What Happens When You Violate a Patent?

By Shelly Morgan

Patent rights are so important the founding fathers mentioned them in the U.S. Constitution. This respect for patent rights encourages companies to develop new technologies because the courts may punish those who violate those rights. Such punishment is commensurate with the damages suffered by the owner of the patent.

Patent Rights

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.

Infringement

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.

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Possible Resolutions

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 Costs

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.

Penalties

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.

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Differences Between a License and a Patent

In the U.S., a patent for an invention can be granted only by the United States Patent and Trademark Office in Washington, D.C. Once granted, the patent gives an inventor the exclusive right to manufacture, use and sell his invention, as well as legally prevent others from doing so. The patent holder also has the right to license others to use his invention, typically for payment of a royalty fee. A patent license is a private agreement between the inventor and a licensee, and does not involve the USPTO.

How to Check to See If a Business Name Is Trademarked

Trademark law protects intellectual property, such as business names. Trademarks are an important means of identifying goods produced by a particular company and an essential part of any branding campaign. Many trademarks are registered with the U.S. Patent and Trademark Office, but not all trademarked names are registered. Unregistered trademarks may be protected by the Lanham Act and common law trademark protections.

What Is the Punishment for Violating a Patent?

Patent laws encourage creativity by allowing inventors to profit from their inventions. In essence, a patent awards inventors the exclusive right to market, sell or use their inventions. Patents are authorized in Article One, Section 8 of the U.S. Constitution. Accordingly, the federal government issues patent laws and sets forth a number of remedies that serve as punishment for those who violate patent rights.

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