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The
basic flow of excising patent rights is illustrated as below:
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(1) Case Entry
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| In general, the
process starts with a case entry, which is triggered by an information
lead to a patent department that "Someone seems to be infringing
our patent," or "Another company is copying our product."
The information lead may come from informal or formal routes.
The information lead from informal routes can result in a case
entry after some preliminary investigation by the staff in the
patent department. Smaller companies may dispense with the formal
procedure of case entry. However, you must wonder, "Are
there any hiatus cases that are buried deep inside your patent
department? |
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(2)
Pre-investigation
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| After
the case entry, the process shifts to the pre-investigation
phase, where an investigation takes place to determine whether
the patent at issue is exercisable or not. The pre-investigation
involves confirming that the patent at issue is indeed valid
and would be so in a continuous manner, and reconfirming all
the information in the case entry. |
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(3)
Collection of Evidence
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exercising patent rights, it is necessary to prove infringement.
For that purpose, compilation of evidence is a must. In practice,
it is preferable to secure evidence of manufacture and sale
of the actual article at issue. This is one of the difficult
steps in the process for excising patent rights. |
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(4) Examination of Technology
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Based on the compiled
evidence, an attempt is made to prove infringement. This process
involves physical and scientific analysis of the evidence so compiled,
and in many cases, it requires specialized knowledge of reverse-engineering.
The process further
involves technical interpretation of compiled evidence, in conjunction
with legal interpretation of the patent claims at issue for the
purposes of determining whether the alleged infringing article is
indeed included in the technical scope of the patented invention.
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| (5)
Establishing a Strategic Plan |
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In conjunction with
the proof of infringement, in case of claiming compensation for
damages, the claimant must calculate damages. For this purpose,
first, the infringing article must be particularized. The particularization
may have been completed in the above case entry step, but other
types of products may be infringing as well. There must be a comprehensive
investigation into all potentially infringing products.
Second, after the particularization
step, an investigation is carried out to determine damages inflicted
upon your company based on the particularized infringing articles.
Conventionally, for cases in general, in claiming an equivalent
amount of royalty, the questions that must be answered are as follows:
"Within a period during which the patent was exercisable, how
many units were manufactured and sold, and during this period, what
was the price of such unit?"
Third, after estimating
an appropriate royalty rate, the amount for appropriate royalty
is calculated. Then, the claimant must determine the feasible amount
of claim for damages for compensation.
Fourth, within a reasonable
scope, an investigation is made into counteroffensives which the
infringer could put forth against your company.
Fifth, in consideration
of strategic business relationships with the infringing company,
the following issues must be settled: the timing for an offensive,
other commercial conditions (e.g., payment and grant-back clauses,
the last stance line, the limit against assignment, and the progression
methods for negotiation.)
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(6)
Negotiation
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Commonly, the offensive
begins by sending a warning letter (cease-and-desist letter) to
the infringing party. However, before completion of this step, a
face-to-face meeting without your counterpart should take place.
Negotiation by correspondence may take undue time, and also may
lead to difficulties in determining a genuine intent of your counterpart
during the discussion for complex technical issues and final terms
for settlement.
The negotiation, starting
with a transmission of a warning letter and a first response letter
of non-infringement and patent invalidity from the infringing party,
enters the core phase of discussion over technology at issue and
calculation of the settlement amount (damages for compensation),
and ends with the assignment acceptable to both parties.
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(7)
Agreement
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After reaching a general
agreement based on negotiation, there is the step for drafting the
agreement contract. In actuality, this process can be seen as part
of negotiation. There is a tug of war for the details. If mistakes
are made here, the agreement reached with great difficulty may disintegrate.
The negotiation phase ends when the two parties sign the agreement
contract.
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(8)
Litigation, etc.
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| When a final
agreement cannot be reached, without other commercial issues, the
litigation may be inevitable upon procurement of budget for litigation.
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| The basic
flow for negotiation has been outlined above, but this step-by-step
process may not proceed linearly but may proceed parallelly as well.
Also, there may be irregular cases in which parties enter into negotiation
without strategic plans, or in which parties proceed to litigation
without substantive negotiation.. |
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