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Reference Sources and Services

Notes 14.1 Functions and Types of Patents

Patents can generally only be enforced through civil lawsuits (for example, for a U.S. patent, by an
action for patent infringement in a United States federal court), although some countries have criminal
penalties for wanton infringement. Typically, the patent owner will seek monetary compensation for
past infringement, and will seek an injunction prohibiting the defendant from engaging in future acts
of infringement. To prove infringement, the patent owner must establish that the accused infringer
practices all the requirements of at least one of the claims of the patent.
An important limitation on the ability of a patent owner to successfully assert the patent in civil
litigation is the accused infringer’s right to challenge the validity of that patent. Civil courts hearing
patent cases can and often do declare patents not valid. A patent can be found invalid on grounds
that are set out in the relevant patent legislation that vary between countries. Often, the grounds are
a subset of requirements for patentability in the relevant country. Although an infringer is generally
free to rely on any available ground of invalidity (such as a prior publication, for example), some
countries have sanctions to prevent the same validity questions being relitigated. An example, is
the UK Certificate of contested validity.
The vast majority of patent rights, however, is not determined through litigation, but is resolved
privately through patent licensing. Patent licensing agreements are effectively contracts in which
the patent owner agrees to forgo their right to sue the licensee for infringement of the licensor’s
patent rights, usually in return for a royalty or other compensation. It is common for companies
engaged in complex technical fields to enter into dozens of license agreements associated with the
production of a single product. Moreover, it is equally common for competitors in such fields to
license patents to each other under cross-licensing agreements in order to share the benefits of
using each other’s patented inventions.

14.2 Ownership of Patents

In most countries, both natural persons and corporate entities may apply for a patent. In the United
States, however, only the inventor(s) may apply for a patent although it may be assigned to a corporate
entity subsequently and inventors may be required to assign inventions to their employers under a
contract of employment. In most European countries, ownership of an invention may pass from the
inventor to their employer by rule of law if the invention was made in the course of the inventor’s
normal or specifically assigned employment duties, where an invention might reasonably be expected
to result from carrying out those duties, or if the inventor had a special obligation to further the
interests of the employer’s company.
The inventors, their successors or their assignees become the proprietors of the patent when and if
it is granted. If a patent is granted to more than one proprietor, the laws of the country in question
and any agreement between the proprietors may affect the extent to which each proprietor can
exploit the patent. For example, in some countries, each proprietor may freely license or assign their
rights in the patent to another person while the law in other countries prohibits such actions without
the permission of the other proprietor. The ability to assign ownership rights increases the liquidity
of a patent as property. Inventors can obtain patents and then sell them to third parties. The third
parties then own the patents and have the same rights to prevent others from exploiting the claimed
inventions, as if they had originally made the inventions themselves.

Self Assessment

Fill in the blanks:
1. In most countries, both ...... and ...... may apply for a patent.
2. The investors, their ...... or their ...... become the properties of the patent when and if it is
granted.

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