Intellectual property is an intangible asset, such as an innovation, idea, or concept, that the owner protects with a patent. Inventors who have created a new product or design use a patent to secure the innovative concept for a predetermined period, and may also sell the patent to another entity. It is in the best interest of a business to not only make sure that it owns the IP it uses, but to also take steps to legally safeguard its ownership interest in it.
Unfortunately, copyright infringement, especially in software, electronics, telecommunications and many other sectors, occurs frequently, and for high-tech industries in Silicon Valley, IP theft can not only be costly, it can also damage the company’s reputation. Whether the theft occurred intentionally or not, the price the company may pay for violating a patent is high. Understanding the complexities of patent law is the first step toward ensuring that the company’s IP interests are protected.
Avoiding patent infringement
There are many ways in which a business can inadvertently steal IP. If the company hires an outside source to create written content, coding or a new innovation, the company does not automatically own rights to the IP once the work is completed. Without a contract that explicitly states the company’s ownership interest in the product, the business will be liable for its use if it does not mention the creator.
Hiring a new employee who is using protected IP from a previous employer in their work can result in a patent violation as well. During onboarding it is critical that the company inform new hires that they cannot use IP from another company, and it is also advisable that the employment agreement includes a provision to that effect. The business must have explicit consent and the appropriate licenses to use a patented product.
The consequences of patent infringement
When a patent infringement occurs, the patent owner may bring an action within six years of the violation. Beyond this period, it becomes time-barred, which ratifies the infringement. Because IP is governed by federal law, a lawsuit will occur in federal district court, during which the patent holder may sue the other party to stop the unauthorized use and, in addition, to seek a monetary award for damages. The patent holder must prove with a preponderance of the evidence that the defendant infringed the patent.
Common defenses to a patent infringement lawsuit include allegations that the patent is invalid and that the patent holder submitted fraudulent information to the U.S. Patent and Trademark Office. Another defense is that the patent does not meet the requirements of novelty and non-obviousness, and so is invalid.