Stopping Infringement at the Border: A Winning Strategy in Patent Wars

Israeli high-tech firms are not known as timid enterprises. As true representatives of the Start-Up Nation, they play to win when it comes to developing groundbreaking technology. But more often than not, they don’t play to win when it comes to protecting their innovations. As a result, competitors who like what they see in Israel, simply “borrow” the ideas. Unless technology is adequately protected, copying the innovations of others is fair game. This is particularly troubling when the copying company has resources far greater than the Israel company from whom the invention was copied. The big gorilla can use its established sales and marketing channels to turn an Israeli company’s ideas into huge profits, often leaving the Israeli company sitting on the sidelines licking its wounds.

But there is one tool the Israeli company has to level the playing field: strong patents, and a willingness to enforce them if needed.  “All patents are not created equal,” says Gerson Panitch, a partner at Finnegan, the Israel practice leader at Finnegan, one of the world’s leading intellectual property firms. Most analysts report that it is the rare exception to find a powerful patent able to sufficiently block competitors. If a company wishes to use patents to achieve its business goals, the patents must first be written strategically from an enforcement perspective. Otherwise, lots of money can be spent developing patents that are effectively worthless.

 “It’s ironic”, says Panitch, “that many Israeli high-tech companies hold in their hands powerful technology that would enable control of vast markets with proper strategic patenting, but they cut corners and leave the door open for others to bypass the patents.”   

But it’s not just about having strong patents. It’s also about a willingness to enforce them against those who harm your business. “I know of one company in Israel that has an incredibly powerful patent portfolio that is likely able to stop all competitors. Every year for the last six years, the company watches as a growing group of competitors steal the company’s business and reduce a premium priced product to a commodity. Paralysis by the company’s management has caused the company to lose approximately a quarter of a billion dollars in sales in the same time period, and now jeopardizes what was once an incredibly bright future. It’s a sad story,” Panitch explains.

In contrast, last month Syneron Medical filed a lawsuit against 18 companies who it accuses of infringing Syneron’s patents that cover Syneron’s Profound RF microneedling technology for treating facial wrinkles. The patents are strategically designed to prevent competitors from skirting them. Eighteen companies, including Lumenis, Pollogen, EndyMed, Invasix and Inmode offer competing products, and Syneron sued them all in the International Trade Commission (ITC) in Washington, DC, to block importation of those products into the U.S.  Jeff Crouse, Syeron’s CEO explained the rationale for the suit:  “Over the years, the company has invested heavily in developing Profound which we believe is the leading fractional RF microneedle system in the world, and we will not permit others to infringe our patent rights."

Because Syneron has sufficient U.S.-based activities, it was able to use the ITC as a forum to sue all 18 companies in a single lawsuit. The action should be completed in 16 months, and if Syneron wins, the ITC will issue an exclusion order, preventing the 18 companies from importing the infringing goods into the United States. Gerson Panitch, who teaches patent strategy in the MBA program at Tel Aviv University, has represented over 130 of Israel’s leading tech companies, and who leads the team of Finnegan lawyers representing Syneron, says that the ITC is a powerful tool that Israeli companies too often overlook.  “Instead of battling in many courts against many infringers over a period of many years, a single suit in the ITC can do the trick in less than a year and a half to completely block importation of the infringing products into the U.S., Panitch explained. Because the U.S. represents approximately one quarter of the world economy, the ITC is a powerful forum that Israeli companies can’t afford to overlook.  Finnegan, whose headquarters are located in Washington, DC not far from the ITC, is involved in a significant percentage ITC suits.