Nearly every business has some type of intellectual property (IP). From trademarks to patents to copyrights to trade secrets, there is something that makes your business unique and you want to protect that so your business can thrive. Unfortunately, sometimes someone infringes on your intellectual property and this can lead to litigation, which can cost your business a significant amount of money and time. In some cases, if the business is small enough, it can force them to close. How can you avoid a lawsuit? You can start with using some of the best practices for intellectual property management, including making sure that you do not infringe on someone else’s IP and implementing litigation avoidance strategies. Our experienced Chicago intellectual property attorneys at Sullivan & Carter, LLP may be able to help you create your IP management strategy and avoid litigation. Call (929)724-7529 for a consultation to review and learn more about protecting your IP.

What Is Intellectual Property Litigation?

Intellectual property litigation are lawsuits related to intellectual property rights disputes. This type of lawsuit applies to trademarks, patents, copyrights, and trade secrets. When an intellectual property owner believes their rights have been infringed, they may opt to file a lawsuit against the alleged infringing party.

IP owners may also file a lawsuit if licensing or settlement negotiations fail, to recover monetary damages, or to establish a legal precedent. However, a lawsuit is not always the appropriate solution in these cases. There are often other options to be explored as part of a litigation avoidance strategy, including cease-and-desist letters.

Causes of Intellectual Property Litigation

There are many potential causes that may drive an intellectual property owner to seek litigation. Some of the more common causes include infringement, ownership disputes, piracy and counterfeit, licensing and contract disputes, misappropriation of trade secrets, and patent, copyright, or trademark disputes.

Infringement of Rights

Infringing on IP rights is likely the most commonly known and used cause for IP litigation. Infringing on someone’s IP rights generally means using their IP without authorization. This unauthorized use may be the actual use of the IP, such as using a software program without permission. Sometimes this use is the creation of derivative works or the reproduction or distribution of the product.

Piracy and Counterfeit

This is the unauthorized reproduction, distribution, or sale of counterfeit or pirated goods. This may include counterfeit branded products, pirated software, or illegally downloaded and shared copyrighted materials.

Counterfeit products are fake products made to look like authentic products, complete with trademarks and other brand-specific traits. Piracy is the authentic product, but it has been obtained without permission or payment to the IP owner.

Ownership Disputes

Ownership disputes occur when multiple parties claim to own the rights to a piece of intellectual property. These disputes can arise for many reasons. If partners in a business decide to part ways, they may dispute who owns the intellectual property. There may also be an ownership dispute if someone hires another person to help them create the intellectual property, but a contract does not state who retains ownership. Conflicting contracts or agreements that are unclear or confusing may also lead to ownership disputes.

Licensing and Contract Disputes

Intellectual property owners often license the rights to their IP to others for use, sale, or other reasons. Unfortunately, this can lead to licensing and contract disputes. These types of disputes often revolve around royalty disputes or non-payment of royalties, breaches of contract, or disputes over the scope of the licensing rights.

Misappropriation of Trade Secrets

Trade secrets are often extremely valuable to a business. They are confidential information that gives the business an advantage over other businesses. Trade secrets can be a secret recipe (for a food, a cleaning product, a perfume, etc.), a manufacturing process, customer list, vendor list, marketing strategy, or anything else that, if made public, would take away that business’s advantage.

Misappropriation of trade secrets litigation often involves the theft of these secrets—often when an employee or business partner leaves the business feeling disgruntled. In some instances, a current employee or business partner may sell the trade secret to a competitor or try to use it to start their own business. This can happen whether the employee has legitimate access to the trade secret or not.

Patent, Copyright, or Trademark Disputes

Patent disputes arise when someone infringes on someone else’s patented invention or when someone questions the validity or enforceability of a patent. Copyright disputes can be the result of ownership disputes or fair use, as well as unauthorized use (including public performances), reproduction, or distribution of copyrighted materials. Trademark disputes occur when someone claims that another party’s use of a trademark will cause confusion or dilute their own trademark’s distinctive qualities.

Pros and Cons of Litigation

There are some valid reasons to file a lawsuit, but litigation avoidance is often preferred by many businesses. Before proceeding with a lawsuit, intellectual property owners may want to consider these pros and cons. If you believe your intellectual property rights were violated, you may want to consult with an intellectual property attorney with Sullivan & Carter, LLP, to learn more about your legal options.

Litigation Pros

One advantage of intellectual property litigation is protecting the rights to the property. In some instances, such as trademarks, IP owners must take action against infringement to retain their rights. If they do not, they can lose their rights, and the infringing party may be able to continue using the trademark.

Other pros to filing a lawsuit include being able to establish a precedent. When there is a favorable outcome, it shows others that the IP owner’s rights have already been upheld and likely would be again, as well as allowing future IP lawsuits to cite the case. Another advantage is gaining a strategic advantage, such as damaging the infringing party’s reputation or gaining market share at their expense.

Litigation Cons

While the advantages may sound appealing, it is imperative to consider the disadvantages as well. First is the expense. Litigation can be quite expensive, with lawyer’s fees, expert witnesses, and more. A lawsuit can also be time-consuming and that time could be spent growing or improving the business.

Another disadvantage to litigation is the outcome is unknown. All the time and money spent could be wasted if the case is lost. Finally, a lawsuit can damage business relationships that may be crucial to the business, particularly if the other party is a customer or supplier.

Intellectual Property Management Best Practices for Litigation Avoidance

If a business wants to avoid litigation, they can take steps to do so. There are many best practices for intellectual property management that can reduce the risk of needing to file or defend a lawsuit.

Understand Your Intellectual Property With a Comprehensive Audit

A comprehensive audit is necessary to separate intellectual property the business owns and intellectual property that the business uses with authorization from someone else. This audit is also necessary to ensure the business does not have any intellectual property that is not properly protected or that they are not using another’s IP without authorization.

If the audit reveals unprotected property, the business should immediately take action to get those protections in place. If they discover they are using someone else’s IP without authorization, speaking with an intellectual property attorney can help determine how to proceed so they can get the proper authorizations and avoid a potential lawsuit.

Register for the Appropriate Protections

Intellectual property loses some of its benefits if it is not properly registered and protected. Ensuring that trademarks, copyrights, and patents are appropriately registered, maintained as needed, and monitored regularly for infringement can be crucial to reaping the most benefits from owning such things.

Additionally, some intellectual property is handled on a first-come, first-serve basis. Trademarks are one example, where registering first can provide an advantage unless someone else can prove an earlier usage of the trademark. Therefore, the earlier a business registers its intellectual property, the easier it will be and the more flexibility it will have to use and defend its IP.

Monitor and Enforce Your Rights

Certain types of intellectual property, such as trademarks, require the owner to monitor for infringement and take action to enforce their rights if they discover such infringement. Therefore, intellectual property management should include a process for monitoring for infringement and outlining steps to take when such infringement occurs. One such step that can help with litigation avoidance is having an attorney send a cease-and-desist letter to alleged infringers.

Monitor and Maintain Intellectual Property Registrations

According to the United States Patent and Trademark Office (USPTO), trademarks must be maintained by continued use and filing the appropriate maintenance documents and fees at the required intervals. The United States Copyright Office (USCO) registers copyrights for the life of the author plus 70 years after their death without the option to renew. Utility patents cannot be renewed, but they do have maintenance fees that must be paid approximately three years after issue, seven years after issue, and eleven years after issue, per the USPTO.

Secure Licensing and Contracts

In many cases, IP owners license their intellectual property to others for use, reproduction, distribution, or sale. This licensing requires clear contracts that spell out all the details: royalty amounts and payment due dates, scope of use (what the user can do with the IP), restrictions, and dispute resolution options. Businesses may want to consult with an attorney to draw up clear and concise contracts. They may also want an attorney to review existing licensing contracts to ensure there are no gaps or loopholes that may cause problems later.

Consider Foreign Registrations

Depending on how a business owner plans to scale their business, foreign registrations for trademarks, patents, and copyrights may be necessary. While they may not be needed right now, researching the countries the business may expand into and what they require may be a good idea. Some countries require applying for a patent within one year of disclosing the new invention, while some require having a patent registration in their country before the product can be made public. In some countries, a trademark must be displayed with more than the ® symbol. Even if a business is not ready to register in a foreign country, it may be worth researching to ensure that waiting will not affect the ability to register.

Leverage the Right Tools to Protect Your Intellectual Property

Various tools are available to assist with protecting intellectual property. Some can track sensitive documents, indicating who is using them, where they are being used, and how they are being used. Encryption can also significantly reduce the chances of intellectual property loss.

Think Like a Hacker to Look for Security Holes

Instead of waiting for someone to hack their systems, business owners can put themselves in the shoes of a hacker to look for security holes before someone else finds them. With the mindset of a hacker, take an honest look at the systems, devices, and security in place and ask how an information thief might bypass the security measures in place to access sensitive intellectual property. This allows the business to work with their information technology (IT) department to improve security where necessary before someone with negative intentions can steal trade secrets or other information.

Build a Process for Infringement

When litigation avoidance is a goal, an intellectual property management program should include a clear process for the steps to take if someone infringes on the company’s IP. For many businesses, the first step is a cease-and-desist letter informing the alleged infringer that the company is aware of the infringement and ordering them to stop immediately or the company will take further action.

How Sullivan & Carter, LLP Can Help With Intellectual Property Management and Litigation Avoidance

At Sullivan & Carter, LLP, our knowledgeable Chicago intellectual property attorneys may be able to assist you in creating a management system for your intellectual property, reviewing new and existing licensing contracts, and when necessary, taking action against those who might infringe on your IP. Call (929)724-7529 to schedule a consultation and learn more about protecting your IP and avoiding lawsuits.