How Should You Respond to a Patent Demand Letter?

First Steps

A demand letter asserts that a product or service infringes one or more patents and usually asks the recipient to take a license. Some letters are sent by competitors protecting a market; many are sent by patent assertion entities whose business is licensing. The first response should be the same in either case.

1. Do not ignore it. A letter that identifies a specific patent and product gives the recipient notice, which can matter for damages and for willfulness.
2. Do not admit anything. Business teams should not reply, speculate about infringement in email, or contact the sender directly.
3. Route it to counsel. In-house counsel or outside litigation counsel should own all communication so that the analysis stays privileged.
4. Preserve documents. When litigation is reasonably anticipated, the recipient has a duty to preserve relevant evidence. Issue a litigation hold covering product documentation, source code, sales data, and communications about the accused features.

Vet the Sender

Understanding who sent the letter shapes every later decision. Determine whether the sender is an operating company that sells competing products or an entity that only licenses and litigates patents. Review the sender's litigation history: how many suits it has filed, in which courts, how many were settled early, and whether any reached a judgment. A sender with a long record of early settlements behaves differently from a competitor seeking to exclude a rival.

Verify the Patent

Before anyone reads the claims closely, confirm that the patent can be enforced at all.

• Status: Check that the patent has not expired and that maintenance fees have been paid. A lapsed patent cannot support a claim for infringement after the lapse.
• Term: Confirm the expiration date, accounting for patent term adjustment and any terminal disclaimer. Damages are limited to the six years before suit under 35 U.S.C. § 286.
• Ownership: Review the assignment records. The sender must own the patent, or hold the rights necessary to enforce it, and gaps in the chain of title are common in acquired patents.
• Family and history: Review the patent family and the prosecution record. Arguments and amendments made during examination can narrow the claims through prosecution history estoppel.
• Marking: If the patentee or its licensees sell products, check whether they complied with patent marking requirements, which can limit damages before actual notice.

Assess Infringement

Infringement is measured claim by claim. Counsel should read each asserted independent claim, construe its terms in light of the specification, and compare every element against the accused product. A claim chart that maps each limitation to evidence is the standard tool, and many letters include the sender's own chart, which deserves close scrutiny. If a single limitation is absent, that claim is not literally infringed, although the doctrine of equivalents may still apply.

Assess Validity

In parallel, search for prior art that predates the patent's priority date. Strong anticipating or obviousness art supports a rebuttal letter and may support a petition for inter partes review, which must be filed within one year after service of an infringement complaint. Consider also whether the claims are vulnerable under § 101 or § 112.

Check Licenses, Indemnities, and Insurance

The accused feature may already be covered. Review existing licenses held by the company and its suppliers, since a license to a component supplier can exhaust the patent for downstream use. Supply and software agreements often contain indemnification clauses, and the letter should be tendered to any indemnifying vendor promptly. Some insurance policies cover intellectual property claims and require prompt notice.

Understand the Legal Risks of Responding

Several legal doctrines affect timing and tone.

• Willfulness: Since Halo Electronics, Inc. v. Pulse Electronics, Inc. (2016), courts have discretion to enhance damages for egregious infringement, and knowledge of the patent is part of that inquiry. A documented, good-faith analysis is the best protection. Under 35 U.S.C. § 298, the failure to obtain an opinion of counsel cannot be used to prove willfulness, but a well-reasoned opinion remains useful evidence of good faith.
• Declaratory judgment: Under MedImmune, Inc. v. Genentech, Inc. (2007), a sufficiently concrete assertion can give the recipient standing to sue first for a declaration of non-infringement or invalidity, which can let the recipient choose the forum.
• State law: Many states have statutes that prohibit bad-faith patent assertions, and some letters may violate them. These statutes vary widely in scope and remedy.

Choose a Response

Once the analysis is complete, the realistic options are:

• Request more information: Ask the sender to identify the specific claims, products, and evidence it relies on. Vague letters often go no further.
• Reply on the merits: Explain, without waiving privilege, why the product does not infringe or why the patent is invalid.
• Negotiate a license: When the risk is real and the price is below the cost of defense, a license or covenant not to sue may be the rational outcome.
• Seek a declaratory judgment: File first, when a court decision is likely and the forum matters.

Keep a record of each decision and its reasoning. Teams that receive assertions regularly benefit from a consistent intake process, and ArcPrime's litigation intelligence shows a sender's assertion history and outcomes when a letter arrives.

This article provides general information and is not legal advice.