There was an attempt to get rid of the US Patent office at one point, because;
“everything that could be invented had been”.
That obviously wasn’t true, but most mechanical mechanisms nowadays are splitting hairs, and numerous patents are just slight variations on existing technologies, and routinely wind up with patents, simply by not citing existing technology, sometimes existing technology that already has had patents applied for, if not rejected as already existing.
The way to get a Patent declared invalid in many cases is to come out with a product that allegedly “violates” that patent, and then yo tell the patent holder to take you to court once the patent holder sends you notice of the Patent violation.
You can also tell the patent holder that you think their patent is not valid and why, and see if they take you to court, or back off.
Harbor Freight has deep enough pockets to pay court costs and legal costs if they want to challenge a Snap-On Patent.
That is what HF did with the Slip Joint pliers.
Snap-On backed off with the pliers.
I don't think you understand that system nearly as well as you think.
There are
lots of derivative patents. Knipex was standing on top of any number of them for their pliers wrench, but their implementation was unique enough that it was still able to be a patent of its own, despite many previous examples of 'prior art' (e.g. similar designs/patents).
A patent isn't invalid if a violating product isn't challenged - it just becomes public domain if the owner doesn't defend it. And there are several variations that over-generalizes that I've had too much Irish whiskey tonight to bother with.
Outside of a licensing discussion gone awry, I doubt many companies are proactively notifying a patent holder the way you're describing. There are ways to contest a patent, but it mainly winds up in court - one that specializes in IP disputes.
Harbor Freight almost certainly has an IP review board that ensures they're not going to wind up at the pointy end of a patent lawsuit. I'd guess SO's patent on slip joint is either so specific that it's easy to design around or so broad it is unenforceable - in this case probably the former. They didn't 'back off' - they were never "on".
I think Snap On uses patents/IP as marketing to some degree. It's 100% what happened with the jack - one or more executives thinks having a patent is **** and deludes themselves into believing any patent is a shield. But the operative patent on the jack was a friggin' design patent (look and feel) and probably the exec(s) didn't know what that was and demanded that the company run to court. They embarrassed themselves in court.
It's true that sometimes a legit patent isn't defended (your 'backed off' thing I guess). I've told the story here more than once about a I product I had the had multiple patents and a trademark that were being infringed on and the guidance from the legal team was it was too expensive to pursue. Still mad about that, but I do not think that's what's going on here. IMHO HF isn't counting on SO not to sue - they know where the legal lines are and mainly they don't cross them. In the case of the jack, SO made a really stupid mistake.
As for the G2 being able to take the SO guts - that's only sorta true. Yeah they
fit, but the SO design lacks the shoulder of the Icon wheel, so when SO guts are in there there's a cavity that should be occupied by part of the geared wheel in the Icon internals. I have no idea whether swapped mechanisms are working well in the G2 ratchets - hard to think so - but none of that proves very much IMHO. It's not a copy or derivative design outside of the physical cavity...sorta.