The Basics of Patent Law

• Author: Austen Zuege
• Pages: 39-100

2

The Basics of

Patent Law

This chapter provides an introduction to patents, explains some

important limits on patent rights that can provide the basis for a

defense against claims of patent infringement, and discusses some of

the risks associated with patent infringement, including the costs of

patent litigation. This chapter includes answers to the follow questions:

• What is a patent?

• How is a patent obtained?

• What rights does a patent provide?

• What are the limitations on enforceable patent rights?

• How are patent rights assigned and licensed?

• What are the requirements to assert that a patent is infringed, and

the consequences of a finding of infringement?

• What are the costs associated with patent litigation?

The scope of this chapter includes very basic topics that may be

most helpful for readers not familiar with patent law. Though experi-

enced patent attorneys may wish to skip ahead to later chapters, this

chapter may still have some value to those experienced readers as a

resource to consult for particular topics that arise during the course

of a freedom-to-operate (FTO) study, such as when educating oth-

ers about patent laws. Moreover, it bears mentioning that while a

basic introduction to patent law is provided here, this is only a brief

39

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40 Patent Freedom to Operate Searches, Opinions, Techniques, and Studies

overview. Other books are available for more in-depth treatment of

patent practice.1

2.1 Overview of Patent Rights

2.1.1 Introduction

Intellectual property (IP) is a form of intangible property recognized

by most sovereign states throughout the world, and includes patents,

copyrights, trademarks, and trade secrets. In the United States, the

Constitution includes the Patent and Copyright Clause in Article I, Sec-

tion 8, Clause 8, which empowers Congress to pass laws “[t]o promote

the Progress of Science and useful Arts, by securing for limited Times

to Authors and Inventors the exclusive Right to their respective Writ-

ings and Discoveries.” Utility patents protect inventions. Copyrights

protect original works of authorship. Trademarks denote the source of

goods or services. Trade secrets refer to confidential information that

derives economic value from being kept secret. Governments incen-

tivize creativity by granting legal rights to inventors through patents

(and to authors through copyrights).2 These legal rights provide cre-

ators with a limited monopoly in exchange for public disclosure of

their creative works. The required disclosure is referred to as the quid

pro quo for the limited monopoly. A rationale for this exchange of

disclosure for a limited monopoly is known as the economic incentive

theory of IP. Creators who apply for protection and satisfy all statu-

tory requirements receive exclusive legal rights in the form of patents

(or copyrights). In this way, patents provide “the inventor with the

right, limited to a term of years fixed by the patent, to exclude others

from the use of his invention.”3

However, rewards must be carefully distributed to protect

society—this has been the norm for patents since the Statute of

Monopolies was passed in England in 1624.4 As a result, temporal

limits and scope limits are placed on IP monopolies. Patents are

1 For instance, Intellectual Property Law for Business Lawyers contains more in-depth dis-

cussion on many of the topics covered in this chapter. K & L, P.A., I-

 P L  B L 1 (2015–2016 ed. 2015); see also, e.g.,

D C, C  P (2015 ed. 2015); A R. T  ., T

P I L H: A  M (2011).

2 Unlike patents and copyrights, trademark laws have generally been established to

regulate commerce rather than to promote creativity, and in the United States are sup-

ported only under the Commerce Clause, art. I, § 8, cl. 3, rather than by a dedicated

constitutional provision.

3 Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229–30 (1964).

4 Graham v. John Deere Co., 383 U.S. 1, 5–6 (1966).

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Chapter 2: The Basics of Patent Law 41

temporally limited by a fixed period of time, called the patent’s term.

Following expiration of a patent’s term, the invention enters the

public domain and the public gains rights to freely make and use

the inventive subject matter of the expired patent. The monopolies

created by patents are also limited in scope. Society grants only lim-

ited monopolies to inventions deemed valuable. Accordingly, a pat-

ent’s scope is limited to “inventions and discoveries which furthered

human knowledge, and were new and useful.”5 As the U.S. Supreme

Court in Bonito Boats summarized, “[t]he federal patent system thus

embodies a carefully crafted bargain for encouraging . . . the creation

and disclosure of new, useful, and nonobvious advances in technol-

ogy and design in return for the exclusive right to practice the inven-

tion for a period of years.”6 In order to be deemed valuable enough

to justify a patent grant, an invention must be useful (or industrially

applicable), novel, and nonobvious (or involve an inventive step).7

Moreover, the invention must be adequately disclosed to enable oth-

ers to make and use the invention. These conditions for patentability

are discussed further below, and are administered through pre-grant

examination by national—or in some cases regional—patent offices.

2.1.2 What Is a Patent?

2.1.2.1 Patent rights

A patent is a grant of the right to exclude others from making, using,

selling, offering for sale, or importing a patented invention.8 This right

allows a patent holder the opportunity to earn profits above compet-

itive market rates through economic market exclusivity secured by

a government-backed monopoly on the patented invention. In other

words, it allows a patent holder to be the sole provider of the pat-

ented invention by excluding others from practicing the invention,

which typically increases profitability of the product—though hav-

ing a patent is no guarantee of profitability of a given invention, in

part because a patent by itself does not create a commercial market

for the protected invention. A patent also provides the patent holder

with the ability to assign and license rights to others, thereby reallo-

cating economic profit between parties. Authorities in some jurisdic-

tions can force a patent owner to license patent rights to others, but

forced or compulsory licensing laws vary greatly from jurisdiction

5 Id. at 9.

6 Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150–51 (1989).

7 35 U.S.C. §§ 101–103.

8 Id. § 271.

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