8 Patent and Legal Aspects T H E O D O R E C. VIRGIL
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American Cyanamid Co., Stamford, Conn., 06904
The use of stabilizers to protect plastics against oxida tive, infrared, and ultraviolet light degradations presents interesting questions in the area of patents, trademarks, and licensing. With the passage of the Patent Act of 1952, it is now possible to procure meaningful patent protection on the applications of stabilizers to plastics. Significant patent protection to the supplier of stabi lizers can now be obtained covering the use of stabilizers in plastics in the form of a method or composition of matter. A trademark which has required widespread consumer acceptance can provide a competitive edge with regard to the sale of the stabilizer and need not be licensed by the owner thereof.
J Jnder the patent system, we think of patents as covering new ^ plastic materials or methods of producing old or new plastics. Actually our patent system can be effective in protecting new ideas relating to the use of additives in plastic materials. The patents which can issue covering such ideas relate to the combination of the plastic with the additive or the use of the additive in plastic material to protect it against degradation such as ultraviolet light, heat, and other deleterious forces. To appreciate how a patent owner may derive benefit from such patent rights, assuming he is interested in more than defensive patenting, it is necessary to understand something about our laws on contributory infringement. Contributory infringement under our patent laws is incurred by either inducing others to infringe or selling to others a non-staple item which has no substantial non-infringing use and the selling party knows infringement will occur in its use by the purchaser. Contribu tory infringement is an important doctrine to know in the plastics industry, because frequently we are dealing with situations in which an additive or an ingredient is sold to others who may employ it in a way to infringe either a method patent or a patent covering the combination οϊ the item sold with one or more other ingredients. Specifically the situation may involve a patent covering a method of reducing ultraviolet light degradation of plastic materials by 76
Foy; Engineering Plastics and Their Commercial Development Advances in Chemistry; American Chemical Society: Washington, DC, 1969.
Downloaded by UNIV OF CALIFORNIA SANTA BARBARA on May 15, 2018 | https://pubs.acs.org Publication Date: June 1, 1969 | doi: 10.1021/ba-1969-0096.ch008
8.
VIRGIL
Patent and Legal Aspects
77
incorporating into it a certain Compound A, or a patent covering the combination of a plastic material and Compound A. Under the present Patent Law, enacted in 1952, it is now possible for the patent owner who supplies Compound A to others for use in his patented system, to sue other suppliers for contributory infringement. Hence, meaningful patent protection is possible in such cases which could prevent others from selling A in a way as to be contributorily liable. While the patent owner, who supplies Compound A as described above, may sue others for contributory infringement, and this is possible under Section 271 (d) of our Patent Act, he must observe certain rules to avoid misusing his patent. If misuse occurs, he may not be able to enforce his patent just so long as the misuse exists. The rule to follow is reasonable, namely, as long as the patent owner supplies the Compound A in competition with others, he must make available to all other ultimate users a license on the same terms as he gives to his customers, even though the licensee may wish to buy Compound A from other suppliers. In the licensing of patents in the plastics field, generally there are certain practices which ought to be observed to avoid difficulties. For example, a licensee should not exercise veto power over who else should be licensed by the patent owner. This is considered a bad practice under our anti-trust laws. Price fixing of the patented item, while still in doubt in certain limited respects as to how far a licensor or patent owner can go in pursuing the practice, is not recommended at all, because of many possible pitfalls. While it is a tempting practice because of the obvious commercial gain, if a supplier holds a patent covering the use of Compound A, for him to insist that Compound A should be bought from him to get a license, he should avoid this practice because it constitutes a misuse. Such practice may also involve an antitrust violation in certain situations. Where a package or plurality of patents are available for licensing, care must also be taken in how the license is offered, because it may be considered a "misuse" for the licensor to insist that all the patents of the package be licensed. The courts frown upon the licensor using coercion to compel the licensing of all his patents. In recent years it has become very risky practice for a patent owner to license a patent, knowing the patent has serious defects which would lead him to believe it is not valid. Serious anti-trust violations may occur in licensing a patent which the patent owner
Foy; Engineering Plastics and Their Commercial Development Advances in Chemistry; American Chemical Society: Washington, DC, 1969.
Downloaded by UNIV OF CALIFORNIA SANTA BARBARA on May 15, 2018 | https://pubs.acs.org Publication Date: June 1, 1969 | doi: 10.1021/ba-1969-0096.ch008
78
ENGINEERING PLASTICS AND THEIR COMMERCIAL DEVELOPMENT
feels is invalid or even in procuring a patent knowing it will be invalid at the time of its issuance. The licensor in the plastic field preferably should not license anyone with the understanding that licensee should not sell competitive goods. One can impose on the licensee, where appropriate, and usually in the case of an exclusive license, the obligation to use his best efforts, but not forbid competition in other goods. It is also important to remember that the courts are refusing to enforce royalty provisions which require a licensee to pay royalty after the licensed patent has expired, if it is the only way covering the goods sold. Referring again to the plastics business, we can see that it is not only possible to protect a segment of your business through patents covering basic compounds or polymers, but patents covering combinations of materials and uses can provide protection which can be profitable. Admittedly, the practices of old where a patent owner could insist upon all types of privileges are no longer safe or desirable from a legal point of view, however, within the permitted channel of exploitation much benefit can be realized. The trademark field differs, in that, there is no law which compels the owner of a trademark to license others who are dealing in the same or competitive goods. However, a problem can arise if the trademark owner will insist on his licensee buying from him the goods to which the mark will be affixed, if the goods are available from another source. RECEIVED,
June 20,
1969
Foy; Engineering Plastics and Their Commercial Development Advances in Chemistry; American Chemical Society: Washington, DC, 1969.
