Chapter Fourteen | Agency

Introduction

Agency is an important area of the law that involves a special relationship between two parties: a principal and the person, who represents the principal, termed the agent.  In the Restatement (Third) of Agency, agency is defined as a “fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.”  In essence, the agent “steps into the shoes” of the principal in a business transaction.
 
The principal hires an agent to act on his or her behalf who is subject to the principal’s instructions and control.  The agent is the individual authorized to act for and on behalf of a principal.  This legal arrangement creates a fiduciary relationship (a relationship of trust and confidence) in which the agent has the duty to act primarily for the principal’s benefit.  For example, a fiduciary relationship exists between the client (the principal) and an attorney (the agent); or the owner of a piece of property (the principal) and a rental or sales agent (the agent).
 
Each state enacts its own laws concerning agency, many of which are similar in scope and import.   However, some differences do exist.  The application of agency law is especially important for U.S. interests doing business in other countries.  Numerous American businesses are entering international markets through joint ventures or foreign direct investment activities.  To avoid problems that arise from language differences and unfamiliarity with foreign laws and customs, many U.S. companies hire agents who are knowledgeable in these matters resulting in smoother operation of the business in the foreign market.

Creating The Agency Relationship

The extent of the authority in an agency relationship may be governed by an express agreement between the parties or may be implied from the circumstances of the agency.  Like any contractual relationship, an agency relationship can only be created for a legal purpose. Further, the formation of an agency must meet two requirements: The principal must not be a minor or be incompetent; likewise, the agent cannot be a minor or be incompetent.  If these basic requirements are met, an agency relationship may be created in any of four ways: 1) by agreement; 2) by implied authority; 3) by estoppel (called apparent agency) or 4) by ratification. The agency contract is not required to be found in writing, unless a provision of the Statute of Frauds stipulates that the contract must be written—for example, a real estate broker’s contract to sell real property. The contract need not follow any special format, or even involve payment to the agent.

Agency By Agreement

The relationship that is created pursuant to a written or oral contract is termed an agency by agreement or an express agency, under which the principal gives the agent the authority to act on his or her behalf.  If the principal does not hire an additional party to carry out the same or similar duties, the principal and agent have formed an exclusive agency contract.
A specific legal document, called a power of attorney, gives an agent the power to sign legal documents on behalf of the principal.  A power of attorney creates an agency relationship.  A power of attorney may be general or special.  A general power of attorney is very broad in the authority it gives to the agent.  A special power of attorney gives an agent limited powers to act in specific ways for specific purposes or for a specified period of time as enumerated in the document creating the agency relationship.  The agent is called an attorney-in-fact, although the agent does not have to be an attorney.
 
A special type of a power of attorney, called a “medical power of attorney” or “advance directive,” is commonly used in relation to health care matters.  If the principal is unable to make health-related decisions, the agent will have the legal power to act on his or her behalf.

Agency By Implied Authority

An agency relationship can also be created by the conduct of the parties, similar to the creation of an implied-in-fact contract.  The specific circumstances surrounding the relationship determine the extent to which an agent may conduct business on behalf of the principal.  In general, an agency by implied authority may not conflict with an agency by agreement.  Courts will permit an agent to receive payments owed to the principal, hire and discharge employees, buy equipment and supplies, and enter into contracts.  Case law demonstrates how far various courts will allow implied authority to stretch.  If the express agency does not provide sufficient details to cover the many contingencies that might arise during the course of the agency relationship, the agent is said to possess certain implied authority to act on behalf of the principal.  This implied authority is referred to as incidental authority.  In addition, under certain circumstances where the agent is unable to contact the principal for specific instructions, the agent has implied emergency authority to take “all reasonable actions to protect the principal’s property and rights.”
 

Case Study

Helene A. Gordon Et Al, v. Andrew Tobias

Supreme Court Of Connecticut, 262 CONN. 844; 817 A.2D 683 (2003)

Overview:
Plaintiff landowners filed an action to quiet title on the subject property in their favor. The Superior Court in the Judicial District of New Haven (Connecticut) entered judgment for the landowners after finding that payments made to the original mortgagee on the property constituted payment to defendant assignee, and consequently discharged the landowners’ obligation under the mortgage. The assignee appealed.
 
The landowners purchased a condominium subject to a mortgage in favor of the original mortgagee. The mortgage was later assigned, but the landowners continued to make payments to the original mortgagee. The original mortgagee received full payment from the landowners but continued to make periodic payments to the assignee until the original mortgagee’s president died, after which the assignee refused to release the mortgage. On appeal, the assignee claimed that there was insufficient evidence in the record to support the trial court’s finding that the original mortgagee was an agent of the assignee for the purposes of collecting payments on the mortgage that he held on the subject property. The supreme court held that the trial court properly found that the mortgagee had apparent authority to collect the mortgage payment due on the mortgage held by the assignee. The assignee collected payments for more than two years knowing that the loan had matured, yet he neither objected to nor demanded full payment on the amount due. Rather, the assignee requested invocation of a higher interest rate to provide the landowners incentive to pay off the loan.

 
Outcome:
The trial court’s judgment was affirmed.
 
Regarding whether the agency relationship that was created was an implied agency, the court stated, “Implied authority is actual authority circumstantially proved. It is the authority which the principal intended his agent to possess. . . Implied authority is a fact to be proven by deductions or inferences from the manifestations of consent of the principal and from the acts of the principal and [the] agent.” Connecticut National Bank v. Giacomi, 242 Conn. 17, 70, 699 A.2d 101 (1997). The court found that the defendant had authorized Mutual to collect monthly payments on the note secured by the mortgage on the plaintiffs’ property and remit those payments to him. The court stated, “Apparent authority is that semblance of authority which a principal, through his own acts or inadvertences, causes or allows third persons to believe his agent possesses. . . Consequently, apparent authority is to be determined, not by the agent’s own acts, but by the acts of the agent’s principal. . . The issue of apparent authority is one of fact to be determined based on two criteria. . . First, it must appear from the principal’s conduct that the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted [the agent] to act as having such authority. . . Second, the party dealing with the agent must have, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent’s action”  Tomlinson v. Board of Education, 226 Conn. 704, 734-35, 629 A.2d 333 (1993).

Agency By Estoppel (Apparent Agency)

Agency by estoppel or apparent agency arises when the principal creates the “appearance of an agency” that in actuality does not exist in fact.  When an apparent agency is created, the principal will be estopped from denying the existence of the agency relationship and will be bound to any contracts entered by the apparent agent while acting within the scope of the apparent agency.
 

Case Study

Robert M. Bailey v. Richard Worton D/B/A Worton Asphalt & Paving

752 SO.2D 470 (2000)

Procedural Posture:
Appellant developer appealed from ruling of the DeSoto County (Mississippi) Chancery Court deeming appellee’s construction lien enforceable against appellant on grounds appellant’s agent had the apparent authority to act for appellant in dealings with appellee.
 
Overview:
Appellant developer, Bailey, hired general contractor Ray and Associates to build and sell a house on appellant’s property (with the proceeds divided between them); in the course of building the house, the contractor hired appellee, Worton – an asphalt company – to pave the driveway. When financial problems resulted in the contractor being unable to pay appellee for services rendered, appellee (Worton) sought and was granted a construction lien on appellant’s property. Appellant objected, arguing he had not entered into any agreement with appellee, but to no avail in trial court. On appeal, the state intermediate appellate court affirmed; the court reasoned that application of three-prong test for an agent’s apparent authority – acts or conduct of the principal indicating the agent’s authority, reliance thereon by a third person, and a change of position by the third person to his detriment – showed that contractor, Ray Associates, appeared to be acting on appellant’s behalf, and thus his (Ray’s) contract with appellee bound appellant.

 
Outcome:
Judgment affirmed; application of three-prong test governing apparent authority by an agent established that appellant was bound by agent’s agreement with appellee, and thus was liable for payment.
 
The court noted, looking at the facts in a light most favorable to the decision of the court below, it is not unreasonable to conclude that Worton relied on Ray and no one else because of her apparent authority. So far as third persons are concerned, the apparent powers of an agent are his real powers. The power of an agent to bind his principal is not limited to the authority actually conferred upon the agent, but the principal is bound if the conduct of the principal is such that persons of reasonable prudence, ordinarily familiar with business practices, dealing with the agent might rightfully believe the agent to have the power he assumes to have. The agent’s authority as to those with whom he deals is what it reasonably appears to be. Where the relationship of principal and agent exists, if the principal places his agent in a position where he appears, with reasonable certainty, to be acting for the principal, and his acts are within the apparent scope of his authority, such acts bind the principal. On principles of estoppel, a principal, having clothed an agent with semblance of authority, will not be permitted, after others have been led to act in reliance on appearances thus produce, to deny, to the prejudice of such others, what he has theretofore tacitly affirmed as to the agent’s powers. Where an agent, with the knowledge and consent of his principal, holds himself out as having certain powers and transacts business with a third person, the principal is estopped from denying the authority of the agent. Under Mississippi agency law, a principal is bound by the actions of its agent within the scope of that agent’s real or apparent authority. Finding no error, we affirm the judgment of the chancellor.

Agency By Ratification

In a case where a person misrepresents him or herself to be an agent when in fact he or she is not, and the purported principal later accepts the benefits of or ratifies the unauthorized acts, the principal is said to have ratified the agency relationship.  The ratification is tantamount to the principal authorizing the agent’s acts on the principal’s behalf in the first instance.  In order for ratification to occur, the principal must have complete knowledge of the agent’s action.  In addition, at the time the agent’s unauthorized acts occur, the third party with whom the agent dealt must know of the existence of the principal.

Duties Created by the Agency Relationship

Extensive case law on the subject and the Restatement 3rd of Agency recognize that an agency relationship creates duties, or legal obligations, on the part of both the principal and the agent.  If either the principal or the agent breaches the agency agreement, the non-breaching party can sue to enforce these duties, seek monetary damages for breach of the agreement, or seek suitable remedies in a Court of Equity.

Duties Of An Agent To A Principal

An agent owes certain duties to the principal.  The duties of the agent to the principal may be set forth in the agency agreement itself or may be implied by law.  On the most basic level, the agent has a duty to notify the principal of information that the agent learns from a third party or from another source that will help effect the purposes of the relationship.  This is known as the duty of notification.
 
An agent owes the principal certain duties of performance in which the agent must meet the standards of “reasonable care, skill, competence, and diligence.”  An agent who does not perform his or her express duties, or who fails to exercise the standard of care, diligence, and skill, or who acts in a negligent or intentional manner will be liable to the principal for breach of the agency contract.
 
The primary duty the agent owes the principal arises from the agent’s fiduciary duty to act loyally for the principal’s benefit in all matters connected to the agency relationship and not to act adversely to the interests of the principal.
An agent might breach this duty of loyalty by acting in the following ways:
  • Undisclosed self-dealing;
  • Usurping an obligation that belongs to the principal;
  • Competing with the principal without the consent of the principal during the course of the agency relationship;
  • Improperly disclosing or misusing confidential information;
  • Engaging in a dual agency relationship without consent of all parties.
In normal circumstances, the agent owes a duty to the principal to maintain a complete and accurate record of all transactions undertaken on behalf of the principal.  This is referred to as the duty of accountability, which encompasses the following:
  • Keeping records of all property and money received and expended during the course of the agency relationship;
  • Maintaining a separate account (no commingling) for the principal; and
  • Using the property of the principal is a manner authorized by the agency contract.
If an agent breaches the agency agreement, the principal may seek monetary damages, including asking a court to impose a constructive trust on any profits the agent earned as a breach of the duty of loyalty.  A principal may also seek to rescind a transaction entered into with third parties because of the breach of loyalty by an agent.
 

Case Summary

Carl Shen v. Leo A. Daly Company

222 F.3D 472 (2000)
Carl Shen, was a former employee and designated agent of Leo A. Daly Company’s (Daly) Republic of China (Taiwan) office. When Daly refused to pay taxes assessed by the Taiwanese government, the government restricted Shen’s travel, forbidding him from leaving the country. Shen then sued Daly on multiple theories of liability for damages and injunctive relief. Shen prevailed in part in the district court. Both he and Daly appeal the judgment. We affirm in part and reverse in part.
 
BACKGROUND
Shen, a United States citizen with dual Taiwanese citizenship moved to Taiwan in 1989 to become managing director of Daly’s operation there. To conduct business in Taiwan, Daly was required to designate a “responsible person,” or legal representative in the country, and Shen was so designated. In November 1992, Daly decided to withdraw from Taiwan because of business setbacks. As a result, Daly terminated Shen, but Shen chose to remain in Taiwan. Daly, however, failed to remove Shen as its responsible person and failed to inform Shen that he was still registered as the company agent.
 
In December 1993, Shen received a notice from the Taiwan Tax Authority that it wanted to audit Daly’s 1992 Taiwan tax returns. Shen, in turn, notified Daly’s accounting firm in Taiwan and informed them he was concerned he could be held responsible for any deficiency because his “chop,” the Taiwanese equivalent of a signature, was affixed to the returns. Daly responded that it was “inconceivable” any tax could be owed because Daly had suffered large losses in Taiwan. In January 1994 through mid-October 1995, Shen requested Daly to indemnify him should the Taiwan Tax Authority impose the tax liability on him directly, to resolve the tax dispute and remove him as the responsible person. In May 1994, the Taiwan Tax Authority assessed a tax liability of approximately $80,000 against Daly for 1991 and 1992. Daly did not appeal the assessment, and it became final in June 1995. In October 1995, the Taiwan Ministry of Finance and the Bureau of Entry and Exit forbid Shen from leaving the country until resolution of the Daly tax issue. Daly’s attempt to extricate Shen through diplomatic channels failed. Shen sued for a declaratory judgment in Taiwan to remove himself as Daly’s responsible person. Although the court recognized Shen was no longer an employee of Daly, it denied relief because Daly had not replaced him as the responsible person. The Ministry of Finance also denied an appeal by Shen.
 
In 1997, Shen sued Daly in the United States District Court for the District of Nebraska. He requested a preliminary injunction to force Daly to pay the taxes. The district court entered such an injunction on December 31, 1997. We assume Daly then paid the taxes because Taiwan lifted the travel restriction. The district court held a bench trial in February 1999 on the issue of a permanent injunction and damages. The district court found a violation of the implied covenant of good faith and fair dealing and granted a permanent injunction. Shen was also awarded attorney’s fees and $4,760 in damages on his contractual claims. Both sides now appeal and we affirm in part and reverse in part.
 
The district court held that Daly breached the implied covenant of good faith and fair dealing based on the agency relationship between Daly and Shen. We agree. Under Nebraska law, whether a person is an agent is a question of fact. The existence of an agency relationship does not depend on the terminology the parties use to characterize their relationship, but depends on the facts underlying the relationship. An agency relationship can be implied from words, conduct or circumstances that evidence an intent to create on. For example, under agency principles, an agent can be given apparent or ostensible authority to act if the “alleged principal affirmatively, intentionally, or by lack of ordinary care causes third persons to act upon the apparent authority.” That is what happened in this case. After Daly terminated Shen in December 1992, Daly did not remove Shen as its responsible person. 
 
A principal and an agent are in a fiduciary relationship. Because of the fiduciary relationship, the principal owes the agent a duty of good faith and fair dealing in the incidents of their relationship. Moreover, “‘[c]orrelative with the duties of the agent to serve loyally and obediently are the principal’s duties of compensation, indemnity, and protection.’ ” Daly breached its duty as a fiduciary in the following ways:  (1) Daly did not pay the tax when it was assessed; (2) it chose not to appeal the assessment through proper channels; and (3) Daly did not find a replacement for Shen as responsible person.

Duties Of A Principal To An Agent

The principal likewise owes duties to an agent arising either from the agency contract or which are implied by law.  These duties include:
  • A duty to cooperate and to deal with the agent fairly and in good faith;
  • A duty to provide the agent with information about risks of physical harm or pecuniary loss that the principal knows, has reason to know, or should know are present in the agent’s work, but which are unknown to the agent.
  • A duty to compensate the agent for services provided either according to the terms of the agency contract or, in the absence of an express agreement, a customary fee ordinarily paid, reflecting the reasonable value of the agent’s services based on a theory of quantum meruit;
  • A duty to reimburse the agent for all expenses, provided they were authorized by the principal, were incurred “within the scope of the agency relationship,” and were necessary to carry out the purpose of the agency relationship;
  • A duty to indemnify the agent for any losses the agent might suffer because of the actions of the principal.

Principal And Agent – Liability To Third Parties

Liability For Contracts

A major purpose of the agency relationship is to provide a principal with the means to conduct or perhaps expand their business dealings.  An agent is authorized to contact third parties on behalf of their principal, enter into contracts on behalf of the principal with third parties, and figuratively put the principal in several places at one time.
 
While generally a principal who authorizes an agent to enter into a contract with a third party is liable on the contract, the agent may be held liable on the contract under certain circumstances, depending upon whether the agency is classified as fully disclosed, partially disclosed, or undisclosed.  The status of the principal will determine the extent of any liability.
A disclosed principal is one whose identity a third party knows at the time he or she enters into an agreement; i.e., the third party knows the agent with whom he or she is dealing is acting on behalf of a known principal.  A disclosed principal operates in a fully disclosed agency.  In a fully disclosed agency, the contract is between the principal and the third party; thus, the fully disclosed principal and not the agent is liable on the contract unless the agent has guaranteed that the principal will perform on the contract in what is sometimes known as a suretyship.
 
A partially disclosed principal is an individual whose identity is unknown to the third party at the time an agreement is reached; however, the third party does know the agent is representing some principal.  A partially disclosed principal operates in a partially disclosed agency.  Under Section 321 of the Restatement (Second) of Agency, in a partially disclosed agency, both the principal and the agent are liable on third-party contracts.  In this case, the third party is relying on the reputation, integrity and credit of the agent because the principal is unidentified.  If an agent is required to “pay on the contract,” the agent can seek indemnification from the principal.
 
An undisclosed principal operates in an agency relationship when a third party is unaware of either the existence of the agency or the identity of the principal.  An undisclosed principal operates in an undisclosed agency.  In an undisclosed agency, both the principal and the agent are liable on the contract with a third party.  In essence, by not divulging that he or she is acting as an agent, the agent has become a principal to the contract.  The third party is essentially relying exclusively on the reputation and credit of the agent in entering into the contract.  However, should an agent be held liable and be required to “pay on the contract,” the agent can seek indemnification from the principal.

Tort Liability

In general, the principal and the agent are each personally liable for their own tortuous conduct.  However, a principal may be held liable for the negligent or intentional acts their agent if the actions of the agent are committed within the scope of the agent’s employment under a doctrine known as Respondeat Superior, providing for what is termed as vicarious liability.
The following are factors a court will employ in order to determine whether an agent’s conduct occurred “within the scope of employment”:
  • Was the act specifically requested or authorized by the principal?
  • Was the act the kind of act that the agent was employed to perform?
  • Did the act occur substantially within the time period of employment authorized by the principal?
  • Did the act take place substantially within the location of employment authorized by the principal?
  • Was the agent “advancing the principal’s purpose” when the act took place?
In analyzing these factors, Restatement Third of Agency Sec. 7.07 provides the following practical guidelines:
“the extent of control that the agent and the principal have agreed the principal may exercise over details of the work; whether the agent is engaged in a distinct occupation or business; whether the type of work done by the agent is customarily done under a principal’s direction or without supervision; the skill required in the agent’s occupation; whether the agent or the principal supplies the tools and other instrumentalities required for the work and the place in which to perform it; the length of time during which the agent is engaged by a principal; whether the agent is paid by the job or by the time worked; whether the agent’s work is part of the principal’s regular business; whether the principal and the agent believe that they are creating an employment relationship; and whether the principal is or is not in business.  Also relevant is the extent of control that the principal has exercised in practice over the details of the agent’s work.”
Example
Joe, a mechanic for ABC Transmissions, owned by Mr. Carville, goes to Bob’s house on behalf of Mr. Carville to pick up Bob’s car and return it to the shop.  On the way back to the shop, Joe stops at a bar, has two drinks and then hits another car parked legally in the bar’s parking lot.  Bob sues ABC Transmissions and Joe for damages to his car.  Are either or both ABC Transmissions and Bob liable?
Example
Joe, while on a sales trip to South Dakota for his employer, ABC Transmission, gets into a car accident when he stops at Mount Rushmore to sightsee.   Might either or both ABC Transmissions liable under these circumstances?  Might a court apply what is known as the “frolic and detour” doctrine to determine liability?  

Criminal Liability

A principal is not generally liable for the criminal conduct of an agent for such crimes as murder, robbery, bribery, etc.  It may be too difficult or even impossible to prove the requisite intent (“mens rea”) on the part of a principal.  Several exceptions exist.  If a principal participates directly in an agent’s crime, or if a principal knows or has reason to know his agent or employee is violating a law, the principal may incur criminal liability as an abettor to the criminal activity.  Several environmental statutes or actions under the Foreign Corrupt Practices Act have provided for the criminal responsibility of “responsible parties” under limited circumstances as a matter of public policy.

Termination Of An Agency Relationship

The agency relationship may end in two ways, by agreement or by operation of law.

Termination by Agreement

Either a principal or an agent may terminate the agency relationship. Termination may occur mutually by agreement; upon notice by either the principal or the agent to the other party; upon expiration (lapse) of the time period stated in the agency agreement time; or upon completion of the purpose of the agency relationship.  When the relationship is terminated, the principal should provide actual notice to all third parties who dealt with the agent that the termination has occurred.  Constructive notice may be provided to other parties by placing appropriate advertisements in publications located where the agency relationship operated; or otherwise providing notice to “the world” that the agency relationship was terminated by appropriate means.

Termination By Operation Of Law

An agency relationship may also be terminated by operation of law.  Circumstances include the death of either the principal or agent; insanity of either the principal or the agent; bankruptcy of the principal; impossibility of performance of the agency relationship (such as through a change in the law; absence of qualification through a failure to obtain a regulatory-type license required to perform duties or the revocation of a required regulatory license; or the loss or destruction of the subject matter of the relationship); and the outbreak of war, where the principal or agent is located in a nation at war and where the agent’s country terminates the agency relationship between the parties.
 
Certain types of agency relationships created for the benefit of an agent are termed “an agency coupled with an interest.”  An “agency coupled with an interest” typically occurs in a security interest to secure a loan.  The principal may not legally terminate the agency relationship during the term of the agency relationship without the consent of the agent if the agent has provided the security (funding) to effectuate the loan.  Should the principal terminate the agency unlawfully, the principal may be required to pay damages to an agent that has been wrongfully terminated.
 

Ethical Considerations

Limiting Compensation
 
In the arena of sports, agents are often limited in their compensation to an amount determined by the League’s collective bargaining agreement. At the same time, a lawyer’s compensation may be four to five times higher. Should a collective bargaining agreement between players and their sports league have the ability to limit the compensation of a sports agent who is not a party to that agreement?
 
Dancing
Maria Aripova runs a dance studio and frequently acts as an agent for booking recitals in the field of modern dance. She has two “up-and-coming” dancers in her studio. Should Maria be permitted to represent both dancers at the same time even though their interest may be quite different and even adverse on occasion? Upon what showing?
 

Questions

  1. How is an agency relationship created?
  2. Explain the legal principle of agency by estoppel.
  3. What are the duties of a principal to an agent? An agent to a principal?
  4. Under what circumstances might an agent be liable to a third party?
  5. What is the difference between a disclosed and undisclosed principal?
  6. Describe how an agency relationship may terminate or be terminated?
  7. Give an example of an “agency coupled with an interest.”
  8. Research Questions
  9. What is an independent contractor?
  10. What is CERCLA?
  11. What are the two most important aspects of the Foreign Corrupt Practices Act?

Chapter Twenty | Intellectual Property: Patents

Introduction To Intellectual Property

The Constitution of the United States provides the authority of the U.S. Congress to regulate that area of law known as intellectual property.

 “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries …” (Article I, Section 8)

Intellectual property flows from inventions of tangible things and creative work, including written and artistic expression or symbols or names (marks) that identify goods or services. According to the World Intellectual Property Organization (WIPO), “…intellectual property refers to creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce [and]  … is divided into two categories:

  • Industrial Property includes patents for inventions, trademarks, industrial designs and geographical indications.
  • Copyright covers literary works (such as novels, poems and plays), films, music, artistic works (e.g., drawings, paintings, photographs and sculptures) and architectural design.”

This type of property, often called “knowledge assets,” represents significant value to its owners. This area of law provides owners with a legal framework to protect tangible and intangible knowledge assets from unauthorized use or other forms of infringement. Owners are required to file with the U.S. Patent and Trademark Office (USPTO) for protection in the U.S. and with the World Intellectual Property Organization (WIPO) for purposes of global protection.

Intellectual property law is intended to encourage individuals, whether they are inventors, writers or artists, to be creators and innovators by providing for a limited period of time during which the monopoly of ownership allows them to profit from their creativity.

We will begin our examination of intellectual property with patent law.

Purpose Of Patents

A patent creates the exclusive right to exclude others from making, using, importing, and selling the patented innovation to an inventor, or patent holder, for a limited period of time. Congress first enacted a Patent Act in 1790 (1 Stat. 109). At present, the U.S. Patent Act (35 U.S.C. §§1 et seq.) is the controlling statute governing patent law. The grant of a patent gives the patent holder monopoly rights for a limited period of time to benefit from the invention. The grant of exclusive rights to an inventor encourages the investment necessary for the development of new and useful discoveries.

Patent Requirements

The Act grants the right to obtain a patent to anyone who “… invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof …” (35 U.S.C. §101). In order for the subject matter to be patentable, it must fit within one of those categories and also be novel, non-obvious and useful.

Therefore, in order for an invention to be patentable it must meet the following essential requirements: (1) patentable subject matter, (2) utility, (3) novelty, (4) non-obviousness, and (5) disclosure.

Patentable Subject Matter

The subject matter of a patentable invention must fall into one of the categories described in §101. Any “… process, machine, manufacture, or composition of matter, or … improvement thereof …” is eligible. (35 U.S.C. §101). However, laws of nature, physical phenomena, and abstract ideas are not considered eligible for patent protection.

The court in Mayo clarifies what is patentability and affirms that laws of nature are not patentable.

 

Case Study

Mayo Collaborative Services v. Prometheus Laboratories, Inc.

Supreme Court of the United States, 566 U.S. 66 (2012)

Procedural Posture

Respondent licensee of patents relating to the use of drugs to treat autoimmune diseases brought an action against petitioner competitors alleging that the competitors infringed the patents, but the competitors asserted that the subject matter of the patents was unpatentable laws of nature. The U.S. Court of Appeals for the Federal Circuit upheld the patents. Certiorari was granted.

Overview

The patents concerned a method of determining the proper dosage of thiopurine drugs which were metabolized differently by different patients with autoimmune diseases to avoid harmful side effects or ineffectiveness. The U.S. Supreme Court unanimously held that the patents were not patent-eligible since the relationships between concentrations of metabolites in the blood and the likelihood that a thiopurine drug dosage would prove ineffective or cause harm were known laws of nature, and the patents did not describe genuine applications of those laws. The steps of administration of the drugs by physicians who already used the drugs, advising the physicians to apply the natural laws in making treatment decisions, and directing the measurement of metabolite levels were well known and simply told the physicians to engage in well-understood, routine, conventional activity previously engaged in by scientists in the field. Further, considering the steps as an ordered combination added nothing to the laws of nature that was not already present when the steps were considered separately, and there was no inventive concept in the claimed application of the natural laws.

Laws of nature, natural phenomena, and abstract ideas are not patentable. A new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E equals mc squared, nor could Newton have patented the law of gravity. Such discoveries are manifestations of nature, free to all men and reserved exclusively to none.

Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work. Monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it. However, too broad an interpretation of this exclusionary principle could eviscerate patent law. All inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. Thus, a process is not unpatentable simply because it contains a law of nature or a mathematical algorithm. An application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.

If a law of nature is not patentable, then neither is a process reciting a law of nature, unless that process has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself. A patent, for example, could not simply recite a law of nature and then add the instruction “apply the law.”

Outcome

The judgment upholding the patents was reversed.

The Diamond case examined a different question presented by the patentable subject matter requirement, namely, whether a live, human-made organism is patentable.

 

Case Study

Diamond v. Chakrabarty

Supreme Court Of The United States, 447 U.S. 303 (1980)

Procedural Posture

Petitioner, Commissioner of Patents and Trademarks, appealed the judgment from the United State Court of Customs and Patent Appeals, which allowed respondent microbiologist’s patent claims for a genetically engineered micro-organism that was capable of breaking down crude oil.

Overview

Respondent microbiologist filed patent claims for human-made, genetically engineered bacterium that was capable of breaking down multiple components of crude oil. The court affirmed the judgment that allowed respondent’s claims. The court rejected the argument of the patent office board of appeals that 35 U.S.C.S. § 101 was not intended to cover living things such as laboratory created micro-organisms. The court held that respondent’s micro-organism constituted a “manufacture” or a “composition of matter” within the meaning of 35 U.S.C.S. § 101 and thus qualified as patentable subject matter. The court found that respondent had produced a new bacterium with markedly different characteristics from any found in nature and which had the potential for significant utility. The court held that the language of 35 U.S.C.S. § 101 embraced respondent’s invention.

Syllabus

Title 35 U. S. C. § 101 provides for the issuance of a patent to a person who invents or discovers “any” new and useful “manufacture” or “composition of matter.” Respondent filed a patent application relating to his invention of a human-made, genetically engineered bacterium capable of breaking down crude oil, a property which is possessed by no naturally occurring bacteria. A patent examiner’s rejection of the patent application’s claims for the new bacteria was affirmed by the Patent Office Board of Appeals on the ground that living things are not patentable subject matter under § 101. The Court of Customs and Patent Appeals reversed, concluding that the fact that micro-organisms are alive is without legal significance for purposes of the patent law.

Decision

A live, human-made micro-organism is patentable subject matter under § 101. Respondent’s micro-organism constitutes a “manufacture” or “composition of matter” within that statute. Pp. 308-318.

(a) In choosing such expansive terms as “manufacture” and “composition of matter,” modified by the comprehensive “any,” Congress contemplated that the patent laws should be given wide scope, and the relevant legislative history also supports a broad construction. While laws of nature, physical phenomena, and abstract ideas are not patentable, respondent’s claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter — a product of human ingenuity “having a distinctive name, character [and] use.” ***

(b) The passage of the 1930 Plant Patent Act, which afforded patent protection to certain asexually reproduced plants, and the 1970 Plant Variety Protection Act, which authorized protection for certain sexually reproduced plants but excluded bacteria from its protection, does not evidence congressional understanding that the terms “manufacture” or “composition of matter” in § 101 do not include living things.***

(c) Nor does the fact that genetic technology was unforeseen when Congress enacted § 101 require the conclusion that micro-organisms cannot qualify as patentable subject matter until Congress expressly authorizes such protection. The unambiguous language of § 101 fairly embraces respondent’s invention. Arguments against patentability under § 101, based on potential hazards that may be generated by genetic research, should be addressed to the Congress and the Executive, not to the Judiciary.***

Outcome
The court affirmed the judgment that allowed respondent microbiologist’s patent claims. The language of the patent statute covered respondent’s invention of a living, genetically engineered micro-organism.

The Diamond court concluded that the fact that the micro-organisms in question were alive was not legally significant to its decision since §101 allows for “… any new and useful … manufacture, or composition of matter …“ to be patentable.

Utility

Utility requires that the invention be useful but not hypothetical or abstract. The patent applicant must demonstrate that the invention is operational and it has both a beneficial and practical use.

In State Street Bank v. Signature Financial Group, Inc. (149 F.3D 1368 (1998)) the Court of Appeals evaluated whether an algorithm (software) that managed a mutual fund investment structure was patentable. Since “abstract ideas” are not patentable and an algorithm is an abstract idea it is, therefore, not patentable subject matter. The court, in State Street, though, using the “machine or transformation test” concluded that “… to be patentable an algorithm must be applied in a “useful” way.” The court in Bilski v. Kappos (561 U.S. 593 (2010)) decided that the State Street standard was not the exclusive test of patentability but a “useful clue” when determining patentability.

Novelty

The requirement that the invention is novel means that patent will not be granted to a new invention that is already available to the public. If the invention has been disclosed to the public prior to the filing of an application for a patent the new invention is not considered to be novel. If the “… claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention …” it is not patentable. (35 U.S.C. §102). Prior public disclosure is determined by a search for what is called I” Prior art consists of all of the information available to the public prior to the date of filing that is pertinent to the invention.

Non-Obviousness

The Patent Act of 1952 added the requirement of non-obviousness to the standard for patentability. (35 U.S.C. §103). The Supreme Court established the three conditions that must be met to determine whether the non-obviousness requirement has been met. (Graham v. John Deere Co., 383 U.S. 1 (1966)). The Court, in determining whether the standard of non-obviousness has been met, required that:

  1. the scope and content of the prior art must be determined;
  2. differences between the prior art and invention under consideration must be ascertained; and
  3. the skill that a person of ordinary skill in the art under review.

For example, if the new invention is not sufficiently different from others like it or if the new invention would be obvious to a person of ordinary familiarity with that type of invention then the non-obviousness standard has not been met by the new invention.

Sufficiency of Disclosure

The monopoly granted to the patent holder requires that the inventor fully describe the details of the invention in a way that a person skilled in the art would be able to make or use it. The description must also present the “best mode contemplated by the inventor or joint inventor of carrying out the invention” meaning that the disclosure must describe the inventor’s preferred way of making the invention. (35 U.S.C. §112).

Types of Patents

All patents must meet the standards of patentability described above, i.e., the invention must be of a new and useful process, machine, manufacture, or composition of matter, or a new and useful improvement thereof. There are, however, different types of patents to consider.

Utility Patents

Utility patents protect the functionality of the invention and are the most common. A utility patent protects the functional aspects of the invention, but a design patent protects the visual look. The term of protection for a utility patent is twenty years from the earliest filing date of the application.

Design Patents

Design patents protect “… any new, original and ornamental design for an article of manufacture …” (35 U.S.C. §171). These patents focus on the non-functional, visual aspects of the object. The drawings included in the application are very important since they clearly establish the visual characteristics of the subject of the application. The term of protection for design patents is fifteen years from the date of the grant of the patent.

Plant Patents

The Plant Patent Act of 1930 (35 U.S.C. Ch. 15) amended the Patent Act to make new varieties of plants eligible for patent protection. A patent is available to anyone who “… invents or discovers and asexually reproduces any distinct and new variety of plant …”. (35 U.S.C. §161). A grant of a plant patent will allow the owner to prevent others “… from asexually reproducing the plant, and from using, offering for sale, or selling the plant so reproduced.” (35 U.S.C. §163). The term of protection for a plant patent is twenty years from the earliest filing date of the application.

Business Methods Patents

Business methods are activities related to running a business. Patents for business methods have been available since Congress enacted the Patent Act of 1790. The issue to be addressed is whether the business method represents a “… new and useful process, … or any new and useful improvement thereof …” (35 U.S.C. §101). The term of protection for business method patents is twenty years from the earliest filing date of the application. This type of patent has become increasingly popular since the 1980s due to the rise of internet companies that use software to develop new “methods” of doing business. As a result, business method and software patents intersect. It is important to remember that while the inclusion of software is not a prerequisite for a business method patent, it frequently incorporates software. Tax strategies would be an example of such a patent.

While the USPTO, for many years, did not recognize the patentability of business methods the Patent Act does not prohibit them. The State Street decision (see above) in 1999 established the rule that patent laws were intended to protect any method, whether or not it required the aid of a computer, so long as it produced a “… useful, concrete and tangible result.” Bilski v. Kappos (561 U.S. 593 (2010)) overruled the “useful” result finding but did not invalidate business method patents. The “useful” result test remains the most appropriate method for determining the viability of a business method patent.

These patents are frequently used by owners to protect innovative business methods that are enabled as a result of software and the internet. They are particularly important in e-commerce applications. Amazon’s patent of its “1-click” shopping system is an example of a business method patent.

Software Patent

A software patent is commonly defined as a patent on any performance of a computer realized by means of a computer program. As with business method patents, patent protection of software is not specifically included in the Patent Act. In fact, the eligibility for patent protection for software remains unsettled. The issue has been addressed several times by the courts but a definitive answer has not been provided (see Bilski v. Kappos (561 U.S. 593, 2010), Mayo Collaborative Services v. Prometheus Laboratories, Inc. (566 U.S. 66, 2012) and Alice Corp. v. CLS Bank International (134 S. Ct. 2347, 2014)).

In Alice, the court addressed whether an abstract idea could not be patented just because it was implemented on a computer. The court found that a software implementation of an escrow arrangement was not patent eligible because it is an implementation of an abstract idea.

 

Case Study

Alice Corporation Ltd. v. CLS Bank International

134 S. Ct. 2347 (U.S. Sup. Ct. 2014)

Procedural Posture

A currency transaction facilitator sued a patent assignee, alleging that the claims disclosing schemes to manage certain forms of financial risk were invalid, unenforceable, or not infringed. A district court held that all of the claims were patent ineligible. The United States Court of Appeals for the Federal Circuit affirmed the judgment. Certiorari was granted.

Summary

Judicial precedent has long held that 35 U.S.C.S. § 101 contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.

Judicial precedent treads carefully in construing the exclusionary principle that the laws of nature, natural phenomena, and abstract ideas are not patentable lest it swallow all of patent law. At some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. Applications of such concepts to a new and useful end remain eligible for patent protection.

In applying the 35 U.S.C.S. § 101 exception, the court must distinguish between patents that claim the building blocks of human ingenuity and those that integrate the building blocks into something more, thereby transforming them into a patent-eligible invention. The former would risk disproportionately tying up the use of the underlying ideas, and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under federal patent laws.

Judicial precedent sets forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, the court determines whether the claims at issue are directed to one of those patent-ineligible concepts. If so, the court then asks what else is there in the claims before it? To answer that question, the court considers the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application. Case law describes step two of this analysis as a search for an inventive concept, i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.

Decision

Asserted computer-implemented inventions–consisting of (1) method for exchanging obligations, (2) computer system configured to carry out method, and (3) computer-readable medium programmed to perform method–held not patent-eligible under 35 U.S.C.S. § 101.

Outcome

The judgment was affirmed.

Patent Application

A patent application requires four parts. They are the specification and claims, the drawings and the inventor’s oath or declaration (35 U.S.C. §115).

The specification is a summary of the technical aspects of the invention. It “… shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.” (35 U.S.C. §112). The claims include a description of the novel features of the invention and of the scope of protection that will be created by the patent.

The drawings will show all of the different features of the invention “… where necessary for the understanding of the subject matter sought to be patented” (35 U.S.C. §113). The USPTO may also require a “… a model of convenient size to exhibit advantageously the several parts …” of the invention (35 U.S.C. §114).

Finally, the inventor’s oath or declaration will include a statement that “… the application was made or was authorized to be made by the declarant and but the declarant believes himself or herself to be the original inventor or an original joint inventor …“ of the claimed invention (35 U.S.C. §115).

A patent examiner will review the application thoroughly and examine the prior art. If the review is satisfactory a patent will be issued (35 U.S.C. §131). In the event that the reviewer either rejects, or objects to, the application, the USPTO will notify the applicant and provide reasons for the rejection or objection.

The applicant may request further review of the application (35 U.S.C. §132). If the applicant does not move forward with the application with six months following the rejection or objection the application will be considered to be abandoned (35 U.S.C. §133). The applicant may pursue an appeal to the Board of Patent Appeals and Interferences (BPAI) (35 U.S.C. §134). There are two additional opportunities for appeal if the decision of the BPAI is not acceptable to the applicant. §141 allows the applicant to file an appeal with the United States Court of Appeals for the Federal Circuit. If that option is not taken, the applicant may ”… have remedy by civil action against the Director …” (35 U.S.C. §145).

An inventor can file a provisional patent application (PPA). A PPA is a strategy that will allow the applicant to establish an early filing date for the patent application. The PPA must sufficiently disclose the invention and a full application must be filed within one year. Patent protection continues for a full 20-year patent term from the filing date of the regular application if approved.

Types of Infringement

Direct infringement arises when anyone “… without authority makes, uses, offers to sell, or sells any patented invention within the United States or imports into the United States any patented invention during the term of the patent therefor …” (35 U.S.C. §271).

Anyone who induces another party to infringe on a patent will be liable for indirect infringement (35 U.S.C. §271(b)). Indirect infringement requires that the person allegedly inducing infringement must be shown to have known the existence of the patent. Contributory infringement arises where a party knowingly “… offers to sell or sells within … or imports into the United States a component …” of a patented invention that will be used in a manner that will infringe on the patent (35 U.S.C. §271(c)). In both instances, the existence of direct infringement is required.

Defenses to Infringement

Invalidity and non-infringement are the two most common defenses to patent infringement (35 U.S.C. §282(b)). Invalidity challenges the validity of the patent itself. Since the statute establishes a presumption that the patent is valid the burden of establishing the “… invalidity of a patent …” is on the party asserting such invalidity (35 U.S.C. §282(a)). Raising invalidity as a defense requires a defendant to show that the patented invention did not meet the novelty or non-obviousness standards.

Non-infringement requires the defendant to describe or demonstrate the differences between its invention and the plaintiff’s patent. Essentially, this defense shows that the challenged invention is different from the patent that is the subject of the infringement claim.

If a plaintiff (patent holder) engages in illegal or unethical behavior in order to benefit its patents the patent holder has engaged in patent misuse and will be barred from instituting a patent infringement claim.

First Sale Doctrine

The first sale doctrine allows purchasers of a patented product to resell it without fear of an infringement claim. The Impression Products case supports the “right to tinker” by purchasers of products.

 

Case Study

Impression Products, Inc. v. Lexmark International, Inc.

Supreme Court Of The United States, 137 S. Ct. 1523 (2017)

Syllabus

A United States patent entitles the patent holder to “exclude others from making, using, offering for sale, or selling [its] invention throughout the United States or importing the invention into the United States.” 35 U. S. C. §154(a). Whoever engages in one of these acts “without authority” from the patentee may face liability for patent infringement. §271(a). When a patentee sells one of its products, however, the patentee can no longer control that item through the patent laws—its patent rights are said to “exhaust.”

Respondent Lexmark International, Inc. designs, manufactures, and sells toner cartridges to consumers in the United States and abroad. It owns a number of patents that cover components of those cartridges and the manner in which they are used. When Lexmark sells toner cartridges, it gives consumers two options: One option is to buy a toner cartridge at full price, with no restrictions. The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark.

Companies known as remanufacturers acquire empty Lexmark toner cartridges—including Return Program cartridges—from purchasers in the United States, refill them with toner, and then resell them. They do the same with Lexmark cartridges that they acquire from purchasers overseas and import into the United States. Lexmark sued a number of these remanufacturers, including petitioner Impression Products, Inc., for patent infringement with respect to two groups of cartridges. The first group consists of Return Program cartridges that Lexmark had sold within the United States. Lexmark argued that, because it expressly prohibited reuse and resale of these cartridges, Impression Products infringed the Lexmark patents when it refurbished and resold them. The second group consists of all toner cartridges that Lexmark had sold abroad and that Impression Products imported into the country. Lexmark claimed that it never gave anyone authority to import these cartridges, so Impression Products infringed its patent rights by doing just that.

Impression Products moved to dismiss on the grounds that Lexmark’s sales, both in the United States and abroad, exhausted its patent rights in the cartridges, so Impression Products was free to refurbish and resell them, and to import them if acquired overseas. The District Court granted the motion to dismiss as to the domestic Return Program cartridges, but denied the motion as to the cartridges sold abroad. The Federal Circuit then ruled for Lexmark with respect to both groups of cartridges. Beginning with the Return Program cartridges that Lexmark sold domestically, the Federal Circuit held that a patentee may sell an item and retain the right to enforce, through patent infringement lawsuits, clearly communicated, lawful restrictions on post-sale use or resale. Because Impression Products knew about Lexmark’s restrictions and those restrictions did not violate any laws, Lexmark’s sales did not exhaust its patent rights, and it could sue Impression Products for infringement. As for the cartridges that Lexmark sold abroad, the Federal Circuit held that, when a patentee sells a product overseas, it does not exhaust its patent rights over that item. Lexmark was therefore free to sue for infringement when Impression Products imported cartridges that Lexmark had sold abroad. ***

Holding

[1] A patent holder could not bring a patent infringement suit against a toner cartridge remanufacturer to enforce the single-use/no-resale provision accompanying its domestic return program cartridges because once sold, the return program cartridges passed outside of the patent monopoly, and whatever rights the patent holder retained were a matter of the contracts with its purchasers, not patent law;

[2] A patentee’s authority to limit licensees did not mean that patentees could use licenses to impose post-sale restrictions on purchasers that were enforceable through the patent laws;

[3] An authorized sale outside the United States, just as one within the United States, exhausted all rights under the Patent Act.

Outcome

Judgment reversed; case remanded ***

Estoppel

Estoppel in its various forms is a concept that we have discussed earlier in chapters relating to contracts, agency, and business associations. Estoppel may, for a variety of reasons, prevent someone from asserting a claim or defense. Defendants can raise two types of estoppel defenses to an infringement claim. They are file wrapper and equitable estoppel. The file wrapper includes all of the patent documents filed with the USPTO. This type of estoppel prevents an inventor from denying any deficiencies in its invention that were disclosed during the patent application process. Equitable estoppel will arise when the patent holder represented to the defendant that the patent would not be enforced. If the defendant relied on the holder’s misrepresentation then the holder’s claim may be dismissed.

Remedies for Infringement

The Patent Act provides for civil remedies for infringement of a patent. These include injunctive relief, damages and, in exceptional cases, attorneys fees. The statute of limitations for an infringement suit is six years (35 U.S.C. §281 et seq.).

Injunctive Relief

The court may issue an injunction either at a preliminary stage in the dispute or as part of the final resolution of the claim. A preliminary injunction may be issued where the patent holder can demonstrate that there is a significant likelihood that (a) it will suffer permanent harm in its absence, and (b) the patent holder will prevail in its infringement claim.

Damages for Infringement

Damages available to patent holders as a remedy for infringement include compensatory and increased damages. Lost profits and costs are recoverable as compensatory damages where the patent holder can establish the value of the patent. Increased damages are available at the discretion of the court if deliberate or willful infringement has been established. Attorney’s fees may be awarded by the court where willful infringement has been shown.

 

Ethical Considerations

Brewing Infringement

Jim teaches 4th grade history. He developed and patented a tea brewing device. He sold one of the tea brewers to Walter. Walter sees real potential in the tea brewer. He decides to launch a company that will sell the device on the internet. Walter reverse engineers Jim’s design, copies it and begins to sell his version of the tea brewer on his website. Are Walter’s actions ethical?

 

Questions

  1. What is the constitutional basis for intellectual property law?
  2. What rights are granted when a patent is issue?
  3. What is patentable subject matter?
  4. Does a patent application meet the novelty requirement if it is already published?
  5. Do design patents focus on utility of the invention?
  6. How are business method and software patents similar?
  7. What are the two most common types of patent infringement? Explain their differences.
  8. What is the First Sale Doctrine?