Exploiting a UK patented invention

In our IP survey earlier this year we asked whether you believed your company is effectively exploiting its IP. Nearly 50% of respondents disagreed. In response to this feedback Charlotte Musgrave takes look at the different ways a patent can be exploited.

Your UK patent gives you the legal right to stop others from making, using, selling or importing your patented invention in the UK, even if those others conceived of the patented invention independently. You can use this right to keep your competitors out of the UK market for the patented product, giving yourself a monopoly position as defined by the scope of the patent claims. In this scenario your competitors would need either to withdraw from the market entirely, or perhaps offer an alternative or even inferior product or process, either way gaining you a competitive advantage.

Using your patent in this way is beneficial if for example you wish to manufacture a patented product yourself, or you wish to subcontract the manufacture to a third party and take the income from selling the product yourself. Another approach might be to use your patent to enter into a joint venture with a third party manufacturer where you would contribute the patent right and they would contribute the manufacturing facility and expertise.

Defending your patent rights

Your patented product and any related commercial literature should be marked with the patent number to make third parties aware of your patent.

Sometimes, the very existence of your patent may be enough to dissuade would-be competitors, and in other cases some degree of negotiation or mediation may be required to preserve your monopoly. In the worst case, it might be necessary to take legal action against the competitor through the courts, or in some cases the UK Intellectual Property Office. If your infringement action is successful, the courts are able to force the infringer to pay compensation for the infringement of the patent, usually running from the date of publication of the application which matured into the patent, to issue an injunction to prevent further infringement, and to award you a proportion of your costs. Where significant and unrecoverable damage to your business is likely as a result of the infringement, an injunction before trial can be obtained under particular circumstances, although this is uncommon. Various other minor legal remedies may also be available. Where infringing articles are being imported into the UK, then it is useful to note that customs officers are able (on request) to confiscate goods which appear to infringe a patent.

Exclusive and non-exclusive patent licencing

An alternative way of exploiting a patent is to encourage other parties to use the patented invention – for a price. You can offer licences to other parties in return for royalties, which will allow them to use the patented invention under the terms set out in the license agreement.

An exclusive licence provides the licensee with a monopoly for the patented invention – excluding even you as the patent holder. You may wish to offer this type of licence if you do not wish to work the patent yourself, and if maximum profit would be derived by offering exclusivity to a single company.

In contrast, a non-exclusive licence opens up the market for the patented invention to several companies, including you as the patent owner. This approach enables you to fully capitalise on a large market which you would not be able to fully exploit yourself.

A licence may be limited by, for example, geographical area, field of use or duration, and may include or exclude the right to sub-license. In this way you are able to limit each licensee to the scope of right they actually require and maintain overall control of the exploitation of your patent. The amount of revenue derivable from the patent will depend on numerous factors, including the nature and value of the patented product or process, the strength of the patent, the breadth of the monopoly provided by the patent claims, the scope of the acts permitted by the licence, and whether it is exclusive or non-exclusive.

Patent acquisition

A patent is a form of property, and has a value dependent on its strength and the commercial significance of the monopoly it provides. The commercial significance may be judged on the basis of the benefit derived by having a monopoly position, or the amount of licensing income actually or potentially derived from the patent. A patent can be used as leverage in commercial negotiations and clearly forms an important asset of a company, which can be realised by way of sale of the patent (either on its own or along with the company) in return for a one-time payment, by way of a mortgage of the patent to raise capital, or by way of attracting investment in the company.

For more information contact Charlotte Musgrave
D Young & Co LLP
Tel: 020 7269 8550
Email: cjm@dyoung.com