Question

Your CEO is very concerned about the potential patent suit. He wants the legal team to settle out of court so there is no risk of losing the commercial rights to the offering.

. How would you help the CEO and General Counsel understand whether to settle or litigate? How would you help them decide a dollar amount for a settlement if they go that route?

Answer 1

I would suggest them to litigate first. It is important to fight the battle first instead of being scared of the consequences. A very common mistake that most of them do, while dealing with patent litigation, is formalising arguments too early without looking at the relevant information.

Firstly, it is very important to gather as much information as possible about the patent by looking at claim charts. Because, without this information, one would miss a differentiating feature in one's product which could help reduce litigation costs. Also, by doing research on the patent claim and analysing patent citations, one can find ways to invalidate the opposing party’s patent infringement claim.

In case if they decide to settle the infringement case, pre-settlement is the best. Pre-trial settlement compromise is one of the most effective means of avoiding the high cost of litigation, just in case if the party is doubtful that litigation might fail leading to high litigation costs. Therefore, Pre-trial settlement compromises often advisable and include the cessation of the infringing activity, the modification of the design of the product to eliminate infringement, and the monetary compensation for the infringement of the patent.

In such case, the dollar amount for the settlement should start from as low as possible. It should depend on the strength of the other party. Starting from the lower dollar amount to negotiating the amount which is between their bargain and our offer is the best way to finalise the settlement amount.