If an individual or corporation infringes on someone’s patented invention, there is no patent police force to pursue justice. Instead, the inventor must dip into their own pockets – which might not be very deep – to fight this infringement action. This type of patent usurpation even has a name – efficient infringement.
But there is a way to access help. Litigation funding markets can be tapped and have proven to be effective in derailing efficient infringement patent actions.
From the infringing companies’ or individuals’ standpoints, it is cheaper to move in on a patent than it would be to simply play fair and pay licensing fees. They know patent owners cannot afford protracted legal battles to protect their products or logos.
The way the current system is set up, should the patent owner sue, the efficient infringer only has to deliver a “reasonable royalty,” i.e., the same sum they would have paid to legally license the patented product. With most lawsuits, that’s the extent of the matter. Even when the patent owner prevails, they may be out tens of thousands in legal fees and court costs.
Punitive damages that triple what defendants must pay to winning plaintiffs only apply if the courts find the defendants willfully infringed on the patents they used without paying licensing fees. Unfortunately, the standards of proof are high, and these damages are rarely awarded in patent cases.
Worst of all, the usurpers can seek to invalidate the original patents through inter-partes reviews.
All Is Not Lost
Litigation funders have a trove of financial and legal resources to offer patent owners who are victims of efficient infringement. Intellectual property cases are a popular choice for these legal professionals to back with their funding and knowledge of the intricacies of patent laws.
Two academic institutions, the California Institute of Technology and Columbia University, used litigation funding in recent patent infringement cases. Both won huge settlements – and Columbia still has a treble damage claim pending that could swell its $150 million award considerably.
Efficient infringement remains a problem even with litigation funding available. Closely examine all your legal options when faced with usurpation of your patented idea or product.