A patent conveys to the holder the right to exclude other parties from making, using, selling, or offering for sale the product or process the patent covers. United States patents cover all uses of a patented item in the United States, including the importation of goods a patent describes or goods made by a method the patent describes. Patents from other countries provide similar rights in their respective countries.
Patent protection only takes affect once the United States Patent and Trademark Office issues the patent. Thus, no protection exists during the application process. It takes an average of twenty months for the review of a patent application, at which point the Office either grants or denies the application. A patent application review can take more or less time depending on the complexity of the patent.
A patent applicant can pay from $5,000 for a simple device or process, to well over $20,000 for complex devices or processes, such as software and biotechnology. Once issued, a patent remains valid for a limited period of time. Twenty years after the date on which the applicant filed the application for the patent, the patent expires.
Beyond exclusive use of a particular product or process, a patent also provides other ways for the patent holder to earn money. The patent holder can license or assign the patent in whole or in part. A person or company can make millions of dollars each year in royalties simply by licensing out patent rights. Licensing or assigning patent rights allows other parties, for a fee, to use the patented product or process subject to any limitations included in the license or assignment.
Over the past twenty years, the patent has transformed into a powerful weapon in protecting research and development investments. Before 1982, three out of four patent litigation suits in United States courts resulted in decisions favorable to the alleged patent infringer. Courts, unable to understand the complexities and milieu of the highly specialized area of patent law, often handed down inconsistent rulings that muddied patent law protections. Consequently, most companies felt that the lax enforcement did not justify the demands of the patent application process. Companies stopped pursuing patents and were unable to protect their technologies. The result was an environment that awarded the duplicator rather than the innovator.
In 1982, to encourage consistency in the interpretation of patent law, Congress created the Court of Appeals for the Federal Circuit. Located in Washington, D.C. and composed largely of judges with expertise in patent law, this court hears all appeals from U.S. patent lawsuits. The Federal Circuit has proven much more willing to enforce patents. In at least two-thirds of the case it hears, the Federal Circuit supports patents. Most notably, the Federal Circuit has strengthened the presumption that an issued patent is valid.
In the past twenty-two years, the Federal Circuit has upheld or imposed judgments exceeding $1 billion against patent infringers. In addition, the Federal Circuits strong stance on patent infringement has lead to multi million-dollar settlement agreements between patent holders and alleged infringers. Perhaps more importantly, the Federal Circuit has often enjoined infringers from using the patented item or process for the remainder of the patent life, and imposed treble, or triple damages, against willful infringers who knowingly and purposefully used a patent.
Perhaps the most notorious patent infringement case caught the countries attention only three years after the creation of the Federal Circuit. In 1985, the Federal Circuit found that Kodak had infringed on Polariod's instant photography technology patents. This finding led to a five-year court battle to determine the damages. In 1990, the Federal Court found Kodak liable for $873 million dollars, payable to Polaroid, for its longtime infringement on Polaroid's patents. In addition, the court enjoined Kodak from any further infringement and ordered Kodak to pull all of its instant photography cameras off the market, forcing Kodak completely out of the instant photography business.