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Copyrights Patents Q&A Trade Secrets Trademarks

What Should I Do If Another Business is Infringing My IP?

An appropriate response to infringement (or misappropriation) will depend on which type(s) of intellectual property (IP) rights are involved.  While some forms of infringement can be enforced by the government, prosecutors rarely take up disputes between competitor businesses. This leaves it up to the IP owner to pursue a civil remedy. Therefore, the first step is generally to conduct your own investigation to ascertain your IP ownership rights, ascertain the identity of the infringing party or parties, preserve evidence of the infringement, and perform a legal analysis to confirm that the conduct in question is prohibited by law. Following an investigation, a cease & desist (demand) letter could be sent, a lawsuit initiated, or possibly other action taken.

Tip: Consider implementing a proactive monitoring program to search for and identify potential infringement of your IP. No one else will identify infringement for you.

As part of your initial investigation of infringement, the legal analysis should consider:

  1. do you have a chain of title to the IP (that is, can you prove ownership)?
  2. does the conduct fall within the scope of your enforceable exclusive rights or is the conduct permitted by law (such as a “fair use” under copyright law)?
  3. did the other party have permission?
  4. what jurisdiction(s) is the infringer located in?
  5. what remedies are available for the type of infringement involved? 

Following an initial investigation, which should be performed with the assistance of a knowledgeable attorney, it is common to send a cease & desist or other demand letter.  This puts the infringer on notice of the claim of infringement, which can remove innocent infringer defenses going forward, trigger the accrual of damages, etc.  A letter might be sent to a publisher, distributor, web host, etc. as well, which can have significance under safe harbor provisions for some types of IP.  If a letter is ineffective, or simply not desired, litigation or certain non-litigation action should be considered. 

As to litigation, patent and copyright actions are handled exclusively by U.S. federal courts and generally require having a patent or copyright registration (at least for copyrightable United States works) before filing suit.  Trademark, trade secret, cybersquatting, and false advertising actions can sometimes be brought in either federal or state court.  A trademark registration is not required to bring suit in the U.S.  A statute of limitations or equitable limits may apply, such as a 3-year limit for copyright infringement claims and a 6-year limit on back damages for patent infringement. 

Remedies may be available outside of courts as well, though often without monetary recovery.  For example, administrative agencies such as Customs & Border Protection and the International Trade Commission can block or exclude importation of infringing goods, and a copyright small claims action may be available.  Online platforms and marketplaces may also have their own IP dispute resolution procedures and mandatory arbitration (e.g., UDRP, URS) may apply to domain name disputes. 

With some exceptions, many IP rights are generally enforceable on a jurisdictional or territorial basis.  If infringement implicates activities in another country, the available remedies and requirements to pursue a claim can vary widely and you may need to consult competent foreign legal counsel. 

Many IP disputes reach settlements, though it cannot be assumed that parties will be able to reach a pretrial settlement.  When considering bringing an infringement or misappropriation suit, bear in mind that awards of attorney’s fees are not always available or likely.  The cost to pursue an IP lawsuit might exceed the monetary recovery, though the benefits of stopping infringement or misappropriation may still be worth the unrecoverable expenses of a suit in some situations. 

Photo of Austen Zuege

Austen Zuege is an attorney at law and registered U.S. patent attorney in Minneapolis whose practice encompasses patents, trademarks, copyrights, domain name cybersquatting, IP agreements and licensing, freedom-to-operate studies, client counseling, and IP litigation. If you have patent, trademark, or other IP issues, he can help.

Categories
Copyrights Patents Q&A Trade Secrets Trademarks

What Are Typical IP Litigation Costs?

Intellectual property (IP) litigation tends to be relatively expensive compared to other types of lawsuits. There are many reasons for that. Though the complexity of the legal issues involved and a tendency for extensive pre-trial discovery and use of expert witnesses contribute to the total costs.

Below are graphs showing average costs through various stages of a an infringement or misappropriation lawsuit in the U.S. A summary graph compares average costs for “small” patent, copyright, trademark, and trade secret cases with less than $1,000,000 at risk. There are also individual graphs for patent, copyright, trademark, and trade secret cases with different amounts at risk, that is, with different amounts of potential damages for infringement or misappropriation (in U.S. dollars). All data comes from the 2021 AIPLA Report of the Economic Survey.

graph of average patent, trademark, copyright, and trade secret litigation costs by stage.  Initial Case Management: $57,000 (Patent), $24,000 (Copyright), $22,000 (Trademark), $60,000 (Trade Secret); Discovery, Motions (incl. Claim Const.): $369,000 (Patent), $161,000 (Copyright), $200,000 (Trademark), $367,000 (Trade Secret); Trial, + Any Appeal: $771,000 (Patent), $1,143,000 (Copyright), $415,000 (Trademark), $776,000 (Trade Secret).
Comparison of Average “Small” IP Lawsuit Costs by Type of Case and Stage
Clustered bar graph of average patent litigation cumulative costs, by stage of case, for cases with less than $1M, $1-10M, $10-25M, and >$25M at risk.  
Initial Case Management: $57,000 	$122,000 	$421,000 	$361,000; Discovery, Motions (incl. Claim Const.): $369,000 	$1,033,000 	$1,621,000 	$3,556,000; Trial, + Any Appeal:	$771,000 	$1,910,000 	$3,728,000 	$5,568,000
Average Patent Litigation Costs
Clustered bar graph of average copyright litigation cumulative costs, by stage of case, for cases with less than $1M, $1-10M, $10-25M, and >$25M at risk.  Initial Case Management: $24,000 	$77,000 	$136,000 	$292,000; Discovery, Motions: $161,000 	$882,000 	$1,125,000 	$2,501,000; Trial, + Any Appeal: $1,143,000 	$1,421,000 	$2,358,000 	$5,778,000
Average Copyright Litigation Costs
Clustered bar graph of average trademark litigation cumulative costs, by stage of case, for cases with less than $1M, $1-10M, $10-25M, and >$25M at risk.  Initial Case Management: $22,000 	$48,000 	$83,000 	$194,000; Discovery, Motions: $200,000 	$514,000 	$837,000 	$1,718,000; Trial, + Any Appeal: $415,000 	$892,000 	$1,592,000 	$3,381,000
Average Trademark Litigation Costs
Clustered bar graph of average trade secret litigation cumulative costs, by stage of case, for cases with less than $1M, $1-10M, $10-25M, and >$25M at risk.  Initial Case Management: $60,000 	$102,000 	$171,000 	$469,000; Discovery, Motions: $367,000 	$977,000 	$1,708,000 	$2,112,000; Trial, + Any Appeal	$776,000 	$1,717,000 	$3,309,000 	$4,582,000
Average Trade Secret Litigation Costs

Additional reports on IP litigation are available from various sources, including PWC’s 2018 Patent Litigation Study and Lex Machina’s 2022 Patent Litigation Report (and infographic), as well as Lex Machina’s 2021 Copyright and Trademark Litigation Report (and trademark infographic and copyright infographic).

Photo of Austen Zuege

Austen Zuege is an attorney at law and registered U.S. patent attorney in Minneapolis whose practice encompasses patents, trademarks, copyrights, domain name cybersquatting, IP agreements and licensing, freedom-to-operate studies, client counseling, and IP litigation. If you have patent, trademark, or other IP issues, he can help.

Categories
Q&A Trademarks

What is Likelihood of Confusion?

Overview

Under U.S. federal trademark law, a trademark registration can be refused or trademark infringement found if there is a likelihood of confusion. The “likelihood of confusion” standard covers more than identical uses, intentional copying, counterfeiting, and knock-offs. It is ultimately a question of determining what ordinary consumers understand and what would confuse them. Trademarks (and service marks) are intended to avoid consumer confusion about the source of commercially available goods and services. So these issues go to heart of trademark law.

Likelihood of confusion is a multi-factor analysis. There are a number of different facts that are taken into account in order to draw a legal conclusion about the likelihood an appreciable number of consumers would be confused. Each individual factor can point toward or away from confusion, or be neutral. Different factors can carry different weight in the overall analysis depending on the circumstances.

Keep in mind, however, that the likelihood of confusion analysis is about whether an appreciable number of ordinary consumers is likely to be confused. That a few undiscerning or careless prospective purchasers might occasionally be confused is not enough. There is generally no obligation under trademark laws to protect negligent, indifferent, inattentive, or careless purchasers from confusion or to make the market foolproof. The owner of a trademark is not entitled to a guarantee against confusion in the minds of careless and indifferent buyers. Even evidence of actual confusion among a few customers may be de minimis and not conclusive of likelihood of confusion.

A reliable consumer opinion survey is highly informative about likelihood of confusion. Actually, it is usually the best kind of evidence. But surveys are complicated and costly. The practical difficulty is to make a judgment about the likelihood of confusion without having survey results available.

A useful exercise is to try to envision a hypothetical consumer survey. This can help you be more objective and avoid looking at likelihood of confusion in too self-serving a way. Splitting hairs about insignificant differences is a common mistake. Thinking that established rights extend to any and all goods and services (that is, thinking that similar marks can never coexist) is also a common mistake. But turning to the idea of a hypothetical survey of ordinary consumers might help avoid those biases. Because, in the end, the likelihood of confusion question is about ordinary consumers’ perspectives not your own.

The specific list of factors considered is phrased in different ways by various courts and the U.S. Patent & Trademark Office (USPTO)—as discussed further below. But under the any formulation of likelihood of confusion factors, the overall analysis is similar. The marks do not have to be identical. Similarly, the respective goods/services do not have to be identical. It is sufficient that they are related in such a manner that an appreciable number of ordinary purchasers are likely to assume—mistakenly—that they originate from a common source.

Registrations at the USPTO

In the USPTO, six so-called DuPont factors are used for the likelihood of confusion analysis. These DuPont factors can be used to refuse registration because there is a prior conflicting registration. They can also be used in deciding oppositions to applications and attempts to cancel an existing registration based on prior use of a mark. Two DuPont factors are always considered:

  1. similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression
  2. relatedness of the goods or services as described in the application and prior application(s)/registration(s)

Four additional DuPont factors might also be considered, though there may not be any evidence available to allow consideration of these other factors:

  1. similarity or dissimilarity of established, likely-to-continue trade channels (that is, actual sales methods used)
  2. conditions under which and buyers to whom sales are made (for instance, “impulse” vs. careful, sophisticated purchasing)
  3. number and nature of similar marks in use on similar goods or services
  4. existence of a valid consent agreement between the applicant and the owner of the previously registered mark

The six factors listed above are actually a condensed list of the ones that are most commonly relevant in the examination of new applications. The DuPont case actually set forth a total of thirteen factors. Though the other factors omitted from the condensed list above rarely come up except for certain contentious cancellation or opposition proceedings where an opposing party is involved, and even then are still rarely significant.

The weight given to any of these individual factors can vary. There is no precise mathematical formula for how they are applied to reach a conclusion. Though the comparison always involves the specific mark and the specific goods or services identified in the application or registration in question. Actual uses of the mark in the marketplace that are not identified in the application or registration at hand are generally irrelevant—the USPTO only decides what can or cannot be registered. Questions about infringement are dealt with by courts instead.

The USPTO provides some useful hypothetical examples of likelihood of confusion comparisons.

Disputes in Court

Courts decide infringement allegations as well as issues about the validity of trademark rights. But there are slightly different formulations of the likelihood of confusion factors applied in courts from different parts of the country. So the applicable factors will depend on which “circuit” handles a given case.

For instance, in the 8th Circuit—whose jurisdiction covers the states of Minnesota, Iowa, Missouri, Arkansas, Nebraska, South Dakota, and North Dakota—six so-called SquirtCo factors are used to assess likelihood of confusion:

  1. the strength of the owner’s mark
  2. the similarity between the owner’s mark and the alleged infringer’s mark, based on an examination of the marks as a whole
  3. competitive proximity (the degree to which the products compete with each other, though infringement may be found in the absence of direct competition)
  4. the alleged infringer’s intent to “pass off” its goods as those of the trademark owner raises an inference of likelihood of confusion, but intent is not an element of a claim for trademark infringement
  5. incidents of actual confusion (if any; not required to establish likelihood of confusion; requires more than isolated incidents of inattentiveness; its presence is also not conclusive of likelihood of confusion)
  6. the type of product, its costs and conditions of purchase

The weight given to any of the factors for likelihood of confusion can vary. And there is no mathematical formula for applying them. Depending on the evidence available, some factors may be more important than others.

Photo of Austen Zuege

Austen Zuege is an attorney at law and registered U.S. patent attorney in Minneapolis whose practice encompasses patents, trademarks, copyrights, domain name cybersquatting, IP agreements and licensing, freedom-to-operate studies, client counseling, and IP litigation. If you have patent, trademark, or other IP issues, he can help.