Field-of-use limitation
Encyclopedia
A field-of-use limitation is a provision in a patent
license
that limits the scope of what the patent owner authorizes a manufacturing licensee (that is, a licensee that manufactures a patented product or performs a patented process) to do in relation to the patent, by specifying a defined field of use -- that is, a defined field of permissible operation by the licensee. In addition to affirmatively specifying the field of use, the license may negatively specify a field or fields, by specifying fields of use from which the licensee is excluded.
By way of example, such a license might authorize a licensee to manufacture patented engines only for incorporation into trucks, or to manufacture a chemical only for sale to farmers (as contrasted with home gardeners). If the licensee exceeded the scope of the licensee, it would commit patent infringement
. More generally, this kind of license permits the licensee to use the patented invention in some, but not all, possible ways in which the invention could be exploited. In an exclusive field-of-use license the licensee is the only person authorized to use the invention in the field of the license.
The concept of fields of use and field-of-use limitations is explained in the article The Doctrine of the General Talking Pictures Case. Field-of-use limitations in patent licenses may raise antitrust
issues when such arrangements are used to allocate markets or create cartels.
.
The doctrine of the General Talking Pictures case does not apply to a patent owner’s sale (or its licensee's sale) of a product to a customer that imposes a restriction on what the customer may subsequently do with the product. Such sales are governed by the “exhaustion doctrine,” rather than the General Talking Pictures doctrine.
Furthermore, when field-of-use licensing is used to create a horizontal cartel
by which product markets are allocated among what would otherwise be competitive licensees, the General Talking Pictures doctrine does not shield the arrangement from the antitrust laws. In Hartford-Empire Co. v. United States, such a cartel based on patents was condemned as an antitrust violation. In United States v. Ciba Geigy Corp., the court found an antitrust violation as to patent licenses that restricted use of purchased drug chemicals but no violation as to licenses that limited the use of the same chemicals by licensees manufacturing them.
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
license
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...
that limits the scope of what the patent owner authorizes a manufacturing licensee (that is, a licensee that manufactures a patented product or performs a patented process) to do in relation to the patent, by specifying a defined field of use -- that is, a defined field of permissible operation by the licensee. In addition to affirmatively specifying the field of use, the license may negatively specify a field or fields, by specifying fields of use from which the licensee is excluded.
By way of example, such a license might authorize a licensee to manufacture patented engines only for incorporation into trucks, or to manufacture a chemical only for sale to farmers (as contrasted with home gardeners). If the licensee exceeded the scope of the licensee, it would commit patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
. More generally, this kind of license permits the licensee to use the patented invention in some, but not all, possible ways in which the invention could be exploited. In an exclusive field-of-use license the licensee is the only person authorized to use the invention in the field of the license.
The concept of fields of use and field-of-use limitations is explained in the article The Doctrine of the General Talking Pictures Case. Field-of-use limitations in patent licenses may raise antitrust
Antitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
issues when such arrangements are used to allocate markets or create cartels.
USA case law
The US Supreme Court held such arrangements legitimate in General Talking Pictures Corp. v. Western Elec. Co. By way of example, such a license might authorize a licensee to manufacture patented engines only for incorporation into trucks (the "truck field"), or to manufacture such engines only for sale to farmers (the "field of distribution to farmers"). If the licensee exceeded the scope of the licensee, it would commit patent infringementPatent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
.
The doctrine of the General Talking Pictures case does not apply to a patent owner’s sale (or its licensee's sale) of a product to a customer that imposes a restriction on what the customer may subsequently do with the product. Such sales are governed by the “exhaustion doctrine,” rather than the General Talking Pictures doctrine.
Furthermore, when field-of-use licensing is used to create a horizontal cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
by which product markets are allocated among what would otherwise be competitive licensees, the General Talking Pictures doctrine does not shield the arrangement from the antitrust laws. In Hartford-Empire Co. v. United States, such a cartel based on patents was condemned as an antitrust violation. In United States v. Ciba Geigy Corp., the court found an antitrust violation as to patent licenses that restricted use of purchased drug chemicals but no violation as to licenses that limited the use of the same chemicals by licensees manufacturing them.