By: Matthew Bernstein, Perkins Coie LLP.

THE MAJORITY OF PATENT CASES ARE BROUGHT BY non-practicing entities (NPEs), also called patent trolls or patent assertion entities (PAEs). These parties litigate or license their patents but have no real products or services. NPE Lawsuits are commonly brought against U.S. companies and pose unique challenges. For example, many NPEs are represented on a contingent fee basis, and because NPEs do not have products, a defendant typically cannot level the playing field by asserting its own patents against the NPE. Whether you should litigate aggressively through trial or try to negotiate a quick settlement depends on your view of NPEs and the circumstances of the case.

This article discusses possible ways to respond to an NPE presuit notice letter and complaint, discovery considerations, and how to approach settlement negotiations.

The NPE Assertion

A target company typically learns of an NPE assertion through either a pre-suit notice letter or a complaint. Regardless of the method of notice, you should immediately research:

• The asserted patent
• The NPE
• The court, if applicable

Research the Patent

You should research whether the asserted patent has been the subject of a federal court case or a proceeding before the United States Patent and Trademark Office (USPTO) including:

• Inter partes review (IPR)
• Covered business method patent review (CBM)
• Post-grant review (PGR)
• Ex Parte Reexamination

Prior litigation documents may provide useful insight into the strength and weakness of the patent, as well as indicate a successful defensive strategy against the NPE. The NPE’s history of litigation may also provide some guidance as to how it will approach the current matter. In particular, you should check relevant dockets and proceeding histories for:

• Early dismissals. Dismissals in federal litigation before responsive pleadings suggest the NPE is likely looking for a quick, nuisance value settlement.
• Dispositive motions. Motions to dismiss and summary judgment motions may indicate potential arguments relevant in the current matter.
• Claim construction filings. Claim construction filings can provide insight into the scope of the asserted patent (i.e., how broadly it is being applied).
• Invalidity contentions. Obtaining invalidity contentions from earlier proceedings, and the underlying prior art, may jump-start your invalidity case.
• Expert reports. Knowing that the previous case reached the expert report stage means that the NPE is willing to litigate instead of just looking for a quick settlement. The existence of expert reports means that defenses were investigated to their final or near final form, and obtaining these reports through the discovery process could jump-start or at least help your case.
• Other accused infringers. Defendants in other pending cases who share a common interest with your client (defeating the NPE) may be willing to pool resources and share the costs of the defense. See Joint Defense Groups later in this article.

To read the full practice note in Lexis Practice Advisor, follow this link

Matthew Bernstein is the managing partner of Perkins Coie's San Diego Office, co-managing partner of the Taipei office, and a partner in the firm's Patent Litigation Group. His practice focuses on patent litigation and patent trial work. The views and opinions set forth herein are the personal views or opinions of the authors; they do not necessarily reflect the views or opinions of the law firm with which they are associated.