Page 15 - Intellectual Property Disputes

Nature of Patent Rights

The essence of patent rights resides in the ability of the owner to exclude others from making, using,
selling, offering to sell, or importing the patented invention into the United States. This right to exclude
others is separate and distinct from the right of a patent owner to make, use, sell, and offer to sell or
import the patented invention.

First to File Versus First to Invent

In September 2011, the Leahy-Smith America Invents Act was signed into law. This law included some
of the most significant changes to patent law in the United States in the previous 50 years. Perhaps the
most prominent of these was a shift of the ownership of a patent to the "first to file" rather than the "first
to invent." This change aligned the U.S. process with that of many other countries. Provisions exist
within the law to address disputes that arise regarding the determination of the true inventor, as well as
other important features.

Patents as Property

The Patent Statute treats patents as personal property. As such, patent rights can be sold or otherwise
shared pursuant to a written agreement or licensed in a similar manner. Licensing is a process by which
a holder of patent rights (the licensor) grants permission to another party (the licensee) to commercially
exploit the patented invention, usually in return for some form of payment or royalty.

Licenses will contain a multitude of contractual terms and can be exclusive or nonexclusive. Under an
exclusive license, the licensor grants exploitation rights to the licensee to the exclusion of others
(including the licensor or patent holder). In contrast, a nonexclusive license permits multiple licensees
and may allow the licensor or patent holder to act as a competing manufacturer.

Patent Damages

Damages for patent infringement are governed by the Patent Statute, 35 USC 284, which states that
"[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for
the infringement, but in no event less than a reasonable royalty for the use made of the invention by the
infringer, together with interest and costs as fixed by the court." fn 17 This section provides for two
distinct measures of damages in a patent infringement case, namely, (a) plaintiff’s actual damages, but
(b) in no event less than a reasonable royalty. Legal costs can also be awarded in exceptional
circumstances.

The focus of the damage analysis in a patent infringement dispute typically first considers whether the
patent holder suffered lost profits. The goal of lost profits, when appropriate, is to award the patent
holder damages adequate to compensate for the infringement. If, in all reasonable probability, the patent
holder would have made the sales that the infringer made, the patent holder is entitled to recover the
profits it would have earned from the sales denied it as a result of the infringement. fn 18

fn 17 35 USC 284.

fn 18 Livesay Window Co. v. Livesay Indus., Inc., 251 F.2d 469 (5th Cir. 1958).

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