This is a great article from Mass High Tech that addresses a common problem that most patent owners are often unaware of. The problem involves a common legal doctrine that basically says that only the owner of a patent or an exclusive licensee can collect damages for infringement of the patent. The author does a great job outlining the many instances where someone other than the legal owner or exclusive licensee is the ‘real’ victim of patent infringement, and how this affects their ability to recover damages.
The part that really struck a chord with me is where the author talks about a company, Spino Solutions, that won a $5.7 million award for damages only to have it vacated because the entity using the patent was not the entity that owned the patent. A simple exclusive license agreement between sister companies would have solved the problem and added millions to the company’s bottom line. Instead, the company wins a patent suit that probably cost them millions in legal fees, but in the end, can’t recover for past damages. How do you explain that to the Board of Directors? Was management comforted in knowing that at the very least they stopped future infringement by the Defendant? (Having worked as in-house counsel, something tells me the answer to that last question is no.)
It also begs the question what part of the average $2-4 million patent litigation bill did the company’s law firm earn for this result? Did the firm know about the problem and advise their client to go forward any way? Did they not know about the problem until sometime after the suit was filed (perhaps when it was raised by the defendant) in which case, they didn’t do their homework? Or did the firm know about the patent ownership but didn’t know there was a legal issue? I honestly don’t know which scenario is worse.
Effective IP management with advice from a knowledgable professional can minimize a company’s risk of losing millions of dollars when simple, inexpensive solutions are available. Contact IP in Focus to see how Kelli can help your organization get the most from your IP investment while minimizing your risk when doing business in this complex world.