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ABSTRACT

This paper covers the issue of using a company’s Intellectual Property (IP) legal team or “IP Group” to deal with “cheaters”. It offers solutions for this problem from the viewpoint of the IP Group.

The IP Group is a specialized legally directed department dedicated to supporting an enterprise’s Intellectual Property matters. We will explain how to put together an IP group and focus their efforts on areas that provide the most benefit.

IP programs can work both ways, where the company acts as either a defendant or plaintiff.  This paper involves only the plaintiff situation, where the IP Group deals with infringers, not when a competitor asserts an infringement claim against the company.

This information is useful for any enterprise who has experienced an unplanned diversion of resources to deal with an IP concern.

It is also useful for Legal Services firms when offering added IP protection options to their clients.

INTRODUCTION

Most people are aware of the accusations and court battles that ensue when “knockoffs” show up on the market. These disputes can occur because of infringements against a company’s artistic creations, products, services, trade secrets, and other novel ideas.

Every company faces competition; it is often relentless. Competition in business is a fact.  It affects profitability and even the very existence of most enterprises.  In an ideal world, companies beat the competition by outselling rivals in the marketplace.

But sometimes, a competitor gains market advantage unfairly.  They choose to steal confidential information, create product knockoffs, copy documentation, duplicate art forms, or sell off critical know-how data.

Of course, there are legal remedies available to address unfair business practices.  But the burden of proof when seeking that remedy usually rests solely on the damaged party.

Providing this proof is no trivial undertaking.  Unfortunately, this is as issue that today’s companies must address, or face continued lost sales and business opportunities to cheaters.

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IP INFRINGEMENT

Those enterprises who have few or no programs in place to address IP infringement are easy targets for unscrupulous actors. To make matters worse, IP issues often arrive by surprise.

Things are going well until a vexing IP issue adds a new bump in the road.

Like having insurance coverage, having a way to deal with this issue is essential.  Further, it is unfortunate that this is one of those issues that one must experience firsthand to really appreciate (and respect).

The problem for those who have had (or know of) a bad experience either with a cheater or claimant is getting an IP preparedness program started. Then making it a permanent part of operations.

EXECUTING AN IP PROGRAM

Adopting and executing an IP protection program requires a combination of resource allocations and ongoing programs to keep cheaters in check.  Applying a program that executes this, even at a basic level, is “a given” for most enterprises, especially those who market products with some degree of technical content.

Below are the basics of how this process works in a typical IP program:

Assertions

When asserting an IP infringement claim, the first order of business is for the IP owner to put the infringing party on notice.  This must show the “areas of infringement” to the infringing party.  It is the first step in an IP case and puts the infringing party on notice; the repartee begins.

This notice points out the exact parts of a product or service offering that infringes.  The company then reviews the infringing party’s response (if there is one initially) to support the best action that is necessary to recover damages.

Defenses

Please note that this can work the other way too. In this case, a company receives notice from someone concerning an infringement on another party’s IP. It is not wise to ignore these claims and a prompt response is the first order of business. As with assertions, this is when the repartee begins.

There are a variety of possible responses to these claims. It is up to the company to decide the best course of action then to execute it. As with many legal matters, the path forward does not always continue predictably.

However, this paper is about assertions, not defenses. Using an IP Group to develop and execute defense strategies is a separate topic.

ALLOCATING RESOURCES

To substantiate infringement as plaintiff, a company’s IP Group, individual inventor, creative department, or publishing group must provide evidence related to the matter.

Infringement demands must clearly show the infringing material, as identified with the company that is Marketing it, by transmitting a submittal that shows the specific infringing product/service elements.

Unfortunately, the evidence-gathering process is often time consuming and requires staff members (sometimes in significant numbers) to drop what they’re doing to dig up the “goods” by scouring the offending company’s offerings.

This activity is often “knee-jerk” in nature and certainly not planned or expected. In addition, all the panic can occur long after someone notices negatively trending sales, raising the issue’s priority to the top level.

To correct this situation, the IP Group must move the discovery of unfair business practices by competitors to a much earlier point in the Marketing cycle to give time for people to work it into their schedules.

This will also allow for extra time if the company stumbles on unexpected revelations while conducting research.

FINDING COPYCATS

An example of an ideal discovery situation is when a competitor introduces a new product at a trade show and a team member reports the details. The IP Group then puts the infringing company on notice.

Most competitors in this situation make changes when put on early notice because they haven’t yet set up the product in their sales channel. Then, the investment needed to manage the infringement is at a reasonable level.  In this case, legal action is not normally necessary to bring the infringing activity to a halt.

Most companies that are well along in integrating IP into their Corporate Governance operations have at least two processes in place.  One is where the IP Group routinely conducts, with guidance from Marketing, a periodic check of new products and service offering activities of competitors (joining a competitor’s mailing list is basic to this).

Another is to check the sales Win-Loss reports using a process described in our white paper “Sales Win-Loss Reporting, Considerations for Intellectual Property”. In this paper, I describe a technique that reports the reasons for losses to competitors; one of these reports reviews copycats.

Once checks of this type become routine, the IP Group’s response to unfair business practices in the form of knockoffs, copies, names, etc. becomes more efficient.  Keeping this process in force will lead to a reduction in legal costs because of its proactive nature.

INFRINGERS

During negotiation with a competitor’s IP staff, it is a relatively simple matter to convert the raw infringement information noted while reporting the Hits into a more presentable form for the IP Group to illustrate during discussions.

One way to do this is to simplify the data using a Power Point, Acrobat, or other presentation system.  Thus, it is easier to communicate specifically which product/service hold areas of concern to the infringing party.

Once the IP Group names the infringing product(s) or service(s), it is a straightforward process to extrapolate the information into product sales data for the subject areas.  The team then records the infringements as associated damages incurred and issues a report for that.

Because the study of a competitor’s product line is an ongoing effort, it may be an attractive possibility to accumulate the data over a period before putting competitors on notice.

By recording the data and logging the potential damages, the IP Group builds a case until it reaches a predetermined threshold.  However, as the notices of infringement are issued, the IP Group starts them according to statutory requirements, or regulatory restrictions will dilute them.

Why fire an IP case at the competition if it has minimal recovery potential?  Just wait, as an infringing company offers more products over time, the case will become stronger.  However, the team must adhere to legal requirements so as not to exceed time limitations on proper notification of infringers to obtain full damages.

Of course, this includes considering that the lifetime limitations for a patent or a copyright remain in force. As a result, executing prompt infringement enforcement actions is essential.

COMPETITIVE RESEARCH

Although not routine in standard business practices, if an IP Group obtains a steady flow of competitive information, there may be areas noted where the company’s product line is falling behind its peers.

Another notable situation may appear when a competitor accompanies a new product release with a flurry of novel patent activity.  It is imperative that the IP legal group inform management of these situations.

Ultimately, it is up to the company to take the proper action.  If the product or service evolution of a competitor signals a competitive threat in the future, the sooner the company acts upon this information, the better.

Always keep Marketing in the loop so that they get the “IP angle” of what the competition is doing with their technology.  This allows them to make strategic changes as necessary to address the competitive risk.

Of course, databases get outdated, and it is also the IP Group’s responsibility to purge out information that applies to expired patents or products that a competitor is no longer selling.  This maintenance activity is especially important, not only to cut wasted enforcement effort, but also to address a fact of business that potential damages vary over time.

Once a product or service is no longer on the market, sales begin to decline rapidly, and so do potential damages.  Deciding to “just leave it alone” is not uncommon, especially with high technology products that undergo rapid evolutionary changes.

This acknowledgement of the fleeting nature of the maximum sales return of product lines can also affect the scope of IP protection that the IP Group is pursuing.  The IP Group must adjust its focus to adapt to these trends.

TRANSITIONAL PRODUCTS

There will be situations where a market window only lasts 2 years. Consequently, there may be no justification for filing a patent.  But trademark and copyright protection remain essential. This “short life” situation often occurs during a time of transitional technologies.

For example, your company has decided to replace its existing networking product with a newer one, but 20 large customers want to continue running their legacy systems. They are fine continuing to work with small incremental improvements for a time.

To support this, your company has decided to give the improved legacy products special trademark names and copyrighted documentation. Actions such as this are common. They create a “transitional” bridge between two generations of products.

There will be limited IP opportunities for bridge products. But once the older platform is fully obsolete, your company will no longer need to support the transitional technology.

Consequently, always control your investment in IP for bridged products. But you should continue to invest in the IP to protect the newest platform.

Sometimes market feedback shows that a market window is about to close sooner. This is often clear when a low revenue product is experiencing a disproportionately high level of R&D.

At the same time, there may be more requests for patent protection to cover enhancements. A decision is then necessary to retire the product. Use risk analysis methods to support the timing of these changes.

It is a good practice for the IP legal group to query management occasionally about continued high levels of IP investment in products that are no longer competitive. Only apply limited resources where they will provide the maximum benefit.

PROCESS FOCUS

Below is a diagram of the process areas that take part in coordinating IP projects and creating IP protection for transitional products. The information previously covered involves active participation in the areas shown on the diagram.

Of course, if IP issues expand enough to require the participation of more groups, the process interactions will increase accordingly.

• Sales & Marketing
• Corporate Governance
• Customers
• Competitors
• IP Legal

CONCLUSION

It is important to strengthen your internal capabilities to track cheaters who are infringing on your Intellectual Property. This is not something to try to implement after the competition has gained a foothold by stealing your best ideas.

Even if you have a small budget, work IP policies into your corporate business planning. Start out by asking sales and marketing if they know of any competitors who may be stealing ideas.

Once you have set up a program to manage IP issues, at least there will be someone assigned to address these issues when they happen. Size the capability as needed. Be able to act both defensively and offensively as needed.

Stay up with the competition. Even the IP Group should understand what they are up to. Be aggressive putting them on notice when infringement occurs. Monitor their compliance and take more steps as needed.

Be prepared to process infringement demands from both competitors and inventors. These people will not go away, you must respond to them with meaningful content that specifically counters their demands.

It is a wise marketing move to create transitional products to bridge the gap between two major product generations. However, it is important for you to carefully consider where to invest IP resources for the bridge products that you create.

Have specific goals in mind when retiring old products. Gather as much market performance information as possible to justify changes. Then control your investment in IP accordingly.