The above title is perhaps a trap. The word “threat”, leaps to the eye; but be reassured that the author is assuming that any approach to the other side would be couched so as not to be actionable under Section 70 of the UK Patents Act. The point being made is that, even before any such approach is made (let alone before an action is begun), the client needs to reflect.
Unless the client is a patent assertion entity (=PAE=patent troll=non-practising entity=NPE) or, to a degree, a pharmaceutical company or the like, his proposed action or threat of action cannot be considered in isolation from his business more generally. (A PAE has no business to worry about other than threatening or litigating; while in pharmaceuticals and the like, patents and therefore patent litigation are a key part of the business model.) With these exceptions, an immediate concern should be the risk of a countersuit, ie an allegation by the other party that the client infringing one of his patents. In many technical areas, mutual patent awareness is poor between competitors; as a result, the client about to make the threat may be unwittingly infringing a patent of the other party, and the other party may be just as unaware of the latter infringement until, provoked by the threat, he looks for it.
It is not uncommon for competitors with large patent portfolios to be in a state of “Mexican stand off”. “Mexican standoff” refers to scenes in Westerns in which two gunmen are facing each other, each afraid to make the first move to shoot, lest the other be more accurate in his aim. Likewise, each competitor may lack confidence in its portfolio being more damaging to the other than the other’s portfolio is to it. (The ingenious scene in The Good, The Bad and the Ugly in which three gunmen face each other – one being Clint Eastwood – is an elaboration of the basic concept to which there is apparently no patent litigation analogy.) Clearly, if there is a Mexican standoff, a company which chooses to threaten or sue will disturb the standoff and possibly trigger a “patent war”.
All companies have relationships and in many business sectors these are complex. Two companies may compete in some areas while at the same time each may be a customer of the other, and of course it is generally not good policy to sue one’s customers. Even where there are no supplier-customer relationships, there may be R&D or bid collaborations.
Even if, properly considered, the risk of retaliation by countersuit/patent war or in other contexts is acceptable compared with the potential gain from the litigation, the client must be prepared for the alleged infringer to manipulate personal relationships so as to weaken the client’s resolve. There will be senior people within the client who are not directly involved in the particular business sector to which the patent relates; these people need to be briefed to be proof to such manipulation. An intellectual property policy and a formal approval procedure for litigation can help to keep these senior people in line.
Likewise, the client needs to be prepared for the other party to go to the Press, hoping to enlist public sympathy. However, the author’s opinion is that (unless the client has behaved in some inappropriate way) a robust view of any such publicity should be adopted, even in cases such as inventor entitlement disputes or disputes with universities. He remembers one case where the client’s motives for a litigation were inaccurately – and rather excitingly – presented in the Press, and where the client’s corporate relation advisers concluded that any public response would “just give the story legs”.
Vital though the issues are that relate specifically to the case –
the assessment of possible non-infringement arguments and of possible counterclaims for invalidity, and
choice of forum within and between countries according to substantive law, speed, costs and practices on award of costs, bifurcation or not, extensive discovery/disclosure or not, jury trials or not, etc. –
these case-specific issues must be set in a broader business and political context.
Mike Jewess 29 April 2014
For a comprehensive consideration of the avoidance and handling of intellectual property disputes, see Chapter 10 of Michael Jewess, Inside intellectual property – best practice in intellectual property law, management, and strategy (Chartered Institute of Patent Attorneys, London, 2013, 516 plus xxviii pages, £ 35 for CIPA members, £ 40 for non-members, details and order form at www.researchinip.com/iip.htm). PAEs and IP policies are dealt with in Chapters 12 and 19.