With a granted patent, the patent holder can take legal action to compel a third party to stop using the patented technology and potentially claim damages.
During a lawsuit, the infringer often argues in defense that the patent is invalid (already known or lacking inventiveness). In some cases, the infringer may have prepared arguments or evidence beforehand that unequivocally prove the patent’s invalidity. However, in most cases, it is a gray area where the outcome is unpredictable. Companies generally aim to avoid lengthy, costly, and uncertain litigation.
A real-world example:
The European Patent Office grants a patent for product X to a Dutch chemical company. At the same time, a German company is preparing to launch a new product. Customers ask the German company whether they can purchase the product, given the newly granted patent held by the Dutch company. The German company is convinced that the patent was wrongly granted. However, its customers are (still) unconvinced and fear they might infringe the patent by buying the product. To invalidate the patent, the German company could initiate a lengthy opposition procedure. Ultimately, under pressure, the German company agrees to license the weak patent from the Dutch company.
In this example, the initial value of the patent for the Dutch company was low because they were unaware of the German company’s plans. However, as the “market” forced the Germans to negotiate a license with the Dutch company, the value of the patent increased. In this case, it is irrelevant whether the patent is ultimately valid. Even pending patent applications can have a similar effect.
The value of a patent (or application) can increase if the relevant business-to-business market becomes aware of its existence. This can be achieved by mentioning the applications on websites, brochures, conferences, and even on the products themselves. Directly notifying competitors and customers is less common but may occur, for instance, if legal action is anticipated.
(Michiel Cramwinckel is a European and Dutch patent attorney)
