In defense of offense...

A couple of months ago I came across Mike Dillon’s blog – The Legal Thing – covering all things legal from the perspective of General Counsel at Sun. 

As GC for Sun, Mike’s daily routine must entail a significant amount of attention to intellectual property issues and his blog plows a lot of ground concerning this topic.  The posts are informative – albeit they have a “big corporate shine” to them, much to the dismay of a lot of “anonymous commenters”.   If you read many patent blogs, you can probably guess the identities of many of these “anonymous commenters” – but they do make for an interesting peek at the more reactionary component of our niche of the legal world. 

That is a lot of setup for a recent post of Mike’s dealing with how Sun defends against patent “troll” lawsuits – namely, a good offense.

I recently shared dinner with a few other GCs of local technology companies. It was a nice evening in which we were able to relax and share insights (and commiserate) about topics of common interest. During the course of our meal while we were discussing rising legal costs, one of my table mates made a statement that I found somewhat bothersome. He said that when faced with patent "troll" litigation, he knows he is going to pay something to get rid of the lawsuit and so he economizes on the use of defense counsel. After all, the thinking goes, if your intent is to settle a case, why spend money on a strong defense?

His view is completely contrary to how we think about this problem at Sun. It's also symptomatic of the way many companies view this issue as a quarterly "cost of doing business" without considering the long term consequences of settlement both for individual companies and our industry.

Before going further, let me state that we respect the intellectual rights of third parties. When a third party claim has been clear and the terms reasonable, we have entered into licenses. However, those situations are easily distinguished from the cases that make up almost all of our present docket of patent litigation. These lawsuits have usually been filed with no advance notice, by plaintiffs that don't commercialize their patents (i.e. create and sell products) and in venues considered favorable to them. It's also almost always the case that these plaintiffs have done little or no investigation to ascertain whether our products infringe prior to filing their lawsuit.

I think the approach that Mike outlines is a good example of how to frame decisions when confronted with a freedom to operate issue – whether the FTO issue is brought to your attention through an offer to license, or a cease and desist, or a patent search, or even when you have been served with a complaint — i.e., “How do we play offense in this particular case or instance?”

As Mike mentions, oftentimes it makes sense strategically and economically to simply license the patent – especially if the license allows you to preclude other competitors in the marketplace. 

On the other hand, a careful analysis may lead to a determination that a license is unworkable – e.g., that the patent is invalid or because the license fee does not make economic sense.  In such a circumstance, a zealous defense against an accusation of infringement may be in order – including the invalidation of the asserted claims.

In either case – taking a license or defending zealously – the accused infringer is approaching the case in an active/offensive manner and judging each case on its relative merits.  Defaulting into paying to settle every case is no better than defaulting into aggresively defending every case. 

The best defense to a patent infringement lawsuit?

Early analysis of the case and its relative merits (including the type of entity bringing the lawsuit).  As each case and situation is unique, arbitrary “blanket rules” – while being easy to implement – don’t necessarily increase value to the corporation.  Licensing everything or defending against everything is not a strategy – it is simply an invitation for disaster.

In any event, go on over and read Mike’s blog – I can guarantee that you will learn something.

The best offense...is a good defense.: the legal thing... by Mike Dillon.