When a patent is issued, the inventor obtains specific rights. Namely, he gets the right to exclude others from making and using the invention. The Manual of Patent Examining Procedures, or MPEP, explains that federal law grants this right in exchange for full disclosure about the invention. The right to exclude others from making and using an invention is why patents are so valuable to companies that develop new technology.
Violating the inventor's rights under a patent is called infringement. Infringement commonly takes place when someone sells a product containing elements that were claimed in a patented invention. Courts consider such infringement a serious violation of U.S. law because it can endanger the financial well-being of a company that legitimately sells the patented product.
One common solution to infringement problems is to give the infringing party the right to continue making and using the invention in exchange for a fee. This right is embodied in a license. For example, a company that holds a patent on a special type of computer memory might license that technology to other companies in exchange for a fee.
Legal action can follow if the patent holder does not want to license its invention. Legal costs can be staggering in an infringement lawsuit in which the technology is part of an important product. The American Intellectual Property Law Association reported that in 2011 the average legal cost of an infringement suit was approximately $5 million if the infringement involved a device that contributed greater than $25 million to a company's revenues.
If you infringe a patent with willful disregard for the inventor's rights, courts might impose treble damages, which are triple the damage suffered by the aggrieved party. Legal costs are so exorbitantly high because the penalties faced by the loser are so high. Courts determine willfulness by looking at the total circumstances.