Small business facing civil case

Hello, My small business received an email yesterday saying we were being sued for patent infringement and I have no idea what to do. We sold a single item on eBay for $8.99 back in March. It turns out that the item was bought by an attorneys office in PA and that attorneys office is the one who notified us that we were being sued. We asked what we could do to resolve the issue and they offered a settlement of $3,500 which seems insane to me considering we only sold the item for $8.99. The summons says "
A lawsuit has been filed against you.
Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff's attorney, whose name and address are:"
They have already froze our PayPal account via court order and I'm worried that the bank and eBay account are next. (Frozen PayPal over $8.99)
Do I hire a lawyer? Pay the $3,500? What happens if we do nothing? I'm completely clueless and would really appreciate any guidance. Thank you!

PTD2020 said:

Do I hire a lawyer?

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Yes, interview as you meet with three or four lawyers.
Then retain the one best positioned to defend your business.

PTD2020 said:

Pay the $3,500?

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Only if you think extortion, coercion, or blackmail is lawful.

PTD2020 said:

What happens if we do nothing?

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The clever, skilled attorney will receive a default judgment of far more than $3,500 because you twiddled your thumbs, while your head was buried in the dirt.

You've allegedly been sued.
Your bank accounts have been frozen.
You'll soon have your feathers plucked.
Doing nothing is not a great choice.

PTD2020 said:

I'm completely clueless and would really appreciate any guidance.

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That's exactly why your search for a legal champion MUST begin Wednesday.

Assuming that you verify that the notice is legitimate and that you actually are being sued by these people, then you get to decide if paying $3,500 is better than (possibly) paying considerably more for an attorney and still settling, or even losing your case.

PTD2020 said:

My small business received an email yesterday saying we were being sued for patent infringement and I have no idea what to do.

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Did the email come with a copy of the summons and complaint?* If so, then the first thing you ought to do is look up the case at www.pacer.com and then retain the services of an attorney. If the email did not include a copy of the summons and complaint, did it identify the federal district court where the case was filed and the case number? If so, then you can look up the case on PACER and get a copy of the summons and complaint. If the email had neither a copy of the summons and complaint nor information about the case, then you should consider requesting same from whomever sent the email.

* - Sounds like you at least received a summons, but that doesn't necessarily mean the case was actually filed, and service by email isn't valid unless the court has expressly ordered it.

PTD2020 said:

Do I hire a lawyer? Pay the $3,500?

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That's a business decision only you can make. If you do decide to pay, then you should make sure you get a solid release and dismissal of the lawsuit.

PTD2020 said:

What happens if we do nothing?

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Impossible to predict, but there's a risk of having a default judgment entered.

The accounts were frozen due to eBay and Paypal terms and conditions. They do this anytime a complaint is filed. It looks like a money grab from the attorneys who filed this. You have only 30 days to respond to their complaint which would need to obviously be done by an attorney. Good news is you can or may cross claim in this under the rules of civil procedure for the state the lawsuit was filed in. Also could be a jurisdiction issue as the people who bought this did not use the product nor commit anything that sounds like a product liability issue on your part.

Again, this is all conjecture. Hire an attorney submit a response and get on with it.

Redemptionman said:

Good news is you can or may cross claim in this under the rules of civil procedure for the state the lawsuit was filed in.

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It's a patent infringement case, which is generally filed in federal court. And indeed, that seems to be the case here as the e-mail refers to the Federal Rules of Civil Procedure (FRCP), which are the rules that govern civil cases in most federal courts (with a notable exception for the Tax Court, which has its own unique set of rules).

Redemptionman said:

Also could be a jurisdiction issue as the people who bought this did not use the product nor commit anything that sounds like a product liability issue on your part.

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Again, this is a patent infringement case, as expressly stated by the OP. There is nothing here to indicate any negligence cause of action. The federal district courts are where this would be filed, in a district that has personal jurisdiction over the defendant (OP). That is likely to be one of the federal district courts in Pennsylvania since the OP indicated that as the jurisdiction that applies, but of course one would need to look at the complaint to see in which court it was filed.

Redemptionman said:

Hire an attorney submit a response and get on with it.

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I completely agree with that.

While the legal issue regarding claims of patent infringement being made against on-line merchants is more common than one might think. Ask yourself, do you have any non-exempt assets. If you don't, then there is nothing they can really do except obtain a judgment against you, which is worth about as much as a lawsuit served by email.

But of course, if you are selling copyrighted, trademarked or patented merchandise on line, if it gets you to stop then it was well worth the price of postage.