A field-of-use limitation is a provision in a
patent
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A p ...
license
A license (or licence) is an official permission or permit to do, use, or own something (as well as the document of that permission or permit).
A license is granted by a party (licensor) to another party (licensee) as an element of an agreeme ...
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 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 v ...
. 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.
Field-of-use limitations in patent licenses may raise
antitrust
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
issues when such arrangements are used to allocate markets or create
cartels
A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mo ...
.
USA case law
The
US Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point of ...
held such arrangements legitimate in ''
General Talking Pictures Corp. v. Western Electric Co.
''General Talking Pictures Corp. v. Western Electric Co.'', 304 U.S. 175 (1938), was a case that the Supreme Court of the United States decided in 1938. The decision upheld so-called field-of-use limitations in License#Intellectual property, pat ...
'' 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 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 v ...
.
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 The exhaustion of intellectual property rights constitutes one of the limits of intellectual property (IP) rights. Once a given product has been sold under the authorization of the IP owner, the reselling, rental, lending and other third party comme ...
,” rather than the ''General Talking Pictures'' doctrine. Enforced with fines and often much bad publicity.
Furthermore, when field-of-use licensing is used to create a horizontal
cartel
A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mos ...
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.
Free software licences
A free-software license is a notice that grants the recipient of a piece of software extensive rights to modify and software distribution, redistribute that software. These actions are usually prohibited by copyright law, but the rights-holde ...
It has been argued that field-of-use limitations are inconsistent with W3C standards and with the GNU General Public License.
[Se]
FSF's Position on W3 Consortium “Royalty-Free” Patent Policy
See also
*
Exhaustion doctrine The exhaustion of intellectual property rights constitutes one of the limits of intellectual property (IP) rights. Once a given product has been sold under the authorization of the IP owner, the reselling, rental, lending and other third party comme ...
References
{{reflist
Patent law
Anti-competitive practices
Patent law legal terminology