February 25, 2015
By Jeremy A. Younkin, Corporate Counsel
Your company may be targeted for a patent infringement lawsuit based on its use or resale of products made by a third-party vendor. Similarly, your company’s customers may be sued for patent infringement based on their use or resale of your company’s products. When either situation arises, both the manufacturer and customer should analyze their rights and responsibilities to provide or receive indemnification and a defense to the patent infringement claims.
Why Do Patent Owners Sue Users and Resellers of the Accused Product?
A patent owner is not limited to suing the manufacturer of the product it claims is infringing its patent. It also can sue the seller and user of the product. A downstream reseller or user may be a more attractive target for a variety of reasons. A downstream company often realizes more revenue from the resale or use of the allegedly infringing product, so targeting that company can lead to a higher damages award.
A patent owner may sue a downstream business because it is big and therefore has the resources to pay a significant settlement, or because it is small and therefore lacks the resources to defend against a costly patent lawsuit. And patent owners know that suing a customer can create tension between the customer and manufacturer, making it more difficult and expensive for them to prepare a unified defense to the infringement claims.