IP Watchdog: Notice letters and licensing communications are an important part of the U.S. patent system, by Laurie Self
This post originally appeared in IP Watchdog on March 1, 2015.
A strong patent system, which has its roots in Article 1, Section 8 of the U.S. Constitution, is an essential part of America’s economic success, contributing to economic growth, higher income, and more jobs. Strong patent rights incentivize investments in technological innovation. IP- intensive industries account for more than one third of U.S. GDP, and directly or indirectly support approximately 40 million jobs. It is critically important to maintain a strong patent system that promotes innovative enterprises of all sizes.
Notice letters play an important role in the patent system. Indeed, as the Supreme Court has explained, “[p]atents would be of little value if infringers of them could not be notified of the consequences of infringement.” Virtue v. Creamery Package Mfg., Co., 227 U.S. 8, 37-38 (1913).
Patent law encourages patent holders to take reasonable steps to notify others of existing or pending patent rights and their possible infringement. In some instances, federal patent law requires patent holders to send notice letters to accused infringers to preserve their patent enforcement rights and ability to collect damages. Notice letters and licensing communications can also serve the interests of accused infringers. Once a patent holder has made its rights known, the accused infringer can determine whether to cease the allegedly infringing activities, negotiate a license, or decide to continue its activities based on an assessment of non-infringement or invalidity. Moreover, knowledge that new products or products in development may practice the patent or patents of another allows potential infringers an opportunity to design around existing intellectual property while still producing a product that is socially and economically beneficial, or even perhaps improve upon the invention or invent an alternative.
Any demand letter legislation must be careful not to discourage legitimate patent-related communications, which are integral to the functioning of the patent system and the resolution of patent disputes, including possible resolution without resorting to litigation.