consists essentially of a multi-party licensing agreement between three or more companies owning patents in a particular field.
  

In conclusion, the financial consequences associated with the infringement of third-party patents can be so catastrophic that a patent infringement risk assessment should be part of any company’s research and development program. For additional information on assessment of infringement risks, do not hesitate to contact us. Once they will have been identified, we will be able to advise on the most appropriate strategy for your particular situation.

[1] NTP, Inc. v. Research in Motion, Ltd. 418 F.3d 1282, 1317 (Fed. Cir. 2005)
[2] 509 F. Supp. 2d 912 (S.D. Cal. 2007), rev’d 543 F.3d 710 (Fed. Cir. 2008)
[3] Spansion Technology, LLC v. Samsung Electronics Co., Ltd,  (D. Delaware 2008, No.08-855-SLR)
[4] 2009 WL 2449024 (E.D.Tex. Aug 11, 2009)