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A United States Patent Has Issued: Now What?

There is great uncertainty about what patents will issue as quantum computer technology evolves.

There is great uncertainty about what patents will issue as quantum computer technology evolves. What innovations will occur? When will they occur? Who will make them? Who will file patent applications? What will they try to patent? What will the United States Patent and Trademark Office allow to issue as a patent? Will the patents that issue cover anything of commercial value or significance? Amidst all of this uncertainty, one thing, however, is certain – patents will issue.

This begs a simple, yet profound, question: So what? The answer requires an understanding of what patents provide, and what they do not provide. A frequent misunderstanding is that a patent allows a patent owner to use the invention. It does not. Rather, a patent allows the owner to exclude others from using the invention covered by the patent. This right to exclude can provide value and opportunity to the patent owner – and potential challenges to others.

There are many ways a patent owner can exploit its patent rights. Much depends on who the owner is and what its business is. A large technology company may have the wherewithal to develop its own commercial products, and may want to exclude others from using its invention, keeping the market to itself.

In contrast, a university or small company may be unable to commercialize an invention itself, and may license its patent to someone else who can, obtaining a royalty in return for granting the license.

In between, a patent owner may license its patent to a joint venture with a partner who may have its own patent, know how, financial resources or marketing resources necessary to exploit the invention. That way, the patent owner can exploit its invention in partnership with another.

Patent licenses usually result from commercial negotiations, but often they cannot be obtained without first instituting an action for patent infringement. Indeed, most patent litigation results in settlement, often involving a license agreement, as the parties realize that their respective positions are not as rosy as they thought at the start of the litigation and as they incur legal fees in connection with the litigation. Absent settlement, a patent owner can expect one of three basic outcomes from litigation: (1) it wins, and receives damages for past infringement and an injunction that prevents future infringement of its patent; (2) it wins, and receives damages for past infringement and a high royalty that allows the infringer to continue to use the patented invention, but at a cost that may provide the infringer an incentive to modify or to stop selling its infringing product; (3) it loses.

It is sometimes the case that two patent owners have “blocking” patents, both of which may be necessary to make a commercial product. When that happens, they may grant each other cross-licenses to their respective patented technologies so they can commercialize their respective inventions. Although this would allow the two patent owners to compete against each other in the market, no one else could enter that market with an infringing products because of the patents. A patent may also have defensive value. Two competitors may have products that infringe each other’s patents but, even in the absence of a license, neither is willing to sue the other for infringement because they would be sued by the other in return.

Although it is better to be a patent owner than to be patent-less, the situation is not dire or hopeless for an accused infringer who has no patent.

A patent covers only what the claims of the patent recite. So a patent may not apply, even if the patent (but not the claims) broadly describes the same technology. It’s like a person who walks down the street in front of a house to reach a destination, but is not a trespasser unless she walks on the lawn. It is also possible for someone who is infringing a patent to modify its product to avoid infringement – a process called “designing around a patent,” which is often available, particularly for electrical and mechanical technology. By analogy, if a person is walking on the lawn, she can simply “design around” the trespass by walking on the street instead, and still reach her destination. Indeed, a product that has been designed differently to avoid a patent may actually be better than the patented product. In our analogy, the person who is forced to walk on the street instead of on the lawn to avoid trespassing may find that she will arrive at her destination at the same time, without getting her shoes muddy.

But what if an infringer either does not want to change its product or cannot reasonably change its product?

It is often possible to obtain a license from the patent owner to continue to use the invention by paying a royalty. The question is whether there is a royalty amount an infringer would be willing to pay to continue to use the invention that would be acceptable to the patent owner. Of course, there are honest disputes about whether the claims of a patent cover a product that is accused of infringement, which may result in good faith patent infringement litigation.

Another potential option is to attack the validity of the patent, either as a defense in litigation or by bringing an “IPR” proceeding in the Patent Office. Not all issued patents are valid. A company when confronted with a patent that adversely affects its business has the economic incentive to engage in a much more thorough search effort than the Patent Office can perform during the patent application process, and sometimes finds different prior art that invalidates the problematic claims of a patent.

As patents issue, they can provide great benefits to patent owners, and great challenges to others. But having a patent is no guaranty of success. And having no patents is no guaranty of failure.

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