Cease and Desist Letters in Patent Infringement
Once a patent application has been issued and granted, the patent owner has exclusive ownership of the patent, protecting him from patent infringement. He has the right to take legal action against infringers for selling, manufacturing, or using his patent invention. The patentee can also send a cease and desist letter to the the accused infringer, warning him to stop using the patent or buy the patent license rights.
What is the Purpose of Sending a Cease and Desist Letter?
While sending a cease and desist letter is not a mandatory requirement, it is one of the first actions taken by the patent owner when a patent is infringed. The letter can either be written by the patent owner or his attorney and serves as a preliminary notice to the infringer, informing him of the patent infringement. The letter can:
- Ask the infringer to stop the activity (selling, manufacturing, importing)
- Send warning of legal action
- Offer a license for the patent at a fee
The cease and desist letter does not have any legal binding when sent but is used as evidence during litigation if the case proceeds towards legal action.
Declaratory Judgement Action
The alleged infringer can opt to file a declaratory judgment action in response to a cease and desist letter. DJ action is a preemptive lawsuit filed by accused infringers claiming that the patent in question is not valid or infringed. This also allows the accused infringer to take the initial steps toward patent litigation without having to wait for the patentee to file a lawsuit or send further legal notices. The DJ action asks the court to resolve the dispute between the patentee and the alleged infringer.
However, a DJ Action may not always work in favor of the patent owner. It may be filed in a different state, burdening the patentee with the risk of litigation in the alleged infringer’s hometown while adding to the litigation costs in another state.
In many instances, the DJ Action is undesirable for the patent.
Patentees can protect against DJ actions by drafting the cease and desist letter with the correct wording to incite the responding reply to their advantage. If you don’t want to move towards an expensive court case and want to come to a mutual understanding or agreement with the alleged infringer, then the wording of a cease and desist letter should be drafted accordingly. Whereas, if you want damages owned or take the alleged infringer to the court, the wording must be indicative of that. Therefore, the cease and desist letter is essential to get a favorable outcome of the notice. It must be written by someone who’s familiar with patent law or is a qualified patent attorney who can guide you accordingly.
The following case details show how a cease and desist letter ended in a DJ Action and an ensuing court case.
Acceleron sent a notice letter to HP, informing them of their patent ownership and requesting further communication on the matter without filing for a DJ Action. HP sent a response letter showing interest in discussing the matter further and asking Acceleron not to file any further notice for 120 days and in return HP will not file the DC action. In response, Acceleron sent another letter stating that HD did not have any reason to file a declaratory judgment action and that his letter was adequate protection against legal action. Four days later, HP filed a DC action in answer to which Acceleron filed for case dismissal based on lack of subject matter jurisdiction. The District Court granted Acceleron’s motion, stating that the content of the letters was too speculative and did not have any grounds for an infringement case.
The Federal Court reversed the District Court examination after reviewing the correspondence between the two parties. The court held that the DJ action for a lawsuit is valid. They further explained their decision, stating that Acceleron is a patent-holding company and generated revenue from licenses and ownership. Therefore, considering the patent ownership and infringement issue and Accerleron’s business model, HP’s DJ action was the correct course of action.
The above case details show that all the factors concerning a potential infringement case must be considered when drafting a cease and desist letter. While the content and wording are vital to getting the desired result, the background, such as the company’s business model, can also affect the Court decision. Even though the letters between the two parties did not have enough grounds for a DJ action, Acceleron’s revenue generation from licensing patents was a valid reason for a DJ action.
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