Anyway, you analyze the patent right P, check the specs of product Y and estimate its potential risk. This review process is called ‘conflict appraisal’ (infringement appraisal). The conflict appraisal may be carried out by IP department staff or by a patent attorney outside the company.
Estimate the Risk
The first stage is to check whether the concept (scope of rights) envisaged by the ‘claims’ of the patent P overlaps with your product Y. For example, if the claim reads ‘an apparatus comprising A, B and C’ and product Y has A and B, but fortunately not C, then it is safe.
Words (symbols) have meaning through interpretation, so a claim extends or contracts its scope of rights depending on its interpretation.
For example, suppose that the claim states ‘an apparatus comprising A, B and C, in which C is adjacent to B’. In such a case, the question arises as to how to interpret the word ‘adjacent’.
According to the dictionary, ‘adjacent’ seems to mean only ‘next to’. According to this interpretation, C does not have to be in physical contact with B (broad interpretation). However, from the atmosphere of the description, it appears that they are somehow in physical contact (narrow interpretation).
If product Y has A, B and C, and B and C are next to each other but not close enough to be in physical contact, then it may escape the scope of patent right P.
In the second stage, the applicant's arguments (preferably, whether they are superfluous) in the process of obtaining the patent right P are checked. For example, if the applicant asserts something like ‘Because B and C are attached to each other...’, the scope of the patent right P is limited to cases where ‘B and C are in physical contact’, and the risk drops dramatically.
In the third stage, a search is made for references (invalid references) that could destroy (invalidate) the patent right P or, if not destroyed, reduce the scope of the patent right P. The process of searching for the possibility of invalidating the patent right is called ‘invalidity appraisal (expert opinion about invalidity)’.
The above review process is used to determine the likelihood of product Y infringing patent right P, or in other words, the magnitude of the patent risk posed by product Y. Sometimes it is almost safe, sometimes it is about 80% safe (it is safe but there is some uncertainty), and sometimes it is almost certain to infringe.
Conflict appraisals are troubling.
Even if the project seems almost safe, it is not always possible to be 100% sure that it is safe (which is not surprising, since the conflict appraisal is originally requested because the case seems to be high-risk). On the other hand, if the conclusion is that the risk is high, we have no choice but to propose design changes (although we do not want to do anything that would demoralise the development department).
How to Deal with Risks
A typical menu of countermeasures when product Y may infringe patent right P is as follows. A blend of several countermeasures may be used.
[Measure 1]
One interpretation of the right is that the patent is being infringed (broad interpretation), while another interpretation of the right is that the patent is not being infringed (narrow interpretation). Simulate the logic of Company X holding patent right P when it exercises its rights, and create a counter-argument that can defeat that logic. Generally, this kind of counter-argument is prepared at the time of conflict appraisal. By preparing a strong counter-argument in advance, you can take advantage of future negotiations.
[Measure 2]
Change the design of the product. Although a drastic design change will reduce the risk, it is often difficult to make major design changes when considering merchantability and delivery times. In some cases, design changes may lower the risk but cannot be said to have reduced it to zero, in which case a combination with Countermeasure 1 is used.
[Measure 3]
Search for references that can negate the patentability of patent right P, i.e. invalid references that the examiner of patent right P could not find. Although we may actively try to destroy patent right P by setting up an invalidation trial, etc., we often save invalid references in case the opponent tries to enforce the right without actively moving for the time being. When the opponent tries to enforce patent right P, you can make them give up enforcing their rights by showing them strong invalid references. Countermeasure 3 is also effective in improving your bargaining power.
[Measure 4]
Financial solution. Paying a royalty or buying out the patent right P erases the risk. Even when negotiating a financial solution, it is useful to have other measures in place.
[Measure 5]
Find a patent right to strike back. If you have a patent right Q that covers Company X's product, you and another company (Company X) are infringing each other's patents, and you can get even. The risk associated with patent right P disappears if you enter into a cross-licence (mutual patent availability agreement). When Google entered the mobile phone industry, it acquired a large number of Motorola's mobile phone-related patents by buying Motorola. The Motorola acquisition is said to have been a patent risk measure.
[Measure 6]
Not taking measures is also a kind of countermeasure. It is quite possible that the patent holder will not actually enforce the patent right, as enforcing the patent right also requires energy. In the first place, there is also the gut-wrenching viewpoint of whether product Y is attractive enough for the patentee to want to exercise patent right P. Measure 6 is, metaphorically speaking, like jaywalking. You may not necessarily get into an accident, and the probability of actually getting into an accident may be low, but you are in breach of traffic laws and it is certainly dangerous. On the occasion of a conflict appraisal, we also check whether the patent holder is a company that is likely to enforce its rights.