Patent Infringement Liability for Component Manufacturers

A component supplier may manufacture a particular component to be used as part of a customer’s larger system or device and expect that any potential infringement liability would reside with the customer. However, patent holders frequently pursue not only direct infringers but also the infringer’s suppliers in patent infringement lawsuits, seeking to recover damages from all parties involved. These threats of patent infringement catch many component suppliers by surprise because suppliers may not expect that they could be liable for uses of its components by its customers downstream in commerce.

The Patent Act provides a cause of action for “contributory” infringement, under which a supplier of a component that constitutes a material part of a patented invention may be liable for contributory infringement. Finding contributory infringement requires showing that the supplier knew that the supplier’s component was being used in a product that infringed the patented invention. Plaintiffs will often attempt to establish the knowledge requirement through a cease and desist letter to suppliers.

What does this mean for suppliers? It means that suppliers and manufacturers should not simply rely on their customers to do due diligence with respect to any potential infringement issues. Suppliers should consider performing at least a cursory review of potential infringement issues before supplying its components to customers. If a supplier learns of a patent that may be asserted against them, an opinion regarding non-infringement and invalidity should be obtained from competent counsel.

Patents, Trademarks and Copyrights: What’s the Difference?

The differences between patents, trademarks and copyrights are not obvious to the casual observer, and these terms are often intertwined or misused with one term for the other. To set the record straight, here are some practical ways to think through the differences between these types of intellectual property.

Patents are rights bestowed by the federal government to inventors of a new utilitarian apparatus or process, a new design, or a new plant variety. The patenting process is a formal application process that must be made through the U.S. Patent & Trademark Office. The patent right is the right to exclude others from making, using, selling, offering for sale or importing whatever is claimed in a particular patent. The term of a utility patent is 20 years from the filing date of the application.

Trademarks are symbols used to designate a source of a good or service. An important function of trademark law is to protect the consumer so that consumers can be confident in the sources from which they buy goods or services. No formal application process is required to obtain trademark rights. However, there are many good reasons to consider taking formal steps with the U.S. Patent & Trademark Office to protect your trademark through a formal application process. Trademarks have no expiration date.

Copyrights protect the expression of information when such information is placed in a tangible medium of expression. Examples include photographs, art work, music, books and computer code. No formal process is required to obtain copyrights in your original works of authorship but, as with trademarks, there are many good reasons to consider taking formal steps to register your copyright. Compared with patents and trademarks, the registration of copyrights is relatively inexpensive. The term for a copyright is typically the author’s life plus 70 years.