Duty to Use Your Property and Your Patents

By Dennis Crouch

Cornell professors Eduardo Penalver and Oskar Liivak have an interesting new essay on the absence of any use requirement in patent law. In the 1908 case of Continental Paper Bag Co. v. Eastern Paper Bag Co., the Supreme Court held that patent owners have no duty to actually practice their patent. In that case, the court tied their analysis to real property where it recognized “the privilege of any owner of property to use or not use it, without question of motive.” In their essay, Penalver and Liivak challenge this notion of real property and, in turn, challenge its use as a metaphor for patent rights. They write:

[T]he law significantly hems in the rights of owners not to use their property, employing numerous doctrines, such as nuisance, abandonment, adverse possession, and permissive waste, to ensure that owners’ decision not to use their property does not inflict harm on others. Even with respect to attentive nonuse, owners’ rights are qualified, both by common law doctrines like necessity and by the state’s power to override (or at least influence) owners’ decisions about nonuse through eminent domain, regulation and taxation.

The essay also challenges the property/patent metaphor as inapt because of the “nonrivalrous nature” of information and “because of the particularly powerful way that patent law constrains the freedom of nonowners.”

Edwardo Penalver and Liivak, Oskar, The Right Not to Use in Patent and Property Law (October 16, 2012). Available at SSRN: http://ssrn.com/abstract=2162667

83 thoughts on “Duty to Use Your Property and Your Patents

  1. The simple truth is, a land patent does not eliminate your ability to otherwise contract and secure the property that sits upon the land to others as collateral against your promise to pay. People also think they own their land because they paid for it and they have a Warranty Deed However, often that is not enough.

  2. American cowboy, if an infringer can infringe with impunity, can refuse to bargain for a license in good faith, can force the patent owner into litigation where they expect to crush the patent owner through delay and expense, and, in the end, still pay the same royalty as paid by anybody else, with their being no possibility of an injunction, then our patent system is really a farce.

  3. The harm to the patentee comes if he is interested only in licensing others. If does not have the absolute right to say NO!, then his negotiating position for adequate compensation for the license is impaired.

    Unless he can enjoin infringers, the infringers can say, “Go ahead, sue me” instead of paying the royalty the patentee demands and see what a court determines…. after the patent owner has spent gazillions of dollars on the litigation. The end result is less valuable patents.

    The FTC disparages this as “hold-up,” but all of humanity has been not only held up, but totally denied access to this invention, up until the inventor did the non-obvious. What is the harm of paying the inventor for his contribution for 20 years? If he wants too much, you can decline the license and do without. After all, you went without it FOREVER previously!

  4. Nice strawman. We’re only talking about denying one particular type of remedy

    It’s not a strawman and I can’t tell what “only we’re talking about” because we aren’t talking yet since you refuse to answer the question I actually asked and for some reason insist on answering a question I have not asked.

  5. Point blank, US patent law has NO use requirement.

    Not in the statute … yet.

    But as a practical matter, showing your own non-trivial use of your patented invention may help you obtain an injunction.

    Is that what you meant by “point blank”?

  6. Is there harm?

    Only if you were going to vote. Is there a remedy?

    under the guise of denying enforcement of the right.

    Nice strawman. We’re only talking about denying one particular type of remedy, and only in cases where it’s completely inappropriate.

  7. Let’s say you have a right to vote. It’s November 4th. You may or may not have decided to exercise your right to vote. Let’s say I detain you and prevent you from exercising your right (whether or not you were actually going to vote).

    Is there harm?

    Now further, note here (as astutely mentioned above), the patent right is NOT a right to practice, and is solely a right to keep others from practicing. So to begin with, your assumption of whether the patent holder is practicing or not is NOT MATERIAL to whether or not you have violated the patent holders rights or not.

    Point blank, US patent law has NO use requirement. You cannot sneak one in under the guise of denying enforcement of the right.

  8. Injunction is an equitable remedy, subject to the balancing of equitable harms. If a patent owner is merely using his patent to withhold the subject matter from the public, how is he harmed by someone else practicing the subject matter? Or, how is his harm greater than the harm to the enjoined party?

  9. (Long commentary citing Blackstone on property lost due to Typepad bug. Go read Blackstone’s “Of Property, in General”, which is where US law got its obsession with property rights.)

  10. At least until the “use it” or be faced with a COMPULSORY PATENT LICENSE statute is enacted in the US….

  11. Never !!! By expenditure of great sums of money and effort, you have been blessed with a RIGHT to prevent others from using your property. You have not been cursed with an OBLIGATION to prevent others from using your property….

  12. Ned,

    Sometimes the “big Picture” is not what is needed to resolve an issue at law. Now, I am not sure if your earlier mention of Lochner was meant as a plus or a minus – can you clarify?

    Sort of like the horrible rant of dicta in Benson – not needed and easily tossed aside.

  13. LOL.

    Your choosing not to answer is likewise, “total mystery.”

    Not. (but then again, you avoiding any actual discussion with substance is not new, and can easily be attributed to the autonomous “burn-reflex” that even non-thinking animals possess)

  14. Thanks for weighing in with your usual banal fluff, my personal troll.

    Rather than ask questions (when I still don’t have an answer to my question, perhaps you would like to try to add some substance instead of your usual crrp?

    You do know how to actually answer a question with something other than insults or another question, right?

  15. answer the question that I actually asked

    “Is there harm if you have a right without a remedy?”

    Let’s say you have a right to kill someone, anon. And let’s say that there is no remedy for that right. Is there harm?

    You tell us, anon.

    Or maybe you can rephrase your question. I know it’s really really hard for you.

  16. However the Federal Circuit is not the Supreme Court. They don’t think too clearly.

    I do not understand your obsession with denigrating the CAFC in comparison to the Supreme Court.

    We have discussed this on more than one occasion and the Supreme Court simply is not a paragon compared to anybody when it comes to patent law, let alone the CAFC.

  17. Anon, you seem to have caught me with my hand in the cookie jar.  Yes indeed I would like to have a system where first to invent is the law and where we would need to actually make the invention before we can file or at least obtain a patent.  Trademark law is not inconsistent with what I propose for patents.

  18. Anon, from the early days of patent law, the Supreme Court knew that there were dominating patents and there were subservient patents i.e. improvements.  I have never seen a Supreme Court case where the construction of an embodiment of an improvement was deemed to be an infringement.  Even to proposed such a rule of law would to be so contrary to the advancement of science and the progress in the useful arts as to be ludicrous.  I hope you would agree that the Supreme Court would never authorize such a rule.

    However the Federal Circuit is not the Supreme Court.  They don't think too clearly.

  19. You haven’t actually posed another question since I answered (twice!) the one you asked.

    Your calling your answer to a different question is not an answer to the question I have asked – no matter how many times you call it so.

    Now please, answer the question that I actually asked.

  20. Answer that question.

    You haven’t actually posed another question since I answered (twice!) the one you asked.

    How about you make yourself clear for a change, and say what you want to discuss, and then we can discuss it.

    If what you’re trying to say is that you’re still bitter over eBay, I can’t help you. This isn’t the only area of law where plaintiffs want more injunctions than they get. The function of the courts is not, it may surprise you to learn, to give every successful plaintiff every remedy he asks for.

  21. My question makes perfect sense. It just changes the focus of the discussion (appropriately).

    Answer that question.

  22. That doesn’t answer my question.

    Your question made no sense. Whether you have a remedy depends on whether you can show harm, and not the other way around.

    The best answer I can give to the question as posed is the one I already gave – if you have a right without a remedy, that must be because you failed to show any harm in violation of that right.

  23. You are hypothesizing about a future change in law – why are you now referring to FTI?

    Please outline what you understand the experimental use exception to entail.

  24. No, there is not. Even I Story’s day you could not “just see how or if it works” if doing so was related to a for profit venture.

  25. Is there harm if you have a right without a remedy?

    There is harm if you’ve been harmed. There isn’t if you haven’t. Which is why you’d have no remedy.

  26. How about this hypo?

    The patent is filed in 1999. Publishes in 2001. Infringing product comes to market in 2003. Market develops in in 2003 and 2004. Patent issues in 2005. When would the obligation to “use your property” kick in?

  27. I guess it’s not the worse thing in the world that the most extreme proponents of the worst patents are also the most inarticulate and (let’s just face it) weird commenters in the patent blogosphere.

  28. I think there are parallels to many of the real property doctrines. Permissive waste and abandonment are akin to failing to pay maintenance fees. Latches would apply in situations similar to adverse possession; granted, there is no statute laying out time limits like there is for adverse possession.

  29. with what many view as the policy holding in the eBay case

    Many are wrong. The lesson from eBay was simpler: No Shortcuts.

  30. You and 6? He’s on the East Coast and you are on the West Coast … how does that long distance relationship thing work?

  31. The bag case was about a permanent injunction after trial at law. In that case cont. bag purchased patents on a new (and improved?) bag making machine and continued to use its old – non-infringing bag making machine. It asserted the patents against a competitor using the new machine. Post trial the infringer posited that it was inequitable and against the policy of the patent clause for a court in equity to grant a permanent injunction in this situation. This provoked the ‘no question of motives’ response concerning a property owner, property rights and what a court of equity needs to weight. Interestingly enough the bag case was upheld in the eBay case. It is definitely hard to square with what many view as the policy holding in the eBay case – i.e., patents should be put to ‘optimal use’ with a court imposed compulsory license.

  32. Ultimately, it is a balancing test between not wanting people to sit on a patent but giving people the right work on the thing to find out what it best and most profitable use is. That is a line to walk.

    I think it is funny that some people use the comment sections of a patent blog to try to boost their own self esteem.

  33. Ned,

    Do you (can you) apply this across all ‘technologies?” What about pharm? If the patent claims take years to actually meet the true reduction to practice, and by any sense of reasonableness would be public knowledge long before any time bar could be met, any consistent application of your standard would mean the de facto end of patents for pharma? If you make an exception there, you then risk the wholesale fragmentation of patent law as each of a spectrum of technologies would want their own ‘optimal’ version.

    Pandora’s calling. She wants her box back.

  34. anon, if I am building an apparatus to test an invention that employs 10000 other inventions for other purposes, I think the use of the other inventions to be incidental and within the “experimental use” exception of Story?

    It is quite different to build the invention to compete with the patentee in the patented product. That is a making and an infringement itself.

  35. One should be entitled to experimentally build a patented device to see how it works and whether it works.

    One can.

    You just cannot do so with a profit motive. Idle curiosity and “to see if it works” is just as valid today as it was in Story’s day – and conversely, building it so that you can devise a better something to profit from is forbidden, just as it was in Story’s day.

  36. Mr. Heller:

    Do you really think you can get a patent on science fiction??? That is taking things to the extreme don’t you think? Besides if I am not mistaken, they have provisional patents now. And that should eliminate the types of problems Mr. American Cowboy is concerned about.

  37. “MM, IANAE, and Leopold kicking up dust and picking on non-lawyer 101 Integration Expert.”

    Well it’s out of the frying pan and into the fire with these guys. It’s kind of amusing that these self proclaimed lawyers run away from discussing the law with another lawyer, to debate an Actual Inventor on invention ( presumably because they think this is easier) only to lose in that arena as well.

  38. Agree, fundamentally and in spades. FTF is the worst system ever invented. Taking one’s time to reduce to practice, to really learn how to make and use and to describe it in one’s patent is gone. We are left with speculation and suggestion as the pith and essence of the disclosure. We file on what we think “might” work, without knowing that it will.

    Without knowing that it will…..

    What is the patent system for in the first place? Do we protect real inventions that are proven to work or do we protect science fiction?

  39. “You are aware that your Mac does that by using standards, right?”

    Mr. Bloom the point is that Actual Inventors can create their own systems in order to get a device/product in the marketplace, and that those systems are and should remain eligible for patent protection. That the systems can integrate and work with other standards does not take away from that fact. After all, businesses will cooperate when it is their mutual interest to do so. However that interest may never occur if one does not have patent protection in the first place.

  40. MM, IANAE, and Leopold kicking up dust and picking on non-lawyer 101 Integration Expert.

    Way to go guys, nice Trainwreck. Hope you had “fun.” Prof. Crouch must be so proud of you.

    Well, I guess you guys had nothing substantive to say about working requirements…

  41. “Your Mac might still be pretty, but it wouldn’t be nearly as useful if Steve had designed around all those essential patents. The same goes for your iPhone.”

    That’s called “Integration” and it is the bedrock of innovation and the foundation for our Patent System in the digital age.

  42. MM Said: What invention are you talking about?

    Any invention that “integrates” a concept and/or technology into a process, and in effect transforms the process into an inventive application of the concept and/or technology.

  43. Just like my Mac connects to other computers over the internet.

    You are aware that your Mac does that by using standards, right? Many of them, in fact, several of which are now or have been covered by dozens of essential patents.

    Your Mac might still be pretty, but it wouldn’t be nearly as useful if Steve had designed around all those essential patents. The same goes for your iPhone.

  44. “to prove how great an inventor you are.”

    It’s more a necessity to bring your ideas to market when the existing standard locks you out. In this way patents stimulate competition and innovation. It forces Actual Inventors to go beyond the “thing” to creating the system.

    Why invent just a phone when you can invent the communication system?

    Why invent just invent a new TV when you can invent a TV network?

    Why invent a just restaurant when you can invent a franchise system?

    Of course others will invent their own systems to compete, that’s the beauty of the broad scope of patentable subject matter. It spurs innovation that benefits all of society.

  45. IANAE: “A new system of telephones? ”

    101 Integration Expert: Why not?

    IANAE: “That can only communicate with other people’s phones by using the highly-patented standard?”

    101 Integration Expert: Why do that? A pioneering inventor can create the new system and the phones will still be able to call other phones. Just like my Mac connects to other computers over the internet. No one owns the airwaves, space, time, etc. The only barrier is people like you and MM coming out of the woodwork calling the claims craaap because you don’t understand the invention.

  46. Actual Inventors of the digital age bust paradigms

    Indeed, they have busted several already and the courts have been working diligently to fix them.

  47. And I am certain you do not understand pioneering a new system.

    A new system of telephones? That can only communicate with other people’s phones by using the highly-patented standard?

    I don’t think you’ve thought this through. But by all means, go invent a new telephone that can’t call anybody because you made it that way on purpose, to prove how great an inventor you are.

  48. And I am certain you do not understand pioneering a new system. Designing a complete system that uses your technology is how Actual Inventors of the digital age bust paradigms and set new standards. And yes, they deserve broad patents on the entire system, not just one device. Think the Mac for Apple Computers in relation to MS/DOS. There is no way to keep a pioneering inventor, that thinks and designs on a global system scale, out of the marketplace. Indeed they become the new marketplace!

    Of course there will always be anti patent ( especially software/business methods) types that come out the woodwork to try and change the law and rules to stop them. Fortunately , the Court is not on their side, at least for now.

  49. I have never seen an invention that could not be designed/invented around.

    I guess you don’t understand the concept of a “standard” – the entire industry has gotten together and said that if you design around the standard, they won’t let you use your technology. Since the point of your invention is to communicate with their technology, how many customers do you think your design-around will have?

  50. “Like you, I sometimes tell potential clients that I don’t want to represent them until they build the device, or suggest that they build the device before we file”

    What about First To File? I mean, what happens if while you are building the device someone comes along and files a patent on it? Doesn’t the new FTF rules say you lose your patent rights?

  51. “What if you can’t build one without infringing 15,000 other patents?”

    I have never seen an invention that could not be designed/invented around. An “Actual Inventor” would know this intuitively.

  52. Only 15,000?

    Now this is where I think the Federal Circuit is and was completely, completely, off base. One should be entitled to experimentally build a patented device to see how it works and whether it works. That, according to Story and for more than 100 years was the law.

    I’d take that issue to the Supreme Court in a heartbeat.

  53. Ned Heller said: “it is not required by the law. Bit, IMHO, it should be so required.”

    Mr. Heller,

    Well done. And may I respectfully suggest that you use the above quote as the boilerplate disclaimer on all your posts?

    After all, all anyone that has ever challenged your veracity really desires, is that you acknowledge the difference between your opinions/wishes for the law and what is the actual law.

  54. “Why is it that whenever a patent is involved, people start crying that their job is too hard? …101 is too complicated.”

    The only people I see crying over 101 are people like yourself that somehow want to make the issue more complicated than it actually is. The law on 101 is clear, concise, and consistent. Only a willful misreading and ignoring of the law ( usually by those that want to change it ) makes 101 complicated.

  55. Ned: Like you, I sometimes tell potential clients that I don’t want to represent them until they build the device, or suggest that they build the device before we file, to make sure the application includes any insights they learn while building it. Sometimes this keeps the quacks away, and sometimes it tempers the enthusiasm of someone who might have a good idea but zero ability to implement it or profit by it, in which case they would pay me a decent fee for a product that is useless to them. Documented properly, I don’t think this raises any serious liability issues.

  56. Patents are for inventions, not science fiction.

    1. We “could” require a reduction to practice before filing.
    2. We “could” require a commercial use by the PO or by a licensee or an infringer before a patent issues.

    I don’t know how many time inventors have come to me proposing technical nonsense. I politely suggest that they would be best advised to actually build one before we file, because this real invention is in how to make it work.

    While this is good advice, it is not required by the law. Bit, IMHO, it should be so required.

  57. James,

    Not denigrating your points (which are well-made), but the real issue here is one of philosophy (it’s not really even about policy – as the policy has been set). Our Congress has seen fit NOT to include a “use” requirement, and no amount of academic squabbling can change that fact.

    This is mere table pounding, and frankly, I have seen nothing compelling.

  58. But then how does a court judge whether the excuse is sufficient?

    It could consider such factors as whether the commercial use was significant enough for the patentee to be irreparably harmed by the competitor’s use.

    Seriously though, courts judge whether excuses are sufficient all the time. It’s kind of their job. Why is it that whenever a patent is involved, people start crying that their job is too hard? Irreparable harm is too complicated. 101 is too complicated. Let’s go shopping.

    And do we really think the courts are going to do better than the market at that kind of thing?

    Surely we do, because we have a patent system in the first place, and the place to resolve patent disputes is in court.

  59. A major problem with a use requirement is that it’s difficult to strike a balance between underenforcement and overenforcement without also being an intrusive and time-consuming process.

    What typically happens with use or working requirements in countries that have them is that they have a large number of exceptions that swallow the rule. For example, the patentee may be waiting for regulatory approval or investment. Manufacturing, distributing, and marketing channels may have to be developed. It may not yet be possible to manufacture the product profitably. It may not be safe enough yet. It may require as-yet-uninvented technologies in order to be particularly useful (e.g. inventing the barcode before the laser). Or maybe there’s been some small number of sales, which the patentee claims is bona fide evidence of use. So in those countries the patentees can easily come up with an excuse for the non-use, and the government accepts whatever they say because it’s far more trouble than it’s worth to actually investigate.

    Now, the government doesn’t have to actively investigate excuses. We could wait until a competitor sued for a compulsory license on the basis of the patentee’s non-use. But then how does a court judge whether the excuse is sufficient? Do we want courts to say “you haven’t been trying hard enough to find a manufacturing partner, so we’re going to give a compulsory license to your competitor”? Or “you should have been willing to accept a lower profit margin, but you waited too long and now we’re going to give a license to your competitor”? How is a court supposed to make that kind of decision? And do we really think the courts are going to do better than the market at that kind of thing? And is the expense of litigation going to be worth the social benefit?

    An alternative is strict overenforcement: no investigation or inquiry, just a flat “use it or lose it in X years” with maybe an exception for pending regulatory approval (i.e. the paperwork has been filed, the patentee is just waiting on the government). But I’m not sure that rigid approach would be much better, since lots of inventions go unused for reasons that are entirely valid but difficult to prove (as discussed above).

  60. Now, I do agree with you that these two professors tend to have a bent against strong patent rights. However, on your particular point, I think that their point in listing these is to show that real property does have use requirements and that suggests that the 1908 metaphor doesn't fit as well as originally suggested. 

  61. The good professors note various ways that real property may cause harm to third parties, “such as nuisance, abandonment, adverse possession, and permissive waste, to ensure that owners’ decision not to use their property does not inflict harm on others. Those do not provide a reason to deny a patent owner his rights, though.

    Nuisance: How is somebody hurt in a way analogous to nuisance for non-use of an invention that nobody knew existed until taught by the inventor?

    Abandonment and adverse possession: Yes, you can lose your title to real property after 20 years of letting somebody else use it, but you lose your patent after 20 years, regardless.

    Sounds like the anti-patent crowd is reaching for straws.

  62. Even though we are not here discussing trademarks, one particular Jacobism comes to mind; that unused registered trademarks are “Abandoned vessels in the shipping lanes of trade”. One couldn’t possibly assert that about patents in Europe though, because the annual renewal fees are so high, and every year higher. But what if a renewal fee is due only every 4 years?

  63. Excuse my ignorance, but U.S. patent right only confers a right to exclude others from making, using, selling, etc.

    A “use” requirement is incompatible with this right. The patentee has no express right to use the patented invention. He/she is likely to infringe on the patent rights of another.

  64. Have the good professors ever heard of owners who don’t “use” the property, but rather rent/lease it to others?

    Its still being “used” for productive purposes, and landlord gets to charge a fair fee.

    Amazing! just like with….. PATENTS.

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