Notice to Competitor of Application

Introduction:

Unless you expressly opt out, your non-provisional application will be published 18 months after the application filing date. Note if your non-provisional application claims priority to a prior provisional application, the 18 months are calculated from the filing date of the provisional application.  Thus, your application can be published as soon as 6 months after filing. It may be advantageous to send notice to competitor(s) of the publication of your pending application.

Also, having a pending patent application does not empower you to stop a person from infringing the invention claimed in your pending application.  Once your pending application is published, however, you are able to put a competitor/possible infringer on notice of the existence of your pending application and start the clock for possible assessment of royalties for infringement. 

Notice of Published Patent Application:

US law (35 U.S.C. Section 154(d)) permits the patent applicant to put a possible infringer on notice of the pending application upon the publication of the application.  The notice does more, however.  Notice can both inform and initiate the start of a clock that allows you (patent applicant) to collect “reasonable royalties” from infringement calculated from the date of your notice letter.

Reasonable Royalties

The collection of royalties is contingent upon several important factors, however.  It is contingent upon a patent being awarded to you based upon the application.  Also at least one claim of the issued patent must be substantially the same as the claim contained in the published application.  Further, there must be a judicial finding that this claim is being infringed by the competitor/infringer’s actions.  

These are not trivial conditions.  Obviously there has to be the initiation and conclusion of a patent infringement lawsuit.  As you probably recognize, patent infringement litigation is expensive.

However, reasonable royalties have been determined by the courts not to be capped at the minimum costs for removing the infringing element or the costs to “design around” the patent.  See the court decisions of Parker-Hannifin Corp. v. Champion Labs, Inc., (2008) and Georgia Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970)

Creating a Leverage:

However, sending the notice letter and the potential of royalty interest liability retroactively applied from the date of the notice, does create leverage over the competitor/infringer.  (Damages for patent infringement accrue only upon the infringer having actual notice of the infringement.  Thus it beneficial to place the infringer on notice at the earliest opportunity.)

This leverage is created for the price of a letter (attaching a copy of the published application).  You don’t have to identify which claim of the patent application is being infringed.  It is not necessary to assert that the recipient of the letter is actually infringing the subject matter of the pending application.  Merely advise the recipient of the existence of the pending application and that there is a possibility that royalties may be assessed by the court retroactive to the date of the letter if the court determines that recipient’s current conduct is an infringement of this later issued patent.  

It is not necessary to threaten litigation.  In fact, I would discourage any threat of action.  Merely advise the recipient of the existence of the pending application that, upon issue of the patent, cause the recipient to be infringing.  You can advise that there may be (in addition to the assessment of “reasonable royalties) an opportunity to license the technology subject of the published application.  Obviously the license would require payment of agreed royalties.  

Note also that I have elsewhere in this blog warned of an infringer having the ability to petition for re-examination of your patent with the first 9 months of award.  Challenges to our Patent

Copyright David McEwing, 2019