In the age of the patent troll, patents are often licensed and transferred. A transferred patent may have been subject to multiple complex license agreements. It cannot be that such a transfer wipes the patent clean of all outstanding license agreements; the licensee must keep the license. But at the same time, it cannot be that the patent transferee becomes a party to a complex and sweeping license agreement – the contract – merely by virtue of acquiring one patent. This article attempts to separate the in personam aspects of a license agreement from its effects on the underlying in rem patent rights, using Hohfeld’s framework of jural relations and the “bundle of sticks” conception of property. A license agreement can diminish (but not add to) the bundle of in rem patent rights initially granted by the USPTO, and a new patent owner takes only the diminished bundle of rights upon transfer, given that one cannot transfer more than what one owns. The bundle theory can provide greater clarity regarding the extent to which licenses “run with the patent,” and also has implications for how patent transfer affects other doctrines such as patent exhaustion, FRAND obligations, prior user rights, and laches.
GW Paper Series
GWU Law School Public Law Research Paper No. 2016-57; GWU Legal Studies Research Paper No. 2016-57
Michaels, Andrew C., Patent Transfer and the Bundle of Sticks (December 1, 2016). GWU Law School Public Law Research Paper No. 2016-57; GWU Legal Studies Research Paper No. 2016-57. Available at SSRN: https://ssrn.com/abstract=2883829