Sunday, June 7, 2009

Possible Outcomes to Your Patent Suit

There are several possible outcomes to a patent suit (or, more formally and correctly, a patent infringement lawsuit).

Victory at Trial: It is possible that your case will go to trial, and you will be victorious. In a patent suit, the jury will have to make three decisions:

1. Is the patent valid and enforceable?
2. Did the defendant actually did infringe your patent?
3. If the defendant did, what damages are to be awarded?

The good news is that a jury verdict is a satisfying vindication of your claim of patent infringement. The bad news is that the losing defendant can file an appeal, and that can delay payment of any award. The defendant may succeed in getting the original verdict overturned, in which case the whole process essentially starts all over again! As you will learn, victory after a trial is an unlikely outcome as only a small percentage of patent infringement suits actually go to trial.

Defeat at Trial: It is also possible that your patent suit will go to trial and you will lose. The jury will rule that the patent was invalid or unenforceable, or that defendant did NOT infringe your patent, so the defendant owes you nothing! You could appeal the verdict, but you cannot appeal a jury verdict just because you did not like the outcome of the trial. Your attorney must identify an error made by the judge, and convince an appellate court that the error was serious enough that it affected the outcome of the trial. Appealing a jury verdict, and then re-trying the case, will be VERY expensive and will take years. This, however, is also an unlikely outcome as very few patent infringement suits actually go to trial.

Dismissal: It is possible that the judge may dismiss your patent infringement claim. This is non common, but it is possible that the defendant's attorney will convince the judge that you essentially do not have a case and you are wasting the court's time.

Abandon the Suit: It is also possible that you and your attorney will decide to abandon your claim. You may reach the conclusion that you will lose at trial, or you may run out of money if you are funding the legislation yourself, and you have no alternative but to walk away because you cannot put any more money into the case.

Out-of-Court Settlement: The most likely outcome of most types of civil litigation is an out-of-court settlement. The plaintiff and defendant and their attorneys meet and hash out a settlement that everyone can live with. When you go to trial, either side can win big or lose big, and that's risky and scary. So the most likely outcome, if you and your attorney have been aggressively prosecuting your claim, is that at some point the parties will agree to meet and discuss a settlement.

The problem, however, is that this typically may occur later than sooner. Both sides will hang tough for the first few months, hoping to wear down the other side. The defendant will first try to get the suit dismissed (that's the optimal outcome for the alleged infringer), and failing that, try to wear down the plaintiff and force him to abandon his claim. While both sides will play tough, confident of a favorable jury verdict, neither side really wants to go to trial. As a result, an out-of-court settlement may not be reached until just a few weeks or days before the trial begins, and that can be months or years into the legal process. Some out-of-court agreements are actually reached during the trial!

The advantage of an out-of-court settlement is that there are no surprises, and while a jury verdict and award is a matter of public record, an out-of-court settlement is a private agreement between the parties. Also, unlike a jury verdict and award, an out-of-court settlement cannot be appealed. It is a final agreement.

Binding Arbitration: A variation on an out-of-court settlement is binding arbitration. Both sides agree they do not want to go to trial, but they cannot reach a settlement, so they turn their dispute over to a third party, and the third party comes up with a settlement that is binding on both parties. The American Arbitration Association was set up many years ago to provide just such services. Since binding arbitration is also an out-of-court settlement, the results of the arbitration are known only to the parties to the lawsuit.

Alexander Poltorak is a business consultant who writes about intellectual property, patent infringement lawsuit, product licensing and other business and innovation-related topics.

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