- On December 19, 2011
Due diligence is a key concept in the business world. Before buying a new company or investing in a new product, companies spend millions of dollars reviewing financial statements, accounting methods, and market reports to ensure that their investments have no hidden risks. In contrast, many companies turn a blind eye to their competitors’ patents when developing their own R&D efforts and patent filing strategies. Unaware of the patent landscape, these companies risk costly infringement lawsuits and even the potential shutdown of an entire product line.
Patent searches and patent landscape analysis are necessary due diligence tools in the high-tech world. Patent searches give companies’ notice of potential IP litigation risks from competitor patents. This gives the company time to refocus R&D efforts to different products, obtain a license, or design-around relevant patents before a product is put on the market.
Research in Motion’s costly lawsuit with NTP provides a stern reminder of the importance of patent due diligence. In March 3, 2006 Research in Motion (producers of Blackberry) announced a settlement of $612.5 million dollars to settle its infringement suit with NTP, ending a five year court battle over the validity of NTP’s wireless email patents, and ending a patent saga that threatened to shutdown RIM’s Blackberry sales in the United States entirely.
The IP battle began in January, 2000, when NTP sent RIM a letter regarding six of its wireless email patents and offering RIM a license. Instead of conducting an in-depth analysis of NTP’s patents, Charles Meyer, RIM’s in-house attorney, discussed NTP’s patents with his staff and quickly concluded that there was no infringement. When the case first came before Judge Spencer in the U.S. district court for the Eastern District of Virginia, Spencer ruled in favor of NTP, finding Meyer’s opinions incompetent because they were based on insufficient information. This decision sparked five years of costly litigation and appeals before RIM finally conceded to the gigantuan $612.5 million settlement.
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