Friday, May 22, 2009

Stopping Patented Invention From Being Imported

Dear Rich: I am preparing to license a U.S. "patent pending" invention to a U.S.-based company. Even though the market for the product is clearly worldwide, it is sparse enough that it does not justify expensive foreign patent filing. The company's supplier and its competitors are located in China and Korea. If any of these other companies sell to U.S. customers via the internet (typical), I believe the sale legally occurs in a foreign country, therefore sidestepping my patent. If so, I question if the company I will deal with has any reason to enter a license agreement with me. Is there any way I can be protected in cost-permissible way? I'm so glad you asked. The short answer to your question is that once you acquire patent protection, you can stop Internet sales to U.S.-based customers. U.S. patent holders can stop anyone from importing infringing products or offering infringing products for sale (advertising or marketing) that product within the U.S. There are also  federal court decisions indicating a foreign supplier cannot "induce" infringement in the United States. So, whether copies of your product are sold on the Internet, or they slip out of the factory's back door, or result from competitor copying, you can stop these from coming into the U.S. The bigger concern is who will bankroll the policing and enforcement needed to stop this activity. One of the reasons inventors license (rather than manufacture themselves) is so that the licensee (the company to whom you're licensing) will watch your back. You may be able to enhance that protection by authorizing (via the licensing agreement) for the licensee to go after infringers and to split the resulting court awards after deducting legal expenses. (You can find additional information about licensing patents in this book.) Without going too far into the blah-blah-blah world of patents and lawyers, the Dear Rich staff feels you should discuss this matter with an IP attorney before agreeing on important licensing agreement terms such as territory, indemnity, and grant of rights.  (You can find qualified IP attorneys in your area in Nolo's Lawyer Directory.)

By the way, thanks to patent attorney Robert Plotkin for his help with this answer. Robert is the author of the new book, The Genie in the Machine: How Computer-Automated Inventing is Revolutionizing Law and Business, and we'll be featuring excerpts from an interview with him in the future.