Replies to post #106947 on Bots Inc (BTZI)

[lesgetrich]

The government awards patents. The courts can be used to decide whether a company has violated a patent and the company can be ordered by the court to pay a reasonable royalty. If they refuse, the company can be ordered to stop selling their product or service. The following article gives a pretty good explanation of how Patents are enforced...

Patent Infringement: It's More Common than You Think

To understand what patent infringement is, and why and how patent infringement occurs, one needs to first look at the history of U.S. patents and how they came into existence.

The concept for U.S. patents was established by the founding fathers in Article I, Section 8 of the original U.S. Constitution that was adopted in 1787.

It gives Congress the power to "promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

Since patents were included in the original version of the U.S. Constitution, patent rights are actually older than such other basic American rights, such as freedom of the press and freedom of speech -- rights that were not established until the adoption of the Bill of Rights (the first 10 amendments to the Constitution) in 1791, 14 years later.

A U.S. patent is a limited monopoly granted to an inventor by the federal government for his or her invention. A patent gives the patent owner (or "patentee") the right to exclude others from using his patented invention without his or her permission.

U.S. patents are governed by the federal law known as 35 U.S.C. (United States Code). According to Section 271 of that law, patent infringement occurs when an entity -- usually a business -- "makes, uses, offers to sell or sells" a product or service that uses a patented invention.

Permission to use a patent is given in the form of a license. The patent is licensed to a manufacturer, for example, and in return the manufacturer pays the patent owner a royalty based on unit sales, dollar sales or some other criteria.

The other option is for the patent owner to sell the patent, and patents can be bought and sold just like any other asset...

...Patent infringement is not a crime, so there are no criminal penalties.

It is a civil matter, and one of the reasons why patent infringement is so common is because the civil penalties are not severe. If a patent owner sues a manufacturer for patent infringement and wins, the redress awarded by the court is defined by law as "reasonable royalties."

In other words, what the patent owner is entitled to is the royalty he would have charged the manufacturer of the infringing product had the manufacturer licensed the patent in the first place.

As a result, it sometimes makes sense for a manufacturer to rush to market with a new product since the royalty he might end up paying to the owner of a patent is essentially the same as the royalty the manufacturer would have paid in the first place had it licensed the patent.

The exception to this is willful infringement. If the patent owner can prove that the infringer knew about the patent, and proceeded to willfully infringe it, the patent owner is entitled to treble (legalese for triple) damages.

The challenge, however, is that it is very difficult to prove willful infringement.

The other option a patent owner has is injunctive relief.

If the patent owner practices the patent (uses the patent in a product or service that is manufactured, used, sold or offered for sale), the court may order the infringer to cease sales of the infringing product.

If the infringing product is manufactured outside of the United States, the court can only order the company to cease importation of the product into the U.S...