The Antitrust Laws of the United States of America: A Study of Competition Enforced by Law

By A. D. Neale | Go to book overview

CHAPTER IX
PATENTS AND ANTITRUST

1. The United States patent-system and the limits set by antitrust to the exercise of patent-rights

The holder of a patent is in a position of monopoly. His monopoly may not be of much economic importance; that will depend on what the patent is for. Often patented articles and components are in competition with other patented or unpatented articles which are close substitutes. But whether the element of monopoly is important or not, every patent is a grant of monopoly power by the State and, as such, is necessarily immune from the prohibitions of antitrust; for if it were a case of illegal monopolization to take out a patent, there would be no point in the patent-system. It follows that the antitrust policy is modified in various ways when applied to trade in patented products. Not only the monopoly in the patented article but also certain kinds of restrictive agreement made by the patent-holder may be no more than the legitimate exercise of rights inseparable from the grant of the patent.

A United States patent confers on its holder for a period of seventeen years the exclusive right to make, use and sell the patented invention.1 The operative word is 'exclusive', for the inventor, like anybody else, needs no special 'right' to make and sell his goods. The special feature of the patent is a right to exclude others from practising the invention except on the patentee's terms. The patentee may dispose of this right as a form of property.2 Thus he may sell or assign the patent outright to another person for a lump sum; or he may license another person exclusively to make, use and sell the article in return for royalty payments. Alternatively, he may share the right with others. Thus he may license other people to manufacture and sell the invention while continuing to manufacture and sell it himself. He may license nonexclusively so that a number of other people may make, use and sell the article on payment of royalties; he may license some to make and

____________________
1
1 The patent claims may describe an article or component part of an article, or they may describe a process of manufacture; in the latter case the right of the patentee is to exclude others from adopting that process.
2
2 Mr. Justice Holmes spoke of a patent as 'property carried to the highest degree of abstraction -- a right in rem to exclude, without a physical object or content'.

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