Patent misuse

Under the patent misuse doctrine, courts have put restrictions on the methods of issuing label licenses. The courts have generally held that a patent holder may not license others to use its unpatented products in the patented manner, while refusing to license its patent to parties that purchase the unpatented goods from its competitors. Moreover, patentees have been found to have misused patents by charging higher royalty rates to licensees who use the unpatented products of competitors than to purchasers of their own products. See, e.g., BJB. Chemical Co. v. Ellis, supra Ansul Co. v. Uniroyal Inc., 448 F.2d 872 (2nd Cir. 1971), cert, denied, 404 U.S. 1018 (1972). 

Recently, the Supreme Court, in Dawson Chemical Co. v. Rohm Haas Co., 448 U.S. 176 (1980), limited the reach of the patent misuse doctrine in a manner crucial to the chemical industry. In that case, Rohm Haas Co., which... 

The Supreme Court held that Rohm Haas had not engaged in patent misuse. Congress in 1952 had amended the Patent Act to state on its face that patent holders did not engage in patent misuse simply because they sold nonstaple articles for use with their patent, authorized others to use nonstaple articles with the patent, and sued others who sold nonstaple articles for use with the patent, 35 U.S.C. 271(d). A nonstaple article is one that has no substantial commercial use apart from its use in connection with a patented subject matter. The court held that these amendments were intended to allow patent owners to tie the sale of nonstaple articles, like propanil, together with authorization to practice the patented process, and at the same time to allow patent owners to prohibit other producers of nonstaple products from selling the articles for use in connection with the patented process. 

This decision greatly changes the nature of the inquiry companies must undertake in deciding to market patented processes. The first inquiry in many cases will now be whether the articles sold for use with the patented process are staples. If so, all of the restrictions of the patent misuse doctrine apply. If not, patent holders may require users of the patented process to buy from them the articles, such as chemicals, needed to engage in the patented process. Briefs by the government and by private interveners assumed that a decision in favor of the patent owner in Dawson Chemical Co. v. Rohm Haas Co. would allow patent owners to charge a higher royalty to licensees who use the nonstaple products of others. However, the court did not reach this question. 

Feldman R (2004). The open source biotechnology movement Is it patent misuse Minn. J.L. Sci. Tech. 6 117-167. 

Intellectual property rights are the most sensitive interface between a fine-chemical company and its customer. This is particularly the case if the latter is a pharmaceutical company. Most of the profits of the industry derive from drugs protected by patents. Any dissipation or misuse of IP, on either the product or the manufacturing process, can cause serious damage. The company, its board, executives, and employees may be held liable. It is, therefore, imperative that strict procedures for safeguarding the IP are put in place, such as the following ... 

While the patent owner, who supplies Compound A as described above, may sue others for contributory infringement, and this is possible under Section 271 (d) of our Patent Act, he must observe certain rules to avoid misusing his patent. If misuse occurs, he may not be able to enforce his patent just so long as the misuse exists. The rule to follow is reasonable, namely, as long as the patent owner supplies the Compound A in competition with others, he must make available to all other ultimate users a license on the same terms as he gives to his customers, even though the licensee may wish to buy Compound A from other suppliers. 

While it is a tempting practice because of the obvious commercial gain, if a supplier holds a patent covering the use of Compound A, for him to insist that Compound A should be bought from him to get a license, he should avoid this practice because it constitutes a misuse. Such practice may also involve an antitrust violation in certain situations. 

Where a package or plurality of patents are available for licensing, care must also be taken in how the license is offered, because it may be considered a misuse for the licensor to insist that all the patents of the package be licensed. The courts frown upon the licensor using coercion to compel the licensing of all his patents. 

Nevertheless, it should be clarified that innovations are subject to the general rule that the legal and moral effects of an invention must always be judged in relation to the use normally expected of the patented product or process, not just the possibility of misuse. For example, a specific product that can be legally used as a pesticide is not excluded from patentability simply because it can also be used in chemical warfare. 

The claims of this patent have been held valid and infringed (40). A patent on a dilute solution of a particular acid to Morehouse and May-field (32) was held valid and infringed (11). Later this decision was modified, and misuse of the patent held because the product sold was a concentrate for later dilution. The dilute solution was the patented product. 

Short cuts based on the use of nontechnical help, when misused, can produce fatal results. For instance, a stenographer who had typed up many searches, was once asked to make a list of patents dealing with windshield cleaning compositions, listed in the annual U. S. patent indexes. She spent several days doing this. Unfortunately, without proper supervision, her list turned out to be a collection of mechanical gadgets—windshield wipers—a subject of no interest whatever for the search. 

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