Patents R Us: Information and Services for Inventors and Patent Owners

With Patent Infringement, There Is No Use It or Lose It

Many inventors and small businesses own patents that they do not use or license. The common terminology when a patent owner uses a patent to produce a product or service is to “practice” the patent. A patent owner − be the owner a he or a she or a business or another entity − 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 patent owner that does practice a patent it owns is known as a “market participant.”

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 of patents. 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 a patent for a time clock, and the company that licensed that Edison patent grew to become IBM.

Rights of the Patent Owner: A patent does not give the patent owner the right to practice his patent. What a patent does, in reality and under the law, is give the patent owner the right to prevent someone else or something else (like a business) from using it. And this right is absolute. Whether or not the patent owner practices the patent, does not practice the patent, licenses the patent or does not license his or her or its patent, the patent owners retains the right to prevent someone else or something else from using the patent! There is not – as many believe – any use-it-or-lose-it principle. A patent owner does not have to practice a patent to maintain ownership of it or the rights it creates for the patent owner!

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

Injunctive Relief: There is, however, one difference in the legal standing of a patent owner that practices his patent and the NPE or non-practicing patent owner. Should the patent owner claim patent infringement, and should the patent owner also practice that patent, one means of justice for the practicing patent owner is to petition the court for injunctive relief. That is, ask a court (patents are issued by the federal government, so patent cases are tried in Federal District Court) to issue an injunction ordering the infringing party to cease production and sale of the product or service that uses the infringed patent. If the product is produced outside the US, the court can issue an order prohibiting its import into the US. The NPE, however − the patent owner that does not practice his patent − does not have this option.

Sue for Damages: Both patents owners that practice the patent and patent owners that do not practice the patent, however, have the same right to sue the patent 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 patent owner that practices its patent will very likely win a larger award in a patent infringement suit than the non-practicing patent owner. The non-practicing patent owner can often win an award after a jury verdict or negotiate an out-of-court settlement with the infringer that compensates the patent owner for the use of the infringed patent. However, the practicing patent owner can sue for and receive damages for BOTH use of the patent AND the lost income and profits that were caused by sales of the patent infringer’s products or services to what might have been customers for the patent owner’s product and services. While that is not an easy number to determine, many small business patent owners have received multi-million dollar settlements from larger businesses that infringed on their patent and in doing so deprived the small business of sales and profits from the product it produced using its own patent!