Offer in Compromise When Infringement is Detected

In the previous article we reviewed what cease and desist letters are and how they are used. Let’s review what an Offer in Compromise means. Basically it is what it says in that it is an offer to settle a dispute. This offer can be made as soon as a claim of infringement is received or at the litigation stage. Depending on the interests of the parties involved and the value of the IP at issue for each of them, the Offer in Compromise can contain the following terms (either offered to the IP owner or demanded from the infringing party):

  • Payment of a lump sum of money for the past use of the IP;
  • Entering into a licensing agreement and making regular payments for future use of the IP;
  • Cease and desist from any further use of the infringed IP;
  • Disclosing the identities of all persons/entities of whom the IP at issue was distributed to, if any, and how much each such person or entity was charged for it;
  • forwarding to the owner of the IP a complete accounting (along with payment) and listing of all unauthorized exploitations of the infringing IP;
  • serving notice to each distributor, retailer or other third party who may be engaged in any exploitation of the infringing IP and demand their immediate withdrawal from commerce, and
  • surrendering all copies of the infringed IP to its legal owner in case the license was not executed.

 The aggrieved party may even request the right to audit and examine the books and records of the infringing party to verify its compliance with the agreement. The above-list of possible terms of the offer in compromise is certainly not all-inclusive. The type of the IP, the circumstances and scope of the infringement, the identities of the involved parties and their future interests in regards to the IP at issue will define the extent of the Offer in Compromise. An intellectual property attorney will usually make sure that all grounds are covered when representing an IP owner or that the demands are not overreaching when representing the alleged infringing party.  

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