Can a Small Company Really Enforce its Patents?

The short answer is “typically yes”, with a number of assumptions and caveats. Most companies take reasonable precautions to avoid infringing patents because the business risks of being found liable for patent infringement are typically not acceptable. In many cases, ownership of patent rights tilts the business aspects of technology in favor of the patent owner.

A granted patent has a presumption of validity at the time the patent is granted. While validity of a patent can be challenged, the burden of proof rests on the party which so challenges validity.

Assuming that the patent is valid, the more common question is whether a small company can bear the costs of the legal process of enforcing its patents. Without question, the cost of engaging in patent litigation is one of the most costly of court processes. While that may seem like an insurmountable obstacle to a small company, it is helpful to remember that both sides bear similar costs – and no company wants to bear any such costs unnecessarily. Thus, the prospect of bearing such costs quite often leads to settlement discussions early in the litigation process. In addition, data show that over 90 percent of all patent litigation cases are settled by the parties, themselves, before the case gets to trial.

Further, the statutes authorize the court to award attorney fees and multiple damages to the patent owner if the defendant’s infringing action is intentional. Thus, the defendant bears more of a financial risk than does the patent owner.
Understandably, where the infringer is much better financed than the patent owner, a David/Goliath situation, the above discussion of financial burden on the infringer may not be helpful as some defendants may employ their greater financial capacity to overwhelm the patent owner.

However, large companies are quite reliant on the goodwill of their customers to maintain the viability of their business. Most companies will not jeopardize their good reputation acting in a manner which appears to the public to be “unfair”. Thus, while some companies will take advantage of their size, my experience over the years shows that most companies, even large companies, respect the patent rights of others.

That said, there are times when there are legitimate questions regarding either the validity of a patent, or whether the accused product or service in fact infringes the patent. In such cases, the patent owner can expect the accused to engage in the patent fight to the fullest extent of their capability.

Thus, before engaging in any patent litigation, the patent owner should conduct, with their patent counsel and any proposed litigation counsel, a thorough review of the strengths and weaknesses of their position, including their legal position, their financial capabilities relative to the financial capabilities of the prospective defendant, and other relevant elements of the resources which will be available to either themselves or the prospective defendant.

Once the review has been conducted, the patent owner, with the advice of his/her counsel, will be in a better position to determine whether the probable rewards of moving forward with litigation outweigh the risks of doing nothing and essentially ceding rights in the patent to the infringer.

The above information is provided for the benefit of general audiences and is believed to be factually accurate. However, the above information is provided to inform and is in no way to be taken as legal advice, applicable to any particular set of circumstances. The reader is specifically advised that any and all specific situations, along with all the relevant details, must be reviewed by a competent attorney.

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