Newsletter
UNREGISTERED PATENT LICENSEE MAY NOT ISSUE CEASE AND DESIST LETTER
In a decision dated 16 July 2008, the Fair Trade Commission (FTC) stated that a patent licensee might not issue a cease and desist letter to a third party if the license has not been registered.
Article 84 Paragraph 2 of the Patent Act provides that if an invention patent is infringed, an exclusive licensee of the patent rights may seek damages in compensation for its losses, and may seek the termination of the infringement, or where there is a likelihood of infringement, it may seek to prevent infringement. However, Article 59 of the Act provides that a patent licensing arrangement that has not been registered with the Patent Authority may not be asserted against a third party. Opinions have been sharply divided in practice as to the meaning of the wording "may not be asserted against a third party," and whether it implies that an unregistered licensee may not enforce its rights.
In its decision in response to a filed complaint, the FTC held that unless the registration of the patent licensing arrangement has been completed, an exclusive patent licensee cannot lawfully enforce its rights against a third party, and if under such circumstances it were to issue a cease and desist letter to a third party asserting that its patent rights were being infringed, this would violate Article 24 of the Fair Trade Act.