“What To Do If You’re Threatened With Patent Litigation” with Tom McNulty of Lando & Anastasi

Jeffrey (0s):
Well, hello everybody. And welcome back to radio entrepreneurs. The radio show that continuously stream stories of entrepreneurship leadership, and how people are dealing with the chaos of this economy and directed towards success. My name is Jeffrey Davis. Again, my next guest is a regular contributor to the show. It’s Tom and McNulty attorney at Lando & Anastasi. Welcome back.

Tom (25s):
Oh, good morning. Good to be here.

Jeffrey (27s):
Nice to see you again. So I know patents are your thing. So what’s the topic. There’s your

Tom (34s):
Well today? I kinda thought it’d be good to talk about what you should do if you’re threatened with patent litigation, you know, when you’re a startup business, one of the signs that you’re maybe onto something or making some progress is when a patent holders kind of come out of the woodwork and come after you for what you’re doing. And there’s, there’s important steps that you should be taking early on in the process to ensure that your rights are as protected as possible. So the first thing I wanted to mention, there’s sort of a number of different ways you can be threatened with patent litigation ranging from somebody, just sort of giving you an informational, you know, letter or an informational call.

Tom (1m 16s):
Hey, you know, I’ve got this patent and maybe you want to take a look at it. Those are, those are in some ways, almost an invitation to license, more so than a threat of litigation. Then it gets a little more formal. If you get a cease and desist letter, that can be something that formally demands that you stopped doing, what it is, whatever it is, they are accusing you of infringing. It might identify specific products or specific services or methods or whatnot. It might identify specific patents and specific claims. That’s a little bit more serious. It kind of ups the ante. I know I’ve talked to the past about the potential for being found a willful infringer. This kind of notice may be the thing that sort of triggers you where now you’ve got to take affirmative steps to avoid infringement or, or potentially be deemed a willful infringer.

Tom (2m 6s):
And then it kind of ramps up from there. There could be a copy of repo proposed complaint that they would tend to file, or very often they will file a complaint and send you a courtesy copy. The filing of the complaint. Doesn’t kick off the lawsuit. It’s only when they formally serve it on you, that it kicks off the lawsuit, but it’s certainly, you know, upstanding a bit if they’ve gone ahead and filed because they’ve, you know, in America, it’s a kind of a first to file is where the, where the court case will be held. So they’ve established what court they want the litigation to be in. And then of course, like I say, if you’ve been served, then the clock is ticking. That’s super important to know a service is usually done by a sheriff or a service process or delivering it in hand to an individual or delivering it on an officer or manager of a corporation or a registered agent of a corporation in hand.

Tom (2m 57s):
So that’s, that’s one of the triggers you want to be aware of is, is when service has occurred. Excuse me. So, like I said, there’s, there’s sort of a couple of a couple of levels of a threat that this triggers. One is the threat of the suit. Another is the threat that you’ll be found to be a willful infringer that can result in trouble damages. It can result in an award of attorney’s fees that typically would not take place in litigation America. So as you would probably expect from an attorney, the first thing you should do is contact your attorney. If you receive any kind of threatening language and discuss with them kind of the options and the possibilities him or her, you know, for responding to, or perhaps for not responding to the communication that you received, you know, an attorney can help analyze obviously sort of the, the, the claim and the likelihood that the claim has merit and that you’ll be found to have infringed, but they can also help you analyze the, the exposure that you have and the potential litigation exposure to the potential damages that you might have to pay the potential for an injunction injunction, excuse me, they can look at the patent.

Tom (4m 10s):
They can look at the file history of the patent, which is the sort of back and forth between the patent Dee and the patent office in negotiating, whether the client should be allowed, those things cannot serve to limit what the claims of the patent mean and can be very helpful in making these analyses.

Jeffrey (4m 30s):
I have a question for you, Tom, you know, in some countries there are inhibitors towards lawsuits and penalties for the aggressor, not as much. So here, freedom of operations on all sites. Now, if I have a small startup company and I have a very interesting patent, and there’s a big, big brother company out there that doesn’t want me in that category, they can just wallpaper me with disincentives. What do I, you know, what recourse do I have other than the law buy back? Because money is limited, right?

Tom (5m 6s):
Yeah. Money is limited. And that, I mean, that’s a problem that, you know, a startup that’s looking to assert patents has to face, you know, the things you would want to do there. You would certainly want to put them on notice is as early as possible. So that, so that you have the, you know, the possibility to claim willful infringement. And like I said, that gives you a much greater chance of getting your attorney’s fees back, but that only, you know, that doesn’t help you throughout the litigation and really helps you if you win in the end

Jeffrey (5m 33s):
And that can put some companies out of business,

Tom (5m 35s):
It’s it certainly is a problem. It probably will impact whether you decide to, you know, really go all out, seeking an injunction and keeping the field clear for yourself or whether you’re going to license the technology, because that gives the, you know, the ability to license and accused infringer gives you sort of a potential anyways, quicker and cheaper out. The other that has, has become, and is becoming more of a thing in this country is there are litigation financing entities that, you know, they’ll evaluate your case. And if they think there’s some merit and some money to be had, they’ll potentially partially, or sometimes even completely fund the litigation and return for, you know, some percentage of the, of any proceeds.

Tom (6m 23s):
So that’s, that’s certainly a route that could be taken.

Jeffrey (6m 25s):
That’s very interesting. And I don’t know how viable that is, but again, I’ve sat with clients over the years and I’m sure you’ve heard this. And I’ve sat in board meetings where people have said to me, we don’t want to file the patent because we don’t want to give them a heads up that we’re in this category and we can’t afford to fight them if they find out that they have a heads up.

Tom (6m 47s):
Yeah, that’s

Jeffrey (6m 48s):
Tough. It’s tough for small business.

Tom (6m 50s):
These are, these are all very difficult decisions. You know, the downside of not filing your patent early enough is, you know, should, should something be sold or published or otherwise disclose. You may lose your rights to file a patent down the road. So there is that concern. And quite frankly, if somebody else comes up with the idea in the interim and they filed first Americas is now a first to file country. So it doesn’t matter if you thought of it before them, if they’ve got something on file before you, they will win. So there are some incentives for filing early, but yeah, I understand your point. There’s, there’s definitely some, some considerations in, in, you know, in terms of money allocated,

Jeffrey (7m 29s):
It’s a very hard business decision for a minimally financed technology business. It’s already bootstrapping. It’s just, it doesn’t seem like there’s a lot of, like, you’re not a Jew. You’re not, you don’t write the laws. So I get that. There is, it doesn’t seem like there’s a lot of protection for those small businesses. And as I said, in some other countries that I’ve consulted in and I’ve worked in, there are protections against these big corporations, you know, filing in order to just stop people, they can be punished by sort of bullying themselves into the room.

Tom (8m 9s):
Yeah. I mean, a lot of other countries have a loser pays litigation kind of set up. So, you know, if you beat them, they will end up paying, you know, some or all of your fees

Jeffrey (8m 19s):
Or triple damages,

Tom (8m 21s):
There’s treble damages. And, and, you know, quite frankly, most countries have far less liberal discovery than American does. And, and the ability to run up costs is, you know, to a certain extent limited, but for, for better or for worse, this is the regime that we have here in the, in the country.

Jeffrey (8m 39s):
Well, I mean, I understand the logic, I’ve spoken to litigators who say to me about the, a fair playing field, you know, democracy. And I understand the argument, it’s a nice pure argument, but it does seem to some degree that the laws are a little bit skewed to those who, you know, those who have the dollars have the power.

Tom (8m 59s):
Yeah. I mean, I hate to say it, but I do have to agree with you there there’s definitely that, that kind of a flavor and, and it sort of works in, in other ways too. I mean, I’m sure you’re familiar with the term patent troll, you know, patent troll is an entity that holds a search patents and really doesn’t do any other business. And a lot of the ways that that industry sort of grew was the threat of very expensive litigation. They would, they would assert a patent against you threatened or actually file suit. And they would accept, you know, relatively small amounts of money, you know, compared to the cost of going through litigation as a way of basically getting you to settle, regardless of what you thought of the merits.

Tom (9m 42s):
And, you know, if you can do that in a against enough entities and get enough settlements without really fighting the fight, you know, it becomes a financially lucrative model. And that’s one of the other problems I know in a lot of states, at least there’s been some discussions about passing anti patent troll litigation, you know, laws decided to curtail it, or at least punish entities that do that, but it sort of remains to be seen whether that will have any significant effect on, on that business model.

Jeffrey (10m 14s):
Wow. We’ve been speaking with our regular contributor, Tom McNulty attorney at Lando, and anesthesi Tom, you know, big or small, it’s a hot topic, especially where you are and you’re in the hot bed. You’re in the center of the heart of the hotbed of new England. If somebody is looking for you or advice on how to be the defender or the aggressor, who knows, how do they find you?

Tom (10m 42s):
They can always get me at my email, T M C N U L T y@lala.com. Or you can call me at (617) 395-7040.

Jeffrey (10m 53s):
How wonderful. And I look forward to speaking with you again, it is a hot topic, especially in our economy and what’s going on today and remind everybody, this is radio entrepreneurs.