Lawsuit against Blackberry highlights intellectual property risks

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Monday, May 01, 2006

by Johnathan E. Mansfield, Schwabe, Williamson & Wyatt

The recent settlement of the NTP/Blackberry patent case caused a collective sigh of relief from thumb-typers everywhere. 

Though the risk of Blackberries going dark may have passed, the case highlights the need to manage intellectual property (IP) risks, not just for businesses that sell products incorporating intellectual property but for any business that uses products that may be covered by IP. If you are a manager or business owner, there are two significant IP risks that you should consider and prepare for — business asset loss and infringement litigation.

Business asset loss

Whether you realize it or not, most of the assets that a company uses in its business (other than real estate) incorporate someone’s IP.

The Blackberry case drove this point home to millions of businesspeople.  Business assets, including mechanical equipment, computers and software, may be covered by IP, including patents, copyrights and trademarks. If the owner of this IP is someone other than the vendor who sold or licensed the product, your business risks losing the use of these assets if a court finds infringement and enjoins the vendor from selling, and you from using, the product.

Infringement litigation

The number of patent and other IP infringement lawsuits continues to rise. While suits are filed against high-tech companies that are accused of making a product that infringes another’s patent, many lawsuits are also being filed against companies that aren’t traditionally considered to be part of the technology sector, such as food processors and tool manufacturers. 

One reason: Under the patent laws, a patent-holder can sue the seller, maker or user of an infringing product, or any of these. Until fairly recently, patent-holders often preferred to file a single lawsuit against the maker of an accused product rather than file a series of lawsuits against the customers, who are the users of the product. But increasingly, some patent-holders have adopted a “sue the customers” strategy on the theory that the customers have less of a stake in the product and are usually indemnified by the maker and as a result are more likely to settle instead of undertaking litigation.

The IP risks of asset loss and infringement litigation are not yet as inevitable as death and taxes. IP risks can be managed by planning. Smart managers know that they not only can but must manage business risks or the business risks will end up managing the business for them.

— Johnathan E. Mansfield,
Schwabe, Williamson & Wyatt
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