If you are planning to license a patent or invest in a company holding important patents, the Federal Circuit recently issued a strong reminder of the importance of a thorough due diligence review.
In most countries, the patent owner must pay annuities or maintenance fees to the patent office on a periodic basis, or the patent will lapse. It’s critical to remember that a due diligence review is more than a chain-of-title search: the investigation should also ensure that all maintenance fees have been paid. In the United States, maintenance fees are due 3-1/2, 7-1/2 and 11-1/2 years after the date of grant of the patent. If a patent lapses, there is a two-year period in which the patent may be revived if the lapse was unintentional. After that, the patent may be revived only if the lapse was unavoidable.
The “unavoidable” standard is a high hurdle. Simply not knowing about the maintenance fee payment requirement, or relying on the USPTO to remind you of the maintenance fee payment due date, is not sufficient. In Korsinsky v. Dudas, the Federal Circuit refused a request from an individual inventor to reinstate a patent after the inventor claimed that (1) he received no notice of the maintenance fee payment, and (2) his wife refused to let him pay the maintenance fee.
In other words, the patent holder is responsible for the payments — and an investor or licensor should not blindly assume that the payments have been made.
IP Spotlight 