Patent Infringement Rights Are Not Based on Use of the Patent

By Alexander X. Poltorak

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Many inventors and small businesses own patents that they do not use or license. The common terminology when a patent owner uses it to produce a product or service is to "practice". An owner that does not practice the patent it owns is known in the legal system as an NPE or "non-practicing entity." On the other hand, the owner that does practice it, he/she owns is known as a "market participant."

  1. Patent Licensing - Many inventors and universities, and a few businesses, own patents they do not practice. They instead license the technology to businesses that use the patents to produce products or services. Many universities produce a return on their research investments by licensing the patents that result from the research they conduct. Many of today's most common and popular drugs got their starts in university laboratories and research facilities. Thomas Edison was primarily a licensor. He was in the invention business, not the business of inventing and then using that invention to produce a product or service. Despite his genius, Edison realized that he was neither an entrepreneur nor an industrialist, so he focused on what he did best invent. Edison owned over 1,000 patents, and many of them were licensed to companies to produce products and services. In fact, Edison owned one for a time clock, and the company that licensed it grew to become IBM.

  2. Rights of the Patent Owner - It does NOT give the owner the right to practice the patented invention. What a it does, in reality and under the law, is give the owner the right to prevent someone else from using it. Whether or not the owner practices it, does not practice it, licenses the it or does not license, the owners retains the right to prevent someone else from using the patent! There is not - as many believe - any use-it-or-lose-it principle. An owner does not have to practice it to maintain ownership of it or the rights it creates for the owner!

  3. Enforcing the Patent - The US Patent and Trademark Office issues them; they do not enforce them. There are no Patent Police. When it is infringed (used without permission of the owner), it is the responsibility of the owner to pursue the infringer through civil litigation. That is, take the infringer to court!

  4. Injunction Relief - There is, however, one difference in the legal standing of an owner that practices his or her or its patent and the NPE or non-practicing patent owner. Should the owner claim patent infringement, and should the owner also practice it, one form or relief for the practicing owner is to petition the court for injunction relief. That is, ask a court to issue an injunction ordering the infringing party to cease production and sale of the product or service that uses the infringed product. If the product is produced outside the US, the court can issue an order prohibiting its import into the US. The NPE, however the owner that does not practice it does not have this option.

  5. Sue for Damages - Both owners that practice the patented invention, and owners that do not practice the patented invention, have the same right to sue the infringer for damages. There is a slight difference, however. While both parties have equal standing in terms of what they own and what their rights are, the owner that practices may win a larger award in a infringement suit than the non-practicing owner. The non-practicing owner may receive damages in the form of "reasonable royalty" on the sales of infringing products or services. The practicing owner may instead seek "lost profits" which, generally, are greater than a reasonable royalty.

  6. Patent Rights - So there is no use-it-or-lose-it factor to ownership. Other than the right to seek injunction relief, patent owners that practice their patents, patent owners that license their patents, and owners that neither practice nor license it, all have the right to prohibit others from using it/them without their permission, and have the right to sue the infringing party for damages. Permission to use a patent usually comes in the form of a licensing agreement.

Alexander Poltorak is a business consultant who writes about intellectual property, patent infringement litigation, patent suites, product licensing, and other business and innovation-related topics. For more information on patent infringement issues visit http://www.generalpatent.com/patent-infringement-litigation

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