Situation: We have a competitor who is infringing our key intellectual property. Counsel tells us that we have a case, but to expect the process to take 2-3 years and to cost $2 million minimum. I’m concerned that if we start down this path, we will drain the company of both time and cash. What should we consider going forward?
Advice from the CEOs:
- The risk here isn’t just your IP; it’s the value of the company!
- Example: if your current valuation based on your IP is a 5x multiple of revenue, and if 60% of your IP is at risk, 60% or more of your valuation may be at risk.
- Under this scenario, you cannot allow the infringement to go unchallenged.
- The hard reality: can you withstand, in time and of money, a large and distracting suit?
- If the infringer is larger, they may be gambling that you won’t sue. Remember, the loser pays the winner’s out of pocket costs, plus damages.
- If your case is good, you may be able to get a lawyer to represent you on contingency.
- If you decide to sue, it must be a surprise. If not the infringer may outmaneuver you in setting venue, etc. through countersuit.
- Get a second opinion, and as much independent advice as possible without showing your hand.
- Key Question: Can you show your IP and research predates your competitor’s?
- Is there a middle ground or a settlement scenario that makes more sense than an all-out suit?
Key Words: Intellectual Property, IP, Technology Protection, Legal Strategy, Settlement