Intellectual property litigation arises under a number of circumstances, each suited to a different purpose and objective. A suit may be filed by someone:
with a patent, trademark, copyright or trade secrets intending to stop ongoing infringemen;
without intellectual property rights, seeking a court order finding that they would not infringe another's intellectual property rights;
to recover intellectual property rights conveyed by contract, license, or assignment; or
to stop unfair competition or disparagement of their products, goods or services.
In the first instance, intellectual property rights in patent, trademark or copyright are used as a sword. Litigation brings with it, not only the attendant costs and fees associated with any complex area of litigation, it also intrudes into the business practices and customer relationships of the defendant. It disrupts the defendant's business, prevents or dissuades marketing and distribution of potentially infringing goods or services and closes competitive markets. Even the threat of litigation can prevent another from capitalizing on technology that may be protected by patent, copyright or trade secrets, providing a competitive advantage to the property owner.
For these reasons, the courts allow access to those placed under threat of intellectual property lawsuits. Litigation becomes a shield. When a business is placed on notice of infringing another's intellectual property rights, and has a reasonable fear of being sued for infringement, it may choose to file suit for a determination of its rights. Why would anyone choose to file a lawsuit when there is only the threat? Perhaps the property owner will not carry through on the threat. However...
if they do sue, they may sue in another jurisdiction, raising the costs of defending the lawsuit, perhaps to an unbearable level;
if they don't sue immediately, does your business follow through on its plans, or abandon an otherwise promising and profitable venture under the threat of litigation;
if you choose to ignore the threat and proceed with the potentially infringing material, the profits from your venture may end up in your competitor's hands when suit is finally filed.
For these reasons, a business may sometimes find it advantageous to file suit in defense of a threat of infringement. Questions are answered before a heavy R&D investment is abandoned or extended into production.
While suits for patent infringement or for rights arising under the federal copyright laws are solely entertained in federal court, recovering intellectual property rights conveyed by contract, license, or assignment is very often a state court endeavor. Intellectual property is "personal" property and rights conveyed by these or similar instruments are no different than any other rights to personal property conveyed under contract. In some instances, it may be possible to litigate these rights without the necessity of referral to an intellectual property litigator. Very often, however, suits for recovery of these rights may raise issues of performance, infringement, fraud in the procurement, or issues of inventorship, ownership or priority governed by patent law. For this reason, it is recommended that the choice of litigation counsel be made only after identification of all issues likely to be raised as a consequence of filing suit.
Similarly, a suit to stop unfair competition or product disparagement may also find itself in state court. Unfair competition finds statutory authority in both federal and state courts. Nevertheless, it is very often joined to other issues such as patent, trademark or copyright infringement, which are federal issues, or it may be joined with allegations of trade secret theft, non-compete or non-disclosure contract violations or state fraud actions, all played out in state court. The choice of whether to proceed to federal or state court may depend on these and other factors such as the presence of federal or state registrations for intellectual property or the ability to obtain jurisdiction (court authority) over the defendant or defendants (all of which may be outside the state, geographically dispersed over the United States or even located beyond U.S. borders).
Intellectual property litigation is one of the most resource intensive and expensive litigation areas today. In patent litigation, the patent will almost always come under attack as not infringed, unenforceable or invalid. The claims of the patent will be scrutinized and the language dissected for weaknesses in the patent's scope of protection. Commentary or language buried in communications with the Patent Office at the time the patent was applied for will be similarly studied for evidence of non-infringement or invalidity. The inventors may have their testimony taken down, their research notes studied and personal credibility called into question. On the flip side, the patent holder will want the names of people and businesses coming into possession of the allegedly infringing goods. This means turning over customer lists to the opposing attorney, usually under court orders requiring the lists to be maintained in confidence. Nevertheless, armed with this information, key customers could be sued for infringement, distributors or retailers threatened for carrying infringing goods by your company and subpoenas issued to track sales records and histories. Litigation can be messy business.
In all instances, businesses are best served by directly confronting their intellectual property issues. If your industry relies upon patented technology to manufacture a product or engage in a business method, understand where your own patent rights lie and where your competitor's may lie. If your industry depends on trademarks, register and police your marks. If trade secrets are the crux of your business, protect them with non-disclosure agreements, police your employees and monitor your competition. Intellectual property rights are only as good as your ability to protect them. While the cost of any litigation is high, the cost of being caught on the wrong side of a judgment is even higher.