Tech Company Contracts Have Unique Considerations

Understanding the difference between direct and contributory patent infringement is important when drafting contracts for a tech company.


As counsel to multiple technology companies, I am always baffled when a negotiating counterpart disputes there are multiple types of infringement, followed by a demand my client bears the burden “for any and all patent infringement” related to its product. In reality, if your client signs a contract accepting the onus for “any and all patent infringement”, your client (if its product is successful) will certainly be either defending or paying a third party’s cost for defending a patent infringement lawsuit. Instead, consider only agreeing to liability based on claims your client’s product “directly infringed a patent”. Being responsible only for claims alleging direct patent infringement, your client will not have to concern itself with having to defend claims contributory infringement. Contributory infringement usually rears its ugly head as part of a scatter shot pleading in which a lawyer names every party or person tangentially related to your product or its use. Patent infringement lawsuits are expensive. Limiting your clients exposure to these lawsuits is something to strongly consider when drafting a contract for a tech company client.

A good analysis of contributory infringement, in which the Court held contributory infringement does not exist without first having direct infringement is in the recent case of Limelight Networks, Inc. v. Akamai Technologies, Inc. -S. CT.- 2014 WL 2440536 (2014).

Attorneys’ Fee Provisions in Contracts at Risk Upon Appeal

Specificity prevails over tired boilerplate.

Attorneys’ fees incurred performing appellate work will not be awarded to the prevailing party if the contract or document forming the basis for an attorneys’ fee award does not provide for appellate attorney’s fees.

Pardo v. Goldberg (Fla 3rd DCA, 2011)