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Ever since '365(n) was added to the U.S. Bankruptcy Code in 1988, a party with a license to use intellectual property — defined to include patents and copyrights but not trademarks — could rest assured that a bankruptcy filing by the licensor would not divest them of their right to use the property. Section 365(n) expressly provides that the rejection of an intellectual property license allows the licensee to retain its rights under the license, including the right to enforce any exclusivity provision. But a 2003 decision by the Seventh U.S. Circuit Court of Appeals, <i>Precision Industries Inc. v. Qualitech Steel SBQ, LLC</i>, casts serious doubt on the ability of licensees to protect their licenses under '365(n).
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Over the past few years, business, legal, and accounting authorities have quite rightly pointed out that corporate IP has far greater potential than its owners usually exploit. The consultancy McKinsey & Company has offered that, as a rule of thumb, a company that owns at least 450 patents and spends $50 million or more a year on R&D should possess enough intellectual property to bring some of it to market. Typically, 10% of the patent portfolio could be put to work in this way. McKinsey also suggests that IP assets could generate 5% to 10% of a company's operating income with little initial capital investment. Thus, effective IP-asset management can be equivalent to the improvement that might be expected from a 20% cut in expenses or from a successful acquisition. See Elton JJ, Shah BR, and Voyzey JN, 'Intellectual Property. Partnering for Profit,' The McKinsey Quarterly, 2002, Number 4 Technology.
The law governing package licensing of patents is currently undergoing a significant change. Historically, package licenses were subject to a 'per se' liability under the controlling legal doctrines. Using this per se test, a package license could be rendered unenforceable absent any inquiry into the actual market effects of the license. The recent case of <i>United States v. Microsoft</i>, 253 F.3d 34 (D.C. Cir. 2001), marks, however, the emergence of an antitrust doctrine called the 'rule of reason' that is likely to become the dominant legal doctrine for testing package licensing of patents. This is a significant change because the rule of reason is a market-based approach that balances the anticompetitive and pro-competitive benefits of the licensing practice. Thus, a package license may be held to be enforceable even if it would have failed the traditional per se test of the patent misuse doctrine or antitrust laws.
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Most inventors new to the patent system express a desire for an international patent — a monopoly good across the whole world from a single application. While it is unlikely that their desire will ever be satisfied, the prospect of being able to offer a patent throughout Europe in the form of a Community Patent may soon become reality. Such a Community Patent would be effective across all of the soon to be 25 member states of the European Union (EU).
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Recent rulings of importance to your practice.
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Recent cases of importance to your practice.
Recent rulings of importance to your practice.
A comprehensive list of key cases discussed in this issue.
<b><i>Part One of a Two-Part Article.</b></i>This commentary discusses ' critically ' a rule recently adopted by a unanimous Court of Appeals in a case in which a housing cooperative was attempting to evict a tenant deemed objectionable by his fellow shareholders. <i>40 W. 67th St. Corp. v. Pullman</i> (5/13/03). In order to understand fully the significance of the <i>Pullman</i> rule, it must be viewed in context. The general subject is the power of a landlord to terminate a tenancy based on a lease provision authorizing such action if the tenant becomes objectionable. More specifically, the issue is what role the courts are to play in determining whether or not the tenant did or did not do the things that he is accused of doing, which things, we will assume, all would agree would render him objectionable.