Exploitation And Licensing

Submitted by patentadmin on Tue, 04/27/2010 - 13:12

For a long time, it was believed that N.P.E.s (nonpracticing entities or trolls, depending upon your viewpoint) lacked standing to bring a patent infringement action in the I.T.C. (the International Trade Commission) because they could not satisfy the “domestic industry” requirement, i.e. that a domestic industry exists or is in the process of being established, with regards to the specific articles protected by the patent for which enforcement was sought. Then, the I.T.C. handed down its Saxon decision, holding that the requirement could be met by “substantial investment in … exploitation, including engineering, research and development, or licensing.” All of the big corporations immediately began to protest that the I.T.C. had thus thrown open its doors to the trolls and exposed them to harassment and extortion. Yet, somehow, they survived.

Now, we have the case of PPC, Inc., an N.P.E., which appeared before the I.T.C. and argued that money spent on litigation against alleged infringers should be considered as investment in “exploitation” or “licensing.” Will this argument spell the doom of large multinational and foreign corporations? Probably not.

In a heavily redacted and rather confusing 64 page decision, the Commission has held that “patent infringement litigation activities alone, i.e. patent infringement litigation activities that are not related to engineering, research and development, or licensing, do not satisfy the [domestic industry] requirements. However, litigation activities (including patent infringement lawsuits) may satisfy these requirements if a complainant can prove that these activities are related to licensing …”. Is that clear? Apparently, if a patentee sues an infringer as part of a licensing campaign, the costs of such litigation count towards the domestic industry requirement; but, the costs of litigation brought merely for fun or profit do not.

THE LESSON TO BE LEARNED: Sometimes the important thing is not what you did, but what you later say you were thinking when you did it. Not all litigation costs are equal – some can be meritorious “exploitation” or “licensing.”

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