Many inventors and small businesses own patents that they do not use or license. The common terminology when a patent owner uses a patent to produce a product or service is to ?practice? the patent. A patent owner that does not practice the patent it owns is known in the legal system as an NPE or ?non-practicing entity.? On the other hand, the patent owner that does practice a patent it owns is known as a ?market participant.?



Patent Licensing: Many inventors and universities, and a few businesses, own patents they do not practice. They instead license the technology to businesses that use the patents to produce products or services. Many universities produce a return on their research investments by licensing the patents that result from the research they conduct. Many of today's most common and popular drugs got their starts in university laboratories and research facilities. Thomas Edison was primarily a licensor of patents. He was in the invention business, not the business of inventing and then using that invention to produce a product or service. Despite his genius, Edison realized that he was neither an entrepreneur nor an industrialist, so he focused on what he did best − invent. Edison owned over 1,000 patents, and many of them were licensed to companies to produce products and services. In fact, Edison owned a patent for a time clock, and the company that licensed the Edison patent grew to become IBM.

Rights of the Patent Owner: A patent does NOT give the patent owner the right to practice the patented invention. What a patent does, in reality and under the law, is give the patent owner the right to prevent someone else from using it. Whether or not the patent owner practices the patent, does not practice the patent, licenses the patent or does not license the patent, the patent owners retains the right to prevent someone else from using the patent! There is not ? as many believe ? any use-it-or-lose-it principle. A patent owner does not have to practice a patent to maintain ownership of it or the rights it creates for the patent owner!

Enforcing the Patent: The US Patent and Trademark Office issues patents; they do not enforce them. There are no Patent Police. When a patent is infringed (used without permission of the owner of the patent), it is the responsibility of the patent owner to pursue the patent infringer through civil litigation. That is, take the patent infringer to court!

Injunctive Relief: There is, however, one difference in the legal standing of a patent owner that practices his or her or its patent and the NPE or non-practicing patent owner. Should the patent owner claim patent infringement, and should the patent owner also practice that patent, one form or relief for the practicing patent owner is to petition the court for injunctive relief. That is, ask a court to issue an injunction ordering the infringing party to cease production and sale of the product or service that uses the infringed patent. If the product is produced outside the US, the court can issue an order prohibiting its import into the US. The NPE, however − the patent owner that does not practice his, her or its patent − does not have this option.

Sue for Damages: Both patent owners that practice the patented invention, and patent owners that do not practice the patented invention, have the same right to sue the patent infringer for damages. There is a slight difference, however. While both parties have equal standing in terms of what they own and what their rights are, the patent owner that practices its patent may win a larger award in a patent infringement suit than the non-practicing patent owner. The non-practicing patent owner may receive damages in the form of ?reasonable royalty? on the sales of infringing products or services. The practicing patent owner may instead seek ?lost profits? which, generally, are greater than a reasonable royalty.

Patent Rights: So there is no use-it-or-lose-it factor to patent ownership. Other than the right to seek injunctive relief, patent owners that practice their patents, patent owners that license their patents, and patent owners that neither practice nor license their patents, all have the right to prohibit others from using their patents without their permission, and have the right to sue the infringing party for damages. Permission to use a patent usually comes in the form of a licensing agreement.