Situation:  A company has a competitor who is infringing their key intellectual property. Legal counsel tells the CEO that his company has a case, but to expect the process to take 2-3 years and to cost $2 million minimum to defend. The CEO is concerned that if the company starts down this path, it will drain the company of both time and cash. How do you protect your IP from infringement?

Advice from the CEOs:

• The risk here isn’t just the company’s IP; it’s the value of the company! For example: if the company’s current valuation based on their IP is a 5x multiple of revenue, and if 60% of this IP is at risk, 60% or more of the company’s valuation may be at risk. Under this scenario, the company cannot allow the infringement to go unchallenged.
• The hard reality is this: can the company withstand, in time and of money, a large and distracting suit? If the infringer is larger than the company is, they may be gambling that the company won’t sue. Remember, the loser pays the winner’s out of pocket costs, plus damages. If the company’s case is good, it may be possible to get a lawyer to represent the company on a contingency basis.
• If the company decides to sue, it must be a surprise. If not, the infringer may outmaneuver the company by setting venue, etc. through countersuit.
• Get a second opinion, and as much independent advice as possible without showing your hand.
• A key Question: Can the company show its IP and research predates the competitor’s? If the company can clearly demonstrate that it is the true developer of the IP, then this provides an important edge.
• Is there a middle ground or a settlement scenario that makes more sense than an all-out suit?

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