Patent owners are granted a limited monopoly over their inventions, and with that monopoly comes a bundle of rights. These rights fall into two broad categories: exclusive rights and provisional rights. Recently, the Court of Appeals for the Federal Circuit issued a precedential opinion that clarifies the requirements for patentees to claim provisional rights: they only attach if the patent actually issues before it expires.
Exclusionary vs. Provisional Rights
Upon issuance, a patent confers upon the patent holder a right “to exclude others from making, using, offering for sale, or selling the invention throughout the United States.” These exclusionary rights begin when the patent issues and extend twenty years from the application date or applicable priority date. Once that patent expires, these exclusionary rights terminate.
In the space between when the patent application is published and when the patent issues, patent owners have provisional rights to seek a reasonable royalty for the use, manufacture, or sale of the claimed invention—so long as the patent eventually issues.
In re Forest
While provisional rights offer a potential remedy for pre-issuance infringement, they are contingent upon the eventual issuance of a valid patent. This principle was underscored in the Federal Circuit’s recent decision in In re Forest.
Donald Forest submitted a patent application on December 27, 2016, which claimed priority, through a chain of earlier-filed patent applications, to an application filed on March 27, 1995. As a result, any patent issuing from Mr. Forest’s 2016 application would have a statutory expiration date in 2015 due to its reliance on the 1995 application. The Patent Trial and Appeal Board (PTAB) affirmed the patent examiner’s rejection of Mr. Forest’s patent application.
On appeal to the Federal Circuit, Mr. Forest contended that while he would not receive exclusionary rights—because the patent would have expired upon issuance—he would still be entitled to provisional rights between the date the patent application was published and the date the patent issued. He argued that patentees are always entitled to provisional rights, regardless of when the patent issues. He also argued that the twenty-year patent term had “no bearing” on the term of provisional rights.
The Federal Circuit rejected these arguments and dismissed his appeal. The Court began with a statutory interpretation of 35 U.S.C. § 154(d)—the provision granting provision rights to patent holders—concluding that the rights were temporary, which means that they only exist until “some other right comes into effect and replaces them.” Since the only other right mentioned in the section of the statute were exclusionary rights, the court construed the statute as necessarily requiring provisional rights to be followed by exclusionary rights. And because the patent Mr. Forest was seeking would have expired at issuance, there was no way for him to be granted exclusionary rights.
Mr. Forest’s sole argument against this interpretation of the statute is that the text should be given its plain and ordinary meaning—provisional rights begin on the date of publication and end on the date of issuance. The court dismissed this argument as “overly narrow,” and concluded that the statute had to be construed in its entirety, meaning that “provisional rights must be granted with and precede the grant of exclusionary rights.”
Key Takeaways
In re Forest makes it clear: provisional rights are tethered to the eventual grant of exclusionary rights upon the issuance of a patent. Accordingly, the reasonable royalty right under 35 U.S.C. § 154(d) is best understood as a form of retroactive compensation tied to the patentee’s exclusionary rights, rather than as a stand-alone damages provision.