Defenses to Patent Infringement
Court of Equity:
A patent is a government-granted monopoly, and as such, is subject to abuse by patent holders. The property rights granted by a patent are tempered by the need to avoid allowing patent owners to create an anti-competitive environment.
In Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942), Suppiger held a patent for a salt “depositing machine.” The machine was used in the canning industry and required the use of salt tablets. When licensing its patented invention, Suppiger required licensees to purchase all their salt tablets from Suppiger. When Morton Salt began selling its own version of the patented machine, Suppiger sued for infringement. The Supreme Court held that:
"A patent affords no immunity for a monopoly not within the grant, and the use of it to suppress competition in the sale of an unpatented article may deprive the patentee of the aid of a court of equity to restrain an alleged infringement by one who is a competitor.” -Morton Salt at 491 (citation omitted).
Interestingly, the 7th Circuit, whose decision was appealed to the Supreme Court, noted that Morton Salt also “makes a machine and uses it in the same way as [Suppiger]. It requires its purchaser or licensee to use salt tablets made by it.” G.S. Suppiger Co. v. Morton Salt Co., 117 F. 2d 968, 971 (7th Cir. 1941).
The Supreme Court, however, was not giving its seal of approval on Morton Salt’s actions. Rather, drawing analogy to trademark law, it noted that
“equity does not demand that its suitors shall have led blameless lives”(Morton Salt at 492, citation omitted) and that a patent holder
“may not claim protection of an exclusive privilege granted in the furtherance of a public policy, where it is being used to subvert that policy." -Morton Salt at 495.
In other words, the Court did not determine that Morton Salt had not infringed on Suppiger’s patent, but rather that Suppiger attempted to use the patent to stifle competition with the patentholder’s unpatented product.
Forty years later in Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176 (1980) the Court arrived at a different outcome in a different case of “tying” a patent to an unpatented product. In this case, Rohm & Haas held a process patent on the use of propanil as an herbicide. The issue arose because Rohm & Haas made use of their patent “only in conjunction with the sale of an unpatented article that constitutes a material part of the invention and is not suited for commercial use outside the scope of the patent claims.” Dawson Chemical at 179.
The crucial difference between Dawson Chemical and Morton Salt is that the patent holder in the later case was merely preventing others from competition in a nonstaple good which has no use outside of its use with the patent. Recall that the distinction between staple goods and nonstaple goods was important in §271(c) contributory infringement cases.
EXAMPLE: Saul invents a method for using the chemical “porvier” for helping balding men regrow their hair. He applies for, and is granted, a process patent. The chemical has no real use outside of the process which Saul invented. Mark has been buying porvier from Saul and re-selling it, instructing his buyers to use it in accordance with Saul’s patented process. Saul can refuse to sell the chemical to Mark unless Mark also agrees to pay for a license for the patent. Following Dawson Chemical this is not misuse, as the only known use for porvier would infringe on Saul’s patent.
In 1988 the following subsections were added to §271(d):
No patent owner…shall be denied relief or deemed guilty of …by reason of his having …(4) refused to license or use any rights to the patent; or (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.
In Hornbook at 507, it is suggested that this marks a trend in the diminishing importance of the misuse doctrine. In order for misuse to apply as a defense to infringement, a defendant must now show that (1) the patent owner has market power, and (2) the product in question is a staple good which has substantial use other than its use in connection with the patented product. Otherwise, courts will not apply misuse theory to refuse to enforce the patent (i.e., courts will enforce the patent).
Prior User Defense
In 2011, as part of the AIA, Congress amended §273 (“Defense to Infringement Based on prior commercial use”). This section applies only to processes and allows continued use if the accused infringer had:
- acting in good faith, commercially used the subject matter in the United States, either in connection with an internal commercial use or an actual arm’s length sale or other arm’s length commercial transfer of a useful end result of such commercial use; and
- such commercial use occurred at least 1 year before the earlier of either—
A. the effective filing date of the claimed invention; or
B. the date on which the claimed invention was disclosed to the public in a manner that qualified for the exception from prior art under section 102 (b).
This defense is non-transferable (i.e., it applies only to the actual prior user) and is very limited.
Notably, §273(f) allows the award of attorney’s fees to the plaintiff/patent holder if the accused infringer is found to have asserted this defense without a reasonable basis for doing so.
Other Defenses to Infringement
If a patent applicant withholds material information from the PTO during patent prosecution and does so with bad intent, an accused infringer may be able to claim the patent holder’s inequitable conduct as a defense. Under the AIA. an accused infringer cannot use this as a defense if the material withheld is the “best mode” for using the invention.
If a patent holder fails to act to bring an infringement claim in a timely manner, and that failure to act causes the accused infringer to incur additional damages, the defenses of laches or estoppel may be available.
When an employee creates an invention while at work which becomes integrated into the employer’s equipment, the employer is said to have shop rights and is entitled to the continued use of this invention even if the employee was not hired to work in that capacity and even if there is no agreement between the employer and employee.