Imagine you conducted an FTO analysis and it turned out your invention was found to infringe a third-party patent. What can you do? This post will discuss three possible solutions that will help you practice your invention after it was found to infringe a third-party patent.
The purpose of an FTO analysis is to determine whether a product infringes another issued patent. This analysis is done by identifying patents and patent applications that, if later issued as patents, may be infringed when commercializing your product. This analysis is done by examining the claims of the issued third party patents and asking whether your product or service contains each and every element of that third-party patent claim. We discussed FTOs in detail here.
The first option when encountering a blocking third-party patent is to design around that third-party patent. This requires identifying an alternative way to develop the desired product without infringing the patent.
An example of designing around may be seen with a drug-eluting stent. A drug-eluting stent is a peripheral or coronary stent or scaffold, placed into peripheral or coronary arteries to release the drugs slowly into a patient's body. Assume that a company has developed a new drug and wants to use a stent to deliver the drug into the patients’ bodies. By developing a new drug, the company will likely satisfy the requirements of patentability; however, the issue resides with the stent. If a third-party owns the stent patent, the company will have to find an alternative design to the stent if it wants to continue using it.
If the original stent patent is broad enough, however, the company may not be able to design around the stent in a way that accomplishes its goals. If designing around becomes unfeasible, the next option may be a solution.
In situations where no design alternative is acceptable or possible, such as with the stent example above, a company may have no other option but to enter into a license agreement with the owner of the third-party patent.
A license is a contractual agreement in which the patent owner promises not to sue the licensee for patent infringement as long as the licensee abides by the terms of the agreement, which usually involves the payment of certain fees. Such an agreement allows the owner of a patent to retain ownership of the patented products or services while permitting the company (e.g., the licensee) to make, use, offer for sale, or sell the patented product or service. Once a license agreement is in place, the company can market the new product without infringing the third-party patent.
Challenge the Third-Party Patent
If the company cannot design around a third-party patent and cannot, or does not want to license the third party patent, then another option is to challenge the third party patent. If the company successfully challenges a patent and invalidates it, it clears the path to commercialization by removing that third-party patent as a hurdle.
Even if the patent challenge does not result in the invalidation of the third-party patent, it could allow the company to enter into a settlement agreement with the third-party patent holder, thereby allowing the company to commercialize its product. While the company may have to pay a licensing fee as part of the settlement, it would allow the company to practice its invention without having to worry about being sued for infringement by the third-party patent holder.
Inter partes review (IPR) proceedings have become a popular method by which someone can challenge an issued patent based on prior art (either Section 102 or Section 103) grounds. IPRs allow for a relatively quick and cost-effective means by which third party patents can be challenged. Moreover, they have yielded favorable results for the challenger, in part due to the lower burden of proof that a petitioner must satisfy. We previously discussed IPRs here and here.
Third-party patents can also be challenged in a traditional district court litigation. While longer and generally more costly than an IPR, district court litigation allows patents to be challenged on grounds in addition to those involving prior art. Challenges directed to inappropriate subject matter or written description, among others, can thus be raised in district court but not in an IPR.
If your product or service is found to infringe a third-party patent, not all hope is lost. There are still several options for practicing your invention.
BioPharma Law Blog posts updates and analyses on IP topics, FDA regulatory issues, emerging legal developments, and other news in the constantly evolving world of biotech, pharma, and medical devices.