The tone of a patent notification letter ranges from a solicitation to a serious nastygram. There are many variations, with various legal consequences and business opportunities. It is all too common for recipients of patent notification letters to, at best, fail to perceive a potential profit opportunity, and at worst, penalize oneself with denial.

The nominal patent notification letter identifies the patent, summaries its claimed invention, cites the infringing product, possibly mapping the claims features to product features, and suggests a course of action: 1] respond; 2] pay or be sued; 3] stop infringing.

A 'cease-and-desist' warning, directly accusing infringement, may offer the opportunity to initiate a declaratory judgment suit. If facing a hostile, better to be the plaintiff; don't wait for the patent owner to sue if you have the grounds to start litigation yourself.

A "pay or be sued" letter isn't the most pleasant opening to negotiation, but it's an opening.

The worst thing a company can do is ignore a patent notification letter. Such matters just don't go away; the fuse, however long, has been lit.

A notification letter that requests a response in a non-hostile manner may be a great business opportunity.

The first thing that a company receiving a notification letter should do is find out whether infringement is actually occurring. If not, respond as such.

If infringement is a distinct possibility, the first thing that a company receiving a notification letter should do is validate the patent(s) cited. An opinion letter may be advisable down the road, but, before responding at all, suss out whether the patent is valid in light of the prior art. You don't need an attorney for that; a professional prior art searcher, such as Patent Hawk, can tackle the task at least cost. If infringing an invalid patent, an opinion letter provides legal cover for willfulness.

If infringing a valid patent, make the most of it: after preliminarily evaluating trade-offs internally, start negotiations.

While a competitor holding a patent is a formula for a financial headache, an individual inventor may offer an opportunity of partnership. When an inventor is holding an untapped patent commodity, a company has resources that can tap a patent's profit potential that the inventor is not likely to have available. An inventor may have an overblown sense of her patent's value, but that just represents an opportunity for the company to enter into a dialogue of education about how much a patented technology contributes to the bottom line, something that even the company at first may not comprehend. Conversely, a company may not realize the full value of a patented invention, and who better to educate towards such potential than the inventor. An infringer and an inventor may offer mutually beneficial resources to each other.

One possible outcome is that a company license an inventor's patent, while eventually profiting from bankrolling an enforcement campaign on behalf of the inventor for which the company takes a cut of royalties paid by other infringing companies. Consider one of your competitors being savvy enough to figure that out - the first to respond & cozy with the inventor gets to eat the competition's cake.