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Know the Law: Can My Business Ignore a 'Cease and Desist' Order for Patent Infringement?

Written by: Jeremy T. Walker

Published in the Union Leader (8/3/2019)

Q: My company has received a “cease and desist” order accusing patent infringement. I don’t think it has any merit. Can I safely ignore it?

A: Ignoring a cease-and-desist order can be very costly, so if a business intends on continuing to use the product or technology at issue, it should take reasonable measures to assess in good faith whether doing so would infringe the patent.

Why can it be costly? If a business fails to exercise reasonable care and continues with activity that is later found by a court to be infringing, it may be found liable for “willful” infringement.

Businesses found to have willfully infringed another’s patent may be ordered to pay up to triple damages and attorney’s fees to the patent owner. By presenting the “cease and-desist” letter, the patent holder can prove actual notice of the patent, and therefore, the patent holder is laying the groundwork for increased damages under the charge of willful infringement.

What actions are reasonable? Generally speaking, courts in patent infringement actions look to all the relevant circumstances to determine whether a party, upon actual notice of a patent, took adequate steps so as not to recklessly disregard the rights of the patent holder. Under earlier legal precedent, accused infringers essentially were required to seek the advice of competent patent counsel to determine whether it was infringing the patent. Recent decisions by the United States Supreme Court and changes to federal law have relaxed the requirement of obtaining a legal opinion of noninfringement to avoid a finding of willful infringement.

The first reaction of many businesses upon receiving a cease-and-desist letter is to seek the opinion of their in-house engineers or scientists. Others will seek the opinion of their in-house counsel or their corporate attorney. Although the engineers and the corporate attorney may be very familiar with the technology or product accused of infringing, they likely are not skilled or experienced in determining whether the technology or products infringe the claims of a particular patent.

On the other hand, if a business had received competent legal advice from patent counsel that it was not infringing the patent, it may well have a legitimate defense against a claim of willful infringement even if a judge or jury determines that the business had indeed been infringing the patent.

In sum, it is critical that businesses accused of patent infringement take the charge seriously and seek the opinion of competent legal counsel as to whether they are infringing the patent at issue.

Jeremy Walker can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association. We invite your questions of business law. Questions and ideas for future columns should be addressed to: McLane Middleton, 900 Elm St., Manchester, NH 03101 or emailed to [email protected]. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.

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