How to Handle Patent Trolls, Trademark Gremlins and

Copyright Ogres
by Martin Medeiros

You read your morning mail. You notice a letter with the operative words
“cease and desist,” “infringement,” or perhaps the more affable “invitation
to license.” You think a “troll” has targeted you.

The pejorative term “patent troll” is often used to describe the sender of the
type of letter described above. However, the term is sometimes used
unfairly, as the letter could be from any one of the following four groups of
organizations, some of whom may have legitimate reasons for contacting
you: (1) attorneys acting on behalf of their client’s interests trying to enforce
intellectual property (“IP”) rights; (2) IP portfolio managers trying to do the
same thing; (3) collection agents with only a vague notion of what IP is and
a very clear understanding of two other things: (a) their contingency fees;
and (b) the anatomy of a shakedown; and (4) confidence men and women
or phishers. If you receive such a letter, you should implement the following
three step decision-making process.

Step 1: Take All Letters Seriously

Typically, two options are exercised by the recipient of the letter. It is

common for the recipient to simply ignore the letter, hoping the sender will
go away. Often this is done because the recipient is too busy and may not
know whether the sender is a real IP holder or operating on another’s
confidence. Alternatively, the recipient may choose to negotiate a deal with
the sender, take a license at the lowest possible rate, and just consider it a
cost of doing business. Both approaches are flawed.

First, take all such letters seriously. Consider every action you take from the
time you receive the letter to be evidence that may be used against you in
subsequent negotiation or litigation. For this reason, it could be a mistake to
try to “go it alone.” Your first steps should be to gather as many facts as
you can and to engage an experienced intellectual property attorney. If you
work for a large or publicly traded company, your employer may have highly
experienced “licensing managers” who can help you. The company’s legal
department may have delegated certain duties to the licensing managers,
such as generating demand letters to protect the company’s IP and
responding to demand letters from others.

Step 2: Identify the Right Enforced

If it looks like the letter deals with IP, does it specify what type of IP?
Letters that attempt to enforce IP rights may concern patents, trademarks,
copyrights, celebrity images, open source, creative commons, and, perhaps,
“unfair trade practices” where no patent, copyright, celebrity image right, or
trademark is actually infringed. Our clients have received letters that
unclearly or mistakenly identify the right claimed. For example, one letter
claimed to be enforcing the sender’s trademark rights, but the letter
concerned a universal resource locator, or “domain,” on the Internet. Such
errors may reveal that you are dealing with a troll, gremlin, ogre, or
phisher. Our clients have also receive letters that essentially make no
demand relating to any identifiable right, a mistake which may be attributed
to poor draftsmanship, language barriers for international demands, or
simply ignorance on the part of the sender.

A new “right” perhaps related to unfair trade practice, are the keywords that
may form part of a company’s branding strategy. Keywords are those that
help searcher find your website and enable the keyword use to acquire
traffic to a website. So called keyword “lifting,” may not rise to the level of
copyright infringement as there is not sufficient unique or expressive content
to claim the right, but it may have value in search optimization. We have
received reports of effective cease and desist activity based on keyword
plagiarism.

Step 3: Identify the Source of the Letter

A demand letter from an IP law firm carries certain weight. A demand letter
from a general practitioner in a rural location can carry weight if they know
what they are talking about. A demand letter from a former real estate
agent turned IP enforcer may carry less weight. This latter case is an actual
example of a letter one of our clients received. If the source of the letter is
not familiar to you, investigate it using legal databases, online searches, a
private investigator or all the preceding. This process will identify the source
of the letter and help you gauge its legitimacy and your risks. Note that
demand letters may come from anywhere in the world. In our experience,
letters from Russia, China, and Africa deserve added scrutiny because legal
protections for civil and property rights are generally less rigorous in those
geographies than they are in the United States, Japan and Western Europe.

The new kid on the block is the “open source” license enforcer. Open source
is a collective software licensing regime where the license requires, among
other things, that the source code must be shared, and licensing fees may
not be charged. The Freedom Software Foundation is one enforcer of open
source licenses. By threatening litigation, The Freedom Software Foundation
has successfully obtained cash from both for profit and non-profit entities.
Open Source is a sophisticated and well developed licensing model, not a
disaffected hacker model that was often perceived by institutional software
publishers in its infancy.

Step 4: Reply Carefully

Work closely with your attorney or licensing department on the reply. Note
that everything you do form here on out is potentially evidence that will be
submitted to a tribunal to determine the rights asserted and the damages,
or money you could lose. Be careful that if you may trigger a greater
assault on your intellectual property, for example, if you are dealing with a
patent, and you assert that the sender is an infringer in your response as a
potential counter claim, you may have triggered the sender’s right to seek a
declaratory judgment against your patent, and potentially invalidate it. The
tripwire for this issue is much easier to get ensnarled in after the
MedImmune case.

Offensive Prevention

There are preventive actions you can take to try to protect yourself from IP
enforcers. One important action is to diligently conduct and document
patent, trademark, image, and copyright searches during your own
development process. Creating a robust evidentiary trail of investigation can
support your arguments related to the incontestability of your IP rights, non-
infringement, or accidental infringement; and such evidence may save you
money. If you have to “re-invent” months of work cobbled together in the
shadow of an IP dispute the facts in support your position may be missing.
Not only does this process reduce your risk of infringement liability, it may
also let you know if the enforcer is legitimate. Keep in mind that if you
receive a demand letter from an IP enforcer, it is not the end of the world.
Depending on which party has senior rights, it may be possible for an
experienced IP attorney to “turn the tables” and have the IP right
transferred from the sender to you. If you have any comments or
questions, please contact us at info@smhllaw.com.