A granted patent has a presumption of validity at the time the patent is granted. While validity of a patent can be challenged, the burden of proof rests on the party which so challenges validity.
   Assuming that the patent is valid, the more common question is whether a small company can bear the costs of the legal process of enforcing its patents. Without question, the cost of engaging in patent litigation is one of the most costly of court processes. While that may seem like an insurmountable obstacle to a small company, it is helpful to remember that both sides bear similar costs - and no company wants to bear any such costs unnecessarily. Thus, the prospect of bearing such costs quite often leads to settlement discussions early in the litigation process. In addition, data show that over 90 percent of all patent litigation cases are settled by the parties, themselves, before the case gets to trial.
   Further, the statutes authorize the court to award attorney fees and multiple damages to the patent owner if the defendant’s infringing action is intentional. Thus, the defendant bears more of a financial risk than does the patent owner.
   Understandably, where the infringer is much better financed than the patent owner, a David/Goliath situation, the above discussion of financial burden on the infringer may not be helpful as some defendants may employ their greater financial capacity to overwhelm the patent owner.
   However, large companies are quite reliant on the goodwill of their customers to maintain the viability of their business. Most companies will not jeopardize their good reputation acting in a manner which appears to the public to be “unfair”. Thus, while some companies will take advantage of their size, my experience over the years shows that most companies, even large companies, respect the patent rights of others.
That said,there are times when there are legitimate questions regarding either the validity of a patent, or whether the accused product or service in fact infringes the patent. In such cases, the patent owner can expect the accused to engage in the patent fight to the fullest extent of their capability.
   Thus, before engaging in any patent litigation, the patent owner should conduct, with their patent counsel and any proposed litigation counsel, a thorough review of the strengths and weaknesses of their position, including their legal position, their financial capabilities relative to the financial capabilities of the prospective defendant, and other relevant elements of the resources which will be available to either themselves or the prospective defendant.
   Once the review has been conducted, the patent owner, with the advice of his/her counsel, will be in a better position to determine whether the probable rewards of moving forward with litigation outweigh the risks of doing nothing and essentially ceding rights in the patent to the infringer.

The above information is provided for the benefit of general audiences and is believed to be factually accurate. However, the above information is provided to inform and is in no way to be taken as legal advice, applicable to any particular set of circumstances. The reader is specifically advised that any and all specific situations, along with all the relevant details, must be reviewed by a competent attorney.

The Benefits. Benefit to the country is that the patent system encourages innovation. Benefit to the inventor/technical community is that one or more patents can provide a government-sanction on what amounts to a market monopoly on the invention. That monopoly protection provides part of the financial justification to invest in a new product, process, or other new venture, and can be an important piece of value in securing financing for the project. Overall, patent rights can serve as protection against copycat competitors for the life of the patent(s). Patents can be secured in almost all countries. The number of countries where patent rights is sought is balanced against the cost in the respective countries and the expected costs in those countries.

Limitations. The greatest limitations we hear from our clients relate to (i) costs to secure patent rights (ii) costs to enforce patent rights, and (iii) difficulties in enforcing patent rights once the patents are granted. Difficulties enforcing patent rights include weak statutory laws in some countries, reluctance of judges to enforce the law, and unpredictability of the court system.

However, quality patents typically are enforceable in the US.

The patent is a start. Looking at value, having one or more patents does not guarantee financial success. The patented technology still has to be coupled with a quality business plan; and that business plan must be executed successfully.

One patent may not be enough. Where the market for the new product is developed with a high degree of success, competitors have a great incentive to try to get around your patent(s) so they can legally compete in the market. In such situation, history teaches us that it is unlikely that a single patent will successfully keep out the competition. Rather, you need to continue developing new versions of the product, and protecting those new versions, as well as any versions you can think of that might successfully compete with your product.

Balancing the interests of the patent holder with those of others. A societal limitation to the patent system is that some products such as cell phones, and other electronic devices as well, include technology which is covered by a large number of patents which belong to a variety of owners. In this case, a large number of patents need to be licensed in order for the phone manufacturer to be able to build the phone. This can discourage new manufacturers from setting up shop because of the large up-front investment in legal analysis and licensing arrangements, just in order to avoid unnecessary litigation.

Another societal limitation is that some inventions seem so good that they should be available to all people; for example new drugs. Yet drug companies can set the prices so high as to price some users out of the market. Certain segments of society want the drug companies to lower prices in order to increase availability to all. The drug companies want the price high to capture a reward on the investment which corresponds with the risks they take in developing new drugs. The patent system sets up the financial incentive which can limit availability, while society asks for universal availability at lower cost. The patent system is set up to put the patent owner in control of the outcome of that tension.

The greater good lies where? There are those who argue that putting society in control of the outcome of that tension will save lives in the short term. There are others who argue that giving a long term incentive and control to the patent owners is in the long term interest of society because it keeps an ongoing incentive to continue to develop new drugs that can eventually be available to all without the layer of patent costs.

The primary purpose of a patent system in any country is to encourage technical innovations. Patents essentially grant government-blessed monopolies on new technology for limited times, varying between 10 years and 20 years. The expectation is that the monopoly will encourage inventors and their employers to invest in new technology. There is also the expectation that new technology is, in general, good for the general public.

Welcome to The Wilhelm Law Blog. We invite a serious and spirited discussion here on legal topics of current interest and in these specific categories:

   Patents
   Trademarks
   Copyright
   Licensing
   Right to Practice
   Confidentiality Agreements
   Balancing Value Versus Cost 
   When should I contact the attorney?

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