Execution of Improved Patents

By BinQiang Liu
Scenario:

Company A has a formerly granted patent PA on product P1 while company B has a latter granted patent PB on product P2, which is am improvement on product P1.

Solution:

Normal execution of the above patents is as follows:

If A wants to manufacture P2, then A has to get a license from B, however, if A does not want to manufacture P2, there is no obligation for it to do so. But the most common situation is that because P2 is improved over P1, A feels like to manufacture P2, too, in order to make more benefits, let's say as an example.

If B wants to manufacture P2, in spite of its having the patent on P2, B has to get a license from A for manufacturing P1, too, though in fact what B produces is absolutely P2 but not P1. The reason why B has to get a license from A for manufacturing P1 is that PB falls within the claimed field of PA despite PB's improvement over PA.

So, typical solution is more often like this:

A gets a license for manufacturing P2 from B, meanwhile B gets a license for manufacturing P1 from A which then makes B be able to implement its patent PB. It's usually called a 'CROSS-LICENSE'.

What should 3rd party do?

As to a 3rd party that wants to manufacture P2, it has to get license both from A and B, of course, or else it may be sued by A or B. If it just wants to manufacture P1, a license from A only is enough.

Keywords: patent improvement license cross-license

P.S.: here, 'it' in this article means nothing offending just for representing convenience.