Lawsuits are very expensive endeavors. Someone who files a lawsuit usually at least has the hope of recovering money at the end. However, for the person being sued there often is no monetary recovery to look forward to. In most cases each side is responsible for paying their own attorney fees, regardless of who wins. So a “victorious” defendant could still end up losing all of the money it cost him to defend himself. This can be an enormous amount of money, particularly when it comes to patent infringement lawsuits.
To help prevent people from being the victims of frivolous lawsuits, where they must spend money defending themselves against claims that have no merit, the federal courts have adopted a rule against such lawsuits. That rule requires every person who files a lawsuit to certify that, to the best of their knowledge after a reasonable inquiry, there is legal and factual support for the lawsuit. If it turns out that the lawsuit does not have legal and factual support, and there was no reasonable inquiry, then sanctions may be imposed. Such sanctions may include an order to pay the other side’s reasonable attorney fees.
When it comes to patent infringement lawsuits, which are filed in federal court, it is generally required that the patent owner have an infringement analysis performed prior to filing a lawsuit. The infringement analysis involves having a patent professional interpret the patent claim elements and then determine whether each and every element is present in the accused product. In general, this requires that there be an examination of an actual accused product sufficient to support a reasonable conclusion of infringement. Patent owners who have failed to conduct a sufficient pre-filing analysis have been sanctioned upon losing a lawsuit, and required to pay the other side’s attorney’s fees.
The expense of conducting a pre-filing investigation varies greatly with the particular patent and accused product involved. If the accused product is a very simple device that can be easily acquired by the patent owner, and infringement can be determined by a simple examination of the product, then the expense of the pre-filing investigation may be low.
On the other hand, if the accused product cannot be easily acquired by the patent owner, and/or infringement cannot be determined by a simple examination of the product, but requires extensive reverse engineering and the input of experts, then the expense of a pre-filing investigation can be very expensive.
Accordingly, a patent owner should be aware of the fact that he cannot simply file a patent infringement lawsuit because he thinks there is a “possibility” of infringement. A thorough infringement analysis based upon facts, not speculation, which shows that all elements of a patent claim are likely present in an accused product is generally needed.
It is important to note that the patent owner should treat any pre-filing investigation as confidential and privileged, and work with a competent patent professional in performing the investigation. A patent owner should also avoid making premature threats or assertions of infringement against a competitor. Such threats or assertions could allow a competitor to file a declaratory judgment lawsuit against the patent owner seeking a declaration that the competitor does not infringe and/or the patent claims are invalid and unenforceable.