I will try to answer the question clearly.

1) A patent once issued is a legal instrument granting a monopoly. The fact that it issued means that the examiner either did not know the prior art or knew it and thought the claims differed. This is a very important distinction as it means the difference between winning and losing in litigation. Many clients come in convinced that something was known beforehand whereas the claim is specific about something new and inventive.

2) The reference must have been published over a year before filing to be certainly citable.

3) If you are sued, you will need to cover your own costs at least through the trial phase.

4) The courts can award costs in patent cases but the criteria is strict, ambiguously applied, and rarely returns all costs, so I would be careful.

What I most often recommend is that you put the prior art together for your files (sometimes things get forgotten and the lack of filing is problematic, so build the file). Make sure you cover off everything in each and every claim. Then get someone to look at it and at least give you a verbal, "you got it right" (this will be somewhat expensive)). After that, you have some defense in relation to litigation.

You can also file for a re-examination if you really believe that all the subject matter is invalid. That said, it may just lead to them focusing their claims more narrowly and therefore cause more problems than it solves.

I have handled a lot of issues like these over the course of my career and each one requires a slightly varied solution, so a simple solution statement is not possible without the facts.

Sorry that I cannot be more helpful.