FOCUS ON: PROBIOTIC PATENTS
PART II: STEPS TO AVOID PROBIOTIC PATENT INRINGEMENT
by Ivan Wasserman, IPA Counsel
In Part 1, we discussed patents in the probiotic industry, focusing on the patent procurement side. However, whether your company is pursuing patent protection of your own or not, it is important to be aware of the other side: patent infringement. Naturally, you would prefer to avoid defending against such a suit. Cost of defense can run into the millions even if you win, and if you lose, the damages potential can be immense. There are, however, steps you can take to reduce your likelihood of facing such a suit. While putting these steps into place may cost some money up-front, they can potentially save significant expense later as well as allowing you to keep your focus on your probiotics business instead of defending against an infringement suit.
One action your company can take is to obtain freedom to operate (or FTO) opinions when you release new products. A FTO opinion involves having a patent search performed to find any patents of which your new product might risk infringing. An experienced patent attorney will then review the results and come to an opinion as to your risk of infringement relative to those patents. Knowledge of the patent landscape and your relative risk can help you avoid a later patent infringement suit; indeed, in some cases your company may decide to scrap a project entirely because the risk is too great.
A written opinion of outside counsel may also come in handy later should you go forward with the project and are then sued by the owner of one of those patents. A well-reasoned opinion of outside counsel can be used to show that any infringement was not willful. This can be important, because “willful infringement” can put a company on the hook for punitive-like damage awards. Because of the chance that the opinion will be disclosed in litigation at a later time, you and your outside counsel should consider all communications in relation to the opinion as potentially discoverable in litigation, even though they would ordinarily be covered by the attorney-client privilege. Thus, when discussing any opinion-related material with your attorney, consider doing so by phone.
If your company has multiple products in the same area, or you plan expansion into a certain subject matter area, a “landscape” search might also be useful. This type of search does not focus specifically on one product infringing a patent or not, but rather is performed more broadly to find patents in the subject matter area that could potentially limit your activities. This may allow you to change courses in your research and development if you find that your planned areas are well-covered by existing patents before you spend too much time and effort in researching that area. While it does not have the same benefit as a full opinion letter does with respect to defending against willful infringement in a lawsuit, it provides information that hopefully helps you avoid the suit, or wasted research dollars, in the first place.
Similarly, your own company employees may be able to do some patent research to determine whether there are patents that present a problem. Again, this does not carry the benefit with respect to defending against willful infringement, but provides useful information in allocating your R&D spend. And be careful what you say in emails about such research, because your internal emails about such a search will almost certainly be discoverable in later litigation should it occur.
You may also consider monitoring competitors’ patents and published pending patent applications, especially if there is a particular competitor you know to be active in patenting in your field. Monitoring the pending applications has an added benefit: while an application is still pending, the patent office allows third parties to submit prior art to the patent examiner within a certain relatively short time frame. If you have prior art on point, a third party submission is a fairly inexpensive way to potentially limit the scope of, or even prevent issuance of, a patent to a competitor. And searches could also be run to find relevant prior art to submit to the examiner.
After a patent is issued, several programs are available through the patent office to challenge patents, but going on offense against a granted patent can be expensive. The least expensive and longest-existing program of the current options is called an ex parte reexamination. This involves sending prior art and essentially a legal brief explaining why that prior art makes the claims of the patent unpatentable. The patent office determines if there is a “substantial new question of patentability” and if so, opens the reexamination. That initial submission is your one and only submission; after that, the reexamination proceeds between an examiner and the patentee, just like regular patent examination. More participative programs are available. Post Grant Review (PGR) is available for a limited period after a patent is issued. PGR allows for challenging a patent on most grounds you could argue in litigation, including prior art grounds but also invalidity arguments under several other statutory requirements. Inter Partes Review (IPR) is available to challenge patents on the basis of prior art. Both PGR and IPR are essentially “mini-litigation” and have an expected budget to match, including expert witnesses and discovery costs. However, PGR and IPR benefit from a lower standard of proof than that applied by the district courts, so your chances of invalidating a patent are likely better in such a proceeding than if you presented the same arguments as a defense in federal court litigation.
Another consideration: what if a product you bought from someone else gets you accused of infringement? Your remedy there will likely be based on your contract with whom you bought that product. Careful attention to the warranties and indemnities in your purchasing contracts may allow you to shift the burden to defend such suits to someone else. There are also insurance policies that can cover patent infringement and shift the defense obligation away from you. If you choose to pursue this route, you will need to give a very careful reading to determine what precisely is covered, what is excluded, and make an informed choice based on the cost-benefit analysis for your particular situation.
In sum, there’s no foolproof way to fully inoculate yourself against a patent infringement suit, but taking some proactive steps during development can reduce your risk to an appropriate level, and allow you to spend your budget on your own products and development instead of legal battles.