Seven Steps To Take When Your IP Has Been Compromised

Our international IP lawyers are often called upon to help companies whose IP has been compromised or infringed upon. We have formulated the following basic checklist for handling these IP problems, be they international or domestic.

1. Identify the client’s IP problem

This step is sometimes straightforward, but often the information our client is getting from staff/suppliers/distributors is not accurate, due to honest mistakes or self dealing. For example, high-quality fakes in the market might in fact be “overruns” by an authorized supplier. Counterfeits might in fact be gray market or second-hand goods.

Getting the right information (sometimes with the assistance of professional investigators) is critical when it comes to deciding on next steps.

2. Determine the client’s IP goals 

The client’s goals largely determine the strategy pursued. It is therefore critical to understand what is desired, acceptable, tolerable, and unacceptable.

Take a situation where a factory in China is making counterfeits of three brands’ products. It could be that Brand A is looking for a new supplier, and sees potential in the counterfeiters’ workmanship. Brand A might be amenable to licensing its IP to the factory. On the other hand, Brand B might be adamantly opposed to any compromise, and insist on aggressive action. Brand C might be content working on preventing exports through a China Customs recordation, without too much concern for what happens inside China. In some cases, who the counterfeiter is might impact the path taken (see 4. below).

Needless to say, client goals must be realistic and based on facts (see 1. above).

3. Identify and evaluate the IP at issue 

Without IP, there is no IP claim. This might seem painfully obvious, but we often find ourselves having to tell potential clients that there is no IP to protect where they think there is. For example, some clients from the U.S. and other common law jurisdictions assume that their long-running use of a trademark in a particular country give them at least some rights over that trademark, even if they have not actually registered the trademark. Other clients find out the hard way that “their” trademark is actually registered in their supplier/distributor/employee’s name.

4. Know your enemy

This step is of far greater importance than many people realize, as who you are pursuing with your IP claims can have a tremendous impact on how you choose to proceed. When companies have learned of IP infringement, their initial reaction is usually “let’s make them stop and sue the bastards for millions of dollars for what they have already done and let’s let the world know that we are not a company to be messed with.” And they usually say this as though these goals all fit together perfectly and can be achieved in a few months. They don’t and they can’t.

If the company that “stole” your IP is a “fly by night operator” there often is no point in suing that company for the millions of dollars it does not have. Often there is simply no point in suing a legit company either, particularly where your case is marginal. If you sue the legit company on a marginal case, it may decide it needs to fight you to the death to show the public that it was not violating any IP laws or your IP rights and to also demonstrate that it is “not a company to be messed with.” In these instances, a more diplomatic approach might work better.

5. Determine your best legal options

By this point, we are usually able to cross most legal options off our list, both in terms of legal theories (unfair competition, trademark infringement, copyright violations, etc.) and dispute resolution options (litigation, arbitration, demand letter, etc.).

6. Formulate your strategy

Once you have a list of your best legal options, it is time to put a strategy into place, with fallback options, if possible. In many cases, the strategic plan will include parallel actions. In all cases, it includes a realistic budget. Our lawyers always work with our clients in formulating the strategy so everyone is on the same page in terms of how we will be proceeding.

7. Implementation

Implementation often requires bringing on experts, investigators, local IP agents, and/or local government. But at its core, implementation really just means moving forward to implement your formulated strategy.

How do you handle your IP infringement matters?