What happens when a UK company infringes a US patent?


12

I'm a one man startup with a high price, low volume, niche software product that I'm considering selling in the US. However, I'm concerned that it may infringe a US patent without me knowing because US software patents seem to be granted for the most obvious and trivial ideas.

To decide if it's worthwhile persuing, I'd like to get a feel for the risks of being sued, what happens if I am sued, and what the potential costs could be if I was sued. I've got a few specific questions:

  1. What is the process for a US company to sue a UK company for patent infringement?
  2. I don't think I could afford a defence; I've heard it costs at least 7 figures. Do I have to defend myself? Do I have to hire a lawyer? Do I have to travel to the US? Is it acceptable to do nothing and wait and see what the US court decides?
  3. If I do everything to keep costs to a minimum e.g., wait for the verdict and not hire lawyers. How much money will it cost my company? Would I just need to pay the US patent owner the profits on my sales to the US? If so, I could accept that risk.
  4. How likely is it that if I did inadvertently infringe a US patent I would get sued?
    I'm a one man company, and I don't expect US sales to be more than $200K per year at the very most.

Thank you.

Legal Patent

asked Mar 14 '11 at 18:14
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Steven F
66 points

2 Answers


4

Nothing, if it's a software patent you simply ignore the threats, let them take you to court in the US, don't turn up, lose by default and carry on regardless.

We're in exactly the same position and ignore the ridiculous crap that the US confuses for inventions. There are cases of UK companies doing exactly this, nothing they can do to you if you have no US presence or assets.

Only one downside if wanted to sell your company or technology to a US company you'd have a problem.

But just tell to the US company this when they come to sue, they'll probably realize it's pointless.

That said, with sales like that they're not likely to bother you. The majority of US patents are defensive in case someone comes after them, a few are for patent trolling. The patent trolls want you in have big cash in the bank to bother.

Another tactic, check if fully legal before doing so, is to keep the copyright to the software to yourself and license it to your company. If your company goes under, it's basically worthless because it owns nothing.

answered Mar 15 '11 at 03:08
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David Benson
2,166 points
  • Very many thanks for providing your first-hand experience of dealing with this. Much appreciated. – Steven F 8 years ago
  • Yes, I was wondering what would happen if my company went bankrupt. Seems like my creditors would get all my software so I will look at the copyright idea. Thanks again! – Steven F 8 years ago
  • What about having a reseller in US, what happens then? Any idea? – The Dictator 8 years ago
  • The reseller gets added as an additional party to the lawsuit. Simple. – K0d3g3ar 5 years ago

1

Standard waiver: I'm not an attorney. Just a guy with 35 yrs of software development and business management experience in many countries.

The answer here is pretty simple. If you (or your entity) does business in the USA, then you probably won't prevail in a lawsuit. The cost of defence of a patent troll is huge (read > $1 million) and not likely to be afforded by a startup. And the reality is that suing you in a US court for a patent violation is a relatively simple process for the patent troll. Its a labor effort on their part to litigate, but since most trolls are founded by or staffed by attorneys, they are already paying for the cost of that labor anyway.

As for you owning your IP and licensing it, then you become the target (along with the license holder). Its pretty simple to add additional parties to a lawsuit like this, so that's not much protection for you.

The reality, however, is that you have to focus not so much on how you can defend from the troll but how unattractive you are to the troll. If you are a US entity, then you are attractive. Once they prevail in the lawsuit, they get a judgment. The judgment can be used globally by just transferring it to the country that you are in. Its a relatively simple and painless process if you are in a country that has reciprocal trade agreements with the US that allows for this. I'm sure the UK does. I know Australia does.

So let's now assume that they win a judgment and the judgment is transferred to your region. They have to hire local representatives (at their cost and after the judgment is awarded - e.g. they would have to open another legal case against you to try and recover these costs, and there isn't any guarantee that would happen) to collect. So are you worth collecting on? That's going to require some financial forensics on you, etc. As you can see its not the getting of the judgment that is difficult. Its collecting on it.

If you want to make this EVEN more unattractive, then register the IP in an entity in a region that has no reciprocal trade agreements that allow for a simple transfer of the judgment. This means that the troll then has to go to that region and try and file their infringement case in that region that is less likely to be partial to their case. More legal fees, more difficulty, more doubt....

Result: If you make yourself as unattractive to a troll as possible, why would they bother trying to go after you if the next guy on the list is "low hanging fruit" and more likely to collect from. Ultimately this is about money to them - not about justice.

answered Jan 1 '15 at 14:49
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K0d3g3ar
41 points

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