What constitutes patent infringement?

Your internet business, Sekure Kart, is going like gangbusters. Your low-cost way to generate keys for end-to-end encryption means you are signing new clients every day: small retailers, startups, and even individuals. Basically, anyone who makes financial transactions over the internet and wants to save 20% over the big boys.

You can't hire fast enough.

You are just finishing a marketing meeting when your CFO knocks on the door. She looks worried. Once in your office, she drops it on your desk: a cease and desist letter, not from some patent troll, but from one of the major payment processing companies. You're taking their customers and, where they can't compete on price, they'll compete with a patent infringement lawsuit.

Patent infringement is scary. Patent litigation is expensive and uncertain. If you want to understand what patent infringement is, and what to do next, you need to know three things:

1. Patent law

Before you even look at the patent that Sekure Kart is allegedly infringing, you need to know what to look for. Governments grant patents to inventors so that they will teach the public how to use the invention. The patent office then negotiates with inventors to make sure the part the inventors own is no more than what the inventors teach.

It's easy to find the part of the patent that describes what the inventors own. The claims are a numbered list of sentences that appear at the end of the patent. They describe exactly what the inventor owns. Each claim is a list of elements and an infringer must include all of them to prove patent infringement.

The entire rest of the patent is the part where the inventor teaches the public how to use the invention. The specification is your source to understand what the claims mean, including the definitions of the words used in the claim and the examples that help illustrate what the inventor invented and what the inventor did not.

All the types of patent infringement—design, utility, even plant—all rely on the same essential analysis.

2. The offending patent

Now that you know what to look for, look for it. Patents are easier to find than ever before, and a quick Google search should turn up the published patent. The cease and desist letter is pretty straightforward: It lists the exact patent Sekure Kart is allegedly infringing.

When you read the patent, start with the claims. Even if the terms used are unclear or even confusing, it is critical to understand what the inventor owns the patent for before you delve into the inventor's directions on how to use it.

Remember, you have to be doing exactly what the claims say. If your machine has one different part or if your process has one different step, then you are not infringing the claim.

You look closely at the first claim and your eyes light up. It includes the step of "random number generation." You read the patent closely: The patent only discusses standard ways of number generation. Sekure Kart uses a totally unique, completely different process for random number generation. You read the patent five more times: There is no way that the patent is using your method of number generation.

Before you call your lawyer, you grab a notepad and run to your programmer's office.

3. The alleged infringement

One of the best patent infringement remedies is to argue that your alleged infringement is not covered under the patent claims.

With great excitement, you ask your programmer to write a report explaining all the ways in which Sekure Kart's unique number generator is different from the methods described in this patent. Confused, your programmer squints at the patent. Patiently, you go over it again: You need a detailed technical analysis that explains that Sekure Kart generates numbers, an essential step in encryption, in a way that is totally different.

On Friday morning, it's waiting in your inbox: 42 pages of flow charts and diagrams explaining 27 core differences between Sekure Kart's random number generator and the random number generators included in the patent. You forward it to your lawyer.

If they were looking for a fight—they've just found it.