Four Steps to Minimize the Impact of Your Competitors’ Patents

UK review by Colm Murphy

The success of your new venture depends on avoiding costly and time consuming patent litigation. Mature companies often engage patent counsel to provide “freedom to operate” opinions with respect to specific products or services based on a thorough review and analysis of the patent law landscape.  These opinions can be expensive, however, and beyond the means of most startups.  If you are looking to manage potential risk of patent claims, but cannot afford a more thorough legal review, consider using the following four-step guide to survey the patent landscape, assess risk, and minimize the impact of competitors’ patents on your freedom to operate:

1. Identify Key Competitors

Make a list of the companies you compete with most directly. Include companies that offer products or services most similar to yours, as well as established incumbents most likely to be impacted by your entry into the marketplace.

2. Check Competitor Patents

Use a tool like Google Patents (patents.google.com) or Free Patents Online (freepatentsonline.com) to search for competitor patents and patent applications. Search on competitor name and a few key words that best describe your technology. Identify patents most relevant to your product or service and consider whether it falls inside the scope of the patent claims, which are located at the end of the patent in numbered paragraphs.

3. Check Litigation History

If you conclude that a competitor’s patents may be relevant to your business, check its litigation history. Search Google using keywords including the competitor’s name, “patent”, and “lawsuit” or “infringement” and look especially for competitor-on-competitor cases where your competitor was plaintiff. Many companies view patents as defensive weapons and never enforce their patent rights. For example, Twitter adopted the Innovator’s Patent Agreement, which prohibits assertion of patents owned by the company unless it first obtains permission from individual inventors. See github.com/twitter/innovators-patent-agreement. Google similarly made an Open Patent Non-Assertion Pledge: google.com/patents/opnpledge/pledge.

 4. Assess Risk and Consider Your Options

If you conclude that core aspects of your product may be covered by one or more patents owned by a competitor and that the competitor is likely to enforce its patent rights against you, consider each of the following issues:

Are your competitor’s patents valid?

Although patent examiners search for prior inventions that block the patentability of a patent application, the patent examination process cannot identify all of the prior “art” that may be relevant to patent validity. Search for evidence that the inventions claimed in patents that are potentially relevant to your business were known, used, made, sold, or offered for sale prior to the earliest priority date listed on the face of those patents. If you find evidence that the same invention – or an obvious variant – was made by others before a patent’s priority date, that patent can be proven invalid.

Are you indemnified?

Component suppliers usually indemnify customers (i.e., provide (usually limited) liability protection) against claims that read entirely on their products, but not patent claims that cover their product as a component of a larger patented product. If you are not indemnified, consider whether you could acquire the entire potentially infringing component from a third party that would indemnify you, and how doing so would impact your business.

Can you design around?

A patent claim is only infringed if every limitation is present in an accused product. Focus on the broadest relevant patent claim and consider the time and cost to change your product to avoid infringement or reduce infringement risk.

Can you license the patent?

If designing around is not feasible, consider the pros and cons of proactively seeking a license. This option is rarely attractive unless you conclude that there is a good likelihood that you could obtain a license on reasonable terms (e.g., because the patent covers an industry standard and is available for license to any company) and that the viability of your business depends on obtaining a license.

Is purchasing insurance worthwhile?

Insurance premiums for small companies with no history of patent litigation are often very reasonable. If a claim is asserted against you, having insurance can transform the ensuing lawsuit from a “bet the company” problem into a manageable distraction.

Are you able to defend yourself?

Consider your company’s intellectual property strategy, including whether it is developing commercially valuable patentable technologies, and if so, the feasibility of developing a portfolio of patents protecting those inventions. If you own patents that are relevant to your competitors’ products or services, they can provide a potent deterrent, as you may be able to countersue a competitor who accuses you of infringement.

If, after considering these factors, you feel that you are facing a major unresolved business risk, contact a lawyer for advice. In the US, if you can prove that the patent is invalid, the United States Patent Office offers a process for challenging the validity of US patents after they issue, but that process can require a lot of time and money.  In the UK, the Intellectual Property Office can provide a non-binding opinion if you are in a dispute over the infringement or validity of a patent. Otherwise, periodically revisit these questions and reassess your situation.