PATENT INFRINGEMENT CASES ARE OFTEN LONG, arduous and expensive undertakings. Although most eventually settle out of court, a resolution could take several years, and legal fees may end up costing a company tens of thousands — if not millions — of dollars.

An executive who thinks a competitor is infringing his company's patents may want to file suit immediately. But that's often not possible; because lawyers have an ethical obligation to conduct a reasonable investigation first. Otherwise, those lawyers — and possibly even the businesses they represent — could face sanctions from a court.

Understanding what lawyers have to do during such a pre-suit investigation can help execs budget and respond to pressure from inside and outside the company to take action against perceived infringers.

When a company suspects that a competitor is infringing its patented product or process, lawyers hired by the company should, at the very minimum, conduct a Federal Rules of Civil Procedure Rule 11 investigation — a reasonable inquiry into the facts and the law at issue — before filing suit. Although the statutory language of Rule 11 applies only to lawyers, some case law indicates that courts will consider sanctioning parties for violations.

Not surprisingly, the Federal U.S. Circuit Court of Appeals, which handles appeals in patent cases, has addressed this issue. For example, in 2000's View Engineering Inc. v. Robotic Vision Systems Inc., the Federal Circuit affirmed a district court's entry of more than $97,000 in Rule 11 sanctions for the lawyer's failure to conduct an adequate pre-filing investigation.

Because of the technical nature of patent infringement cases, compliance with Rule 11 is arguably harder to achieve than in most other cases. Nevertheless, the pre-filing investigation serves two important purposes. First, it provides a basis from which the company can conduct a qualitative analysis of the technical aspects of the case and thus perhaps evaluate its expectations of a successful legal resolution. Second, the investigation protects defendants against baseless claims that their products are infringing another's patents, by showing that the patent-holding plaintiffs had a reasonable chance of proving infringement. In a perfect world, the patent holder need only show that it conducted an infringement analysis prior to filing suit.

If an exec wants his lawyers to file suit right away without taking the time for a pre-suit investigation, he should consider a 1997 case, Judin v. Hewlett- Packard Co. There, an inventor's first attorney of record relied solely on the inventor's experience and credentials in the industry, as well as the inventor's observations of the accused product from a distance, as a basis for the complaint. The Federal Circuit found "on the record before us, we would have no hesitancy to impose on ... [the inventor and that lawyer] a Rule 11 sanction in favor of HP," but the Federal Circuit remanded the case to the trial court to make a determination on sanctions. The Federal Circuit remarked that the first attorney of record had "acted unreasonably in giving blind deference to his client and assuming his client had knowledge not disclosed to the attorney." In other words, counsel must acquire personal knowledge of the facts. It is simply not enough to rely on the company's assessment or purported expertise. Executives should allow their lawyers to conduct an independent investigation of the case.

WHAT TO EXPECT

At a bare minimum, the pre-suit investigation's infringement analysis should include construing the claims of the asserted patent, obtaining a sample of the accused product (or adequate technical documentation for the accused product) and applying the construed claims to the accused product. Such an investigation will require time, effort, brainpower and money.

Oftentimes, a trained patent attorney can adequately conduct the pre-filing investigation and report back to executives. The costs associated with the investigation can vary widely and often depend on the technology at issue and whether an independent expert is required. Executives should weigh the costs of a reasonable pre-filing investigation against any damages they might win.

Lawyers will first review the patent the company owns, obtain a sample of the product suspected of infringing on the company's patent and then apply the claims of the patent to the accused product to see if the claims cover the suspected product. Then, the lawyers will try to determine the scope and meaning of the terms used in the claims. 

Execs should plan on making the company's technical expertise available to their attorneys. For example, the lawyers may need to talk with engineering staff to learn background technical information. The lawyers also may require assistance with making industry contacts to help them obtain the sample of the suspected product. Investigating the accused product can be time intensive, and the exec's company may have to pay for outside technical experts to advise the attorneys.

What if a sample of the accused product is not available or unreasonable obstacles stand in the way of securing one? The Federal Circuit in Judin found that the patentee's first attorney of record could have easily obtained a sample of the accused product at a nominal price, and failure to do so meant that that lawyer failed to meet his Rule 11 obligations. On the other hand, in 2000, the Federal Circuit in Hoffman-La Roche Inc. v. Invamed Inc. found that because obtaining a sample of the accused product proved to be an unreasonable obstacle (i.e., 'the product owner was not amenable to sharing the technical information), the trial court did not err in refusing to sanction the patentee's lawyer under Rule 11. In other words, courts require lawyers to make reasonable efforts to acquire a sample of the accused product but will not penalize them if reasonable efforts are not entirely fruitful.

What if the infringement analysis is incomplete or courts could consider the suit frivolous? The Federal Circuit has required that the patentee apply the claims of each patent in a suit to an accused product and conclude a reasonable basis for finding infringement of at least one claim of each patent asserted. In 2004, the Federal Circuit in Q-Pharma Inc. v. Andrew Jergens Co. found that the patentee conducted a reasonable investigation — not a frivolous one — where the party construed the claims broadly and supported those constructions using intrinsic evidence.

Rule 11 cannot be ignored. As an absolute minimum, lawyers should construe the claims of the asserted patent, obtain a sample of the accused product (or adequate technical documentation for the accused product) and apply the construed claims to the accused product. Anything less may run afoul of Rule 11.1.

LOOK BEFORE LEAPING

• AN EXEC WHO SUSPECTS THAT ANOTHER COMPANY IS INFRINGING ON HIS COMPANY'S PATENTS MAY WANT TO SUE IMMEDIATELY, RUT FIRST AI IOW (AWYERS TIME TO CONDUCT A 'RE-SUIT INVESTIGATION.
• FAILURE TO INVESTIGATE CAN RESULT IN SANCTIONS PROM A COURT.
• THE COMPANY NEEDS TO UNDERTAKE REASONABLE EFFORTS TO OBTAIN A SAMPLE OF THE PRODUCT IT WILL ACCUSE OF INFRINGEMENT.

Darin Klemchuk is a partner in and Bhaveeni Parmar is an associate with Klemchuk Kubasta LLP in Dallas. Klemchuk focuses on intellectual property protection and prosecution, commercial and business litigation, and negotiating entertainment-related agreements. Parmar focuses on assessing, managing and protecting intellectual property, with an emphasis on litigating patent, trademark, copyright and trade-secret disputes.