Press reports on patent suits give the impression that only large international corporations are involved in patent litigation that seem to always amount to “patent wars” and go on for years. Patents can, however, also be enforced quickly, which then makes them an extremely effective tool against infringers. This can be an interesting option for companies of all sizes, and with respect to any technology.
Following the “Smartphone Wars” between Apple and Samsung, it seemed that patent disputes were reserved for “high-tech” and would inevitably go on for years. The recent press attention to Gillette’s legal proceedings against Wilkinson corrected this impression: Gillette claimed the infringement of a patent, which – simply put – protects the connection between a disposable razor blade and the razor’s handle. An everyday product with easy-to-understand technology: ultimately a simple plug-in connection.
The relevance of this suit was therefore not that it dealt with cutting-edge technology. Further, Gillette’s patent will also rather soon expire and razors with disposable blades have been on the market for ages. It is thus safe to assume that the reason to bring this suit was neither based on the need to protect a future business model. One can only speculate why Gillette chose this particular time to bring their claim. However, the proceedings show that:
- patents can and must be actively used, i.e. enforced, in order to be able to hold or defend a market position;
- also in patent law interim injunctive relief is an important means of redress;
- it is not only “high-tech” that can and needs to be enforced in (preliminary) proceedings.
These proceedings provide a good opportunity to reconsider one’s own use of patents, and how the value of the patent portfolio can be strategically secured and even enhanced through court proceedings.
Patents as a competitive advantage
Patents “protect” innovations or, in other words, advances in technology. It is time consuming and costly for businesses to develop patentable technologies and to obtain patents. This is the reason why the state grants a monopoly in the form of patents. For twenty years, the economic benefits generated with the invention are reserved for the inventor or an assignee. But does the right granted with the patent, namely the right to exclude others from using the patented technology, already grant protection? If the prospective profit is large enough, a “rogue competitor” will hardly hold back because of an entry in the patent register. The protection offered by the patent must be actively sought through enforcement of the patent. If need be, this includes litigation.
Preliminary injunctions provide fast protection against infringements
It is true that, like ordinary civil law suits, it often takes more than a year for an initial judgment to be handed down in patent infringement proceedings. The potential damages a company could incur over such a period of time is considerable. Thus, preliminary injunctions provide the necessary prompt judicial protection. In preliminary injunction proceedings, the court’s assessments are only cursory and provisional, and the burden of proof is limited as compared to full proceedings on the merits. With a preliminary injunction a court may enjoin a company e.g. from selling a product. It may, however, also order that certain documents or objects be seized as evidence. The provisional nature of such a preliminary injunction means, in particular, that the parties can revisit the dispute in full proceedings on the merits following the injunction. It may then be the found that the court issuing the injunction erred and that the injunction is to be lifted, again.
In Germany, preliminary injunctions can often be obtained within a few days, and can be issued ex-parte, i.e. even without the opponent’s participation or knowledge. It is precisely because of the speed of the proceedings and the potentially grave disruption an unexpected injunction may cause, that high standards are set for the respective application. It must be very carefully and thoroughly drafted. Only if a court can easily follow the applicant’s reasoning and no questions with regard to the underlying technology or the alleged infringement remain, it will be prepared to grant a preliminary injunction.
Preliminary injunctions are difficult to obtain in patent cases; a misconception?
Patent cases are considered to be complex. Concise yet comprehensive presentation of the matter might be challenging. Therefore, rights holders are often led to believe that it was impossible to obtain preliminary injunctions in patent matters and thereby too easily relinquish an important tool for protection of their rights. It is true that the preparation of an application for a preliminary injunction in a patent dispute is more intense than in other areas of law. Not only the factual evidence concerning the infringement must be presented. Also, the patent-in-suit’s validity must be substantiated as of course courts do not want to assist in enforcing patents which are actually on the verge of invalidity. It is further true that there will be technologies that are so complex that a court my refuse to grant a preliminary injunction because it cannot properly assess the facts with the limited means available in preliminary proceedings.
In many patent infringement cases, however, it will be only a matter of preparing and processing the facts, which will allow the rights holder to secure his/her legal position by interim relief. The surprise effect of an ex-parte injunction that has been “secretly” issued without the participation of the opponent is, of course, a strong incentive. However, an effort to include the opponent in the process may in some circumstances even help to succeed. If, for example (in the case of domestic opponents), the applicant proactively requests an oral hearing or suggest that the alleged infringer should be given the possibility of submitting a written response to the application, this can signal to the court that the applicant is very sure of its position: The right holder does not shy away from the dispute with the opponent. It demonstrates strength.
It is also important to take into account the remaining (potentially residual) term of the patent to be asserted. If a patent expires in two years, but proceedings on the merits take at least two years until a legally binding decision is obtained, such judgement would – at least with regard to the injunction part of it – be pointless. It may be clear to a court in such a situation that interim relief must be granted in order not to unduly strip the patent holder of his rights.
Preparation and processing of information
Interim relief is only available for a limited time so that companies must act quickly after what are usually accidentally discovered infringements. In order to be successful in patent cases as well as in obtaining interim relief, the following should be prepared as soon as possible:
- Test purchases of the allegedly infringing product (with documentation and a list of the witnesses who made the purchase), or other proof of the infringing offers with as many (technical) details of the product or process as possible.
- Detailed photo documentation of the product and its (allegedly) infringing characteristics, or, as applicable, implementation and documentation of a series of tests as evidence of the patent infringement.
- Determine the sales structure of the seller of the infringing product.
- Detailed preparation of one’s own legal situation: What kind of property rights are involved, are they valid, which prior art exists that might pose a threat to the patent?
- Assessment of the economic significance: How large is the market for the products in question, how many units have been sold, and what revenue was generated?
- Preparation of any technical/market-specific arguments: Are there any particular risks associated with the counterfeit products?
Other considerations in patent litigation
Patents are used in different ways in companies, and for companies with larger portfolios, not every type of property right is of equal importance. Also, the assertion of an intellectual property right always entails the risk of a “counter attack” against the asserted rights’ validity. These and other points must be accounted for in a company’s general strategic considerations before it commences injunction proceedings (or later, main proceedings).
It is important to see patents (like other property rights) as assets of the company. To fully exploit their value, they must be used. To maintain or even increase their value, they must also be enforced.
As the highlighted Gillette-example shows, the market is sensitive to patent disputes. Many (potential) competitors of Gillette will now even more carefully assess whether to enter the market or review specifications of existing products in order to avoid conflicts. Gillette has made a point: The company has not only demonstrated its strength and a willingness to fight in the market. It has also reminded its competitors that, even with seemingly simple products, there could be a large number of associated property rights that may render market entry a risky endeavor. This is one way to support or maintain a market position.