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WAKE FOREST JOURNAL OF BUSINESS
AND INTELLECTUAL PROPERTY LAW
VOLUME 18 SPRING 2018 NUMBER 3
UNDERSTANDING PATENT AND COMMERCIAL

WARRANTY LIABILITY STEMMING FROM PENDING
PATENT APPLICATIONS
Austen Zueget
I. INTRODUCTION .......................................................... 444

A. SOME BACKGROUND ABOUT THE PATENTING
P RO C ESS ................................................................... 445
B. THINGS TO KNOW ABOUT PATENT ENFORCEMENT.. 450
C. PROVISIONAL RIGHTS TO PRE-GRANT DAMAGES .... 452
II. POTENTIAL STATE COMMERCIAL LAW LIABILITY. 456
A. THE UCC WARRANTY AGAINST INFRINGEMENT ..... 456
B. KEY LIMITATIONS OF THE UCC WARRANTY
AGAINST INFRINGEMENT .......................................... 458
C. APPLYING THE UCC WARRANTY TO PENDING
PATENT APPLICATIONS ............................................. 460
D. INTERNATIONAL COMMERCIAL LAW
CONSIDERATIONS ..................................................... 466
E. CUSTOM WARRANTIES AND INDEMNIFICATIONS ..... 469
III. CHALLENGING A PENDING PATENT APPLICATION. 472
A . O VERV IEW .............................................................. 472
B . PROTESTS .......................................................... 473
C. PRE-ISSUANCE SUBMISSIONS .................................. 474
D. INFORMAL SUBMISSIONS ......................................... 477
E. DERIVATION PROCEEDINGS .................................... 478
F. O THER O PTIONS? .................................................... 478
IV. CONCLUSION ........................................................... 479
-© 2018 Austen Zuege is an intellectual property attorney at Westman, Champlin

& Koehler, P.A. in Minneapolis. He holds a B.S. in Industrial Engineering from the
University of Wisconsin-Madison, and a J.D. (cum laude) from the University of
Illinois College of Law. The views expressed in this Article do not necessarily reflect
those of Westman, Champlin & Koehler, P.A. or any of its clients.
444 WAKE FOREST J. [VOL. 18
BUS. & INTELL. PROP. L.
I. INTRODUCTION
Businesses often wonder about the risks associated with pending
patent applications; that is, when a patent application has been filed by
another entity but an issued patent has not yet been granted.' These
sorts of analyses always involve a certain amount of speculation,
because a pending patent application might become a granted patent, or
might not.2 Waiting until a patent is granted or the patent application is
abandoned is often unappealing, from a business perspective, because
the art of business is about strategic positioning and a "wait and see"
approach may mean lost opportunities.3 Moreover, patent applicants
may mark their products as being "patent pending," which may prompt
inquiries to competing sellers from potential customers, or various
threats-overt or veiled-from such patent applicants about their not-
yet-patented technology. 4 What follows is an overview of potential
liability stemming from others' pending patent applications, meant as a
guide to addressing these sorts of situations. The hope is that readers
can learn when, if ever, a seller can be liable for conduct that occurs
before a patent is granted that would constitute patent infringement if it
would have been committed after the patent is granted. Understanding
the scope of such potential liability has important implications for
commercial transactions, in view of indemnification agreements or
implied warranties that may apply by default under the Uniform
Commercial Code (the "UCC"), for instance.5 As will be seen, there is
tremendous ambiguity regarding pre-grant patent infringement liability
for sellers under implied warranties against infringement. 6 This
suggests legislative revisions in the long run, as well as the use of
customized commercial contract terms to redress this ambiguity in the
1See 35 U.S.C. § 292 (2012); see also ProvisionalApplicationfor Patent,
USPTO, https://www.uspto.gov/patents-getting-started/patent-basics/types-patent-
applications/provisional-application-patent (last visited Feb. 20, 2018).
2 See 35 U.S.C. § 132 (2012).
3 See Stephen Key, Don't File That Patent Yet. File a ProvisionalPatent
Application First,FORBES (Jan. 8, 2018, 11:54 AM),
https://www.forbes.com/sites/stephenkey/2018/01/08/dont-file-that-patent-yet-file-a-
provisional-patent-application-first/#8d5 fl 3b57fe0.
4 Michael A. Shimokaji, Inducement and ContributoryInfringement Theories to
Regulate Pre-PatentIssuance Activity, 37 IDEA 571, 571 (1997); see also How To
Protect Your Invention When PitchingIt, FORBES (Dec. 6, 2006, 12:10 PM),
https://www.forbes.com/2006/12/06/patent-smallbusiness-tradesecret-ent-law-
cx nl 1206nolo.html#403e0864104c.
' See U.C.C. § 2-312(3) (AM. LAW INST. & UNIF. LAW COMM'N 2002) ("Unless
otherwise agreed a seller who is a merchant regularly dealing in goods of the kind
warrants that the goods shall be delivered free of the rightful claim of any third
person by way of infringement or the like ... .
6 See infra Section II.C.
continued...
2018] PATENT AND COMMERCIAL 445
WARRANTY LIABILITY
short run absent clarifying legislative action. 7 But first, a discussion of

the basic legal framework under both patent laws and the laws of
commercial transactions is in order, because much of the ambiguity in
these situations arises at the intersection of two very different bodies of
law.
A. Some Background About the Patenting Process
The United States has permitted inventions to be patented since the

founding of the country. 8 Today, U.S. patent laws provide that
"[w]hoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title." 9 Three basic requirements
for patentability are utility, novelty, and non-obviousness. 10 There are
three types of patents in the United States: utility, design and plant." In
common parlance, reference to a "patent" without further qualification
generally means a utility patent.
The United States Patent and Trademark Office (the "USPTO")
examines each and every patent application to assess patentability
before grant.1 2 Examined applications are either rejected or allowed. 3
When allowed, and after payment of the issue fee, a granted patent can
7See infra Part II.

8 See U.S. CONST. art. I, § 8, cl. 8 ("The Congress shall have Power... [t]o
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 .... ).
9 35 U.S.C. § 101 (2012).
10 35 U.S.C. §§ 101-103 (2012). In other countries, "industrial applicability"
replaces "utility" and "inventive step" replaces "non-obviousness," though the
principles are generally the same. See, e.g., ComparativeStudy on
Hypothetical/Real Cases: Inventive Step/Non-obviousness, TRILATERAL 3 (Nov.
2008), https://www.trilateral.net/projects/worksharing/study/cases2.pdf (providing
comparisons between the United States, Europe and Japan's patent laws).
11See 35 U.S.C. §§ 101, 161, 171 (2012).
12 See 35 U.S.C. § 131 (2012); see also GeneralInformation Concerning
Patents,USPTO, https://www.uspto.gov/patents-getting-started/general-information-
concerning-patents (last visited Feb. 27, 2018) (detailing the functions of the
USPTO).
13 See Manual of Patent Examining Procedure §§ 701-702, 1302.02 (9th ed.
Rev. 08.2017, Jan. 2018) [hereinafter MPEP]. The average total pendency (i.e., time
to a final disposition of issuance or abandonment) for a patent application in fiscal
year 2017 was 24.2 months. Performanceand Accountability Report: FY2017,
USPTO 2, 15, 47 (Nov. 9, 2017),
https://www.uspto.gov/sites/default/files/documents/USPTOFY17PAR.pdf
[hereinafter Performanceand Accountability Report].
continued...
issue. 14 If rejected, the applicant has the opportunity to amend the

application and/or submit arguments in favor of patentability.15 This
process is often referred to as patent "prosecution. '16 The "prosecution
history," or "file wrapper," for a given patent application contains all
communications between the applicant and the patent office and is made
publicly available after a patent application is published, or when a
patent issues.17 The USPTO Patent Application Information Retrieval
(the "PAIR") system provides online access to such information.18
Patent application claims are often narrowed in order to obtain
allowance, but, occasionally, they may be narrowed in some respects
and broadened in others, or simply broadened. 19 Most importantly,
applications can and often do change in scope between the time they are
first filed and the time granted patents issue. For a business evaluating
another party's pending patent application, this can make it seem like a
moving target.
Each year, more than 600,000 new patent applications are filed in
the United States, and more than 350,000 applications are allowed.2 1
The general trend has been an increase in the number of patent
applications and grants each year.22 One study found that the overall
allowance rate, for patent applications filed between 1996 and 2005,
was between 55.8% and 71.2%.23 What these very general statistics
14
See MPEP, supranote 13, §§ 1306, 1309.
15See MPEP, supra note 13, §§ 714.01-.25.
16 See, e.g., Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 22
(1997).
17 37 C.F.R. § 1.11 (2017); see also MPEP, supra note 13, §§ 719, 719.01, 724.
In this context, "image file wrapper" refers to the online digital file wrapper for a
given patent application. MPEP, supra note 13, §§ 719, 719.01.
18 See Public PatentApplication Information Retrieval, USPTO,
https://portal.uspto.gov/pair/PublicPair (last visited Dec. 26, 2017).
19 See MPEP, supra note 13, § 2163.05.
20 See Michael Carley et al., What Is the ProbabilityofReceiving a U.S.
Patent?, 17 YALE J.L. & TECH. 203, 205 (2015).
21 See Performance andAccountability Report, supra note 13, at 168; see also
GeographicPatent Type & Count, USPTO,
https://developer.uspto.gov/visualization/geographic-patent-type-count (last visited
Dec. 14, 2017).
22 See Performance andAccountability Report, supra note 13, at 168.
23 Carley et al., supra note 20, at 208-09. In this study, the 55.8% figure
represents the allowance rate for "progenitor" patent applications, defined as first
filings without any continuing prosecution action (including an absence of requests
for continued examination [RCEs]), while the 71.2% figure represents the
percentage of patent application families (i.e., applications sharing a common
priority claim) that produce at least one patent. Id. at 209-10. This is not the most
helpful breakdown of categories, particularly by excluding applications with RCEs
from the "progenitor" category. These figures also vary by technology area. Id. at
219. Using a different metric, it can be said that in 2015, the number of utility
continued...
WARRANTY LIABILITY
show is that most patent applications do result in a granted patent, but a

substantial number of applications do not. It stands to reason that many
abandoned patent applications are abandoned because a patent examiner
has rejected them as not being patentable. 24 But applicants also
abandon patent applications for other reasons, such as a lack of funds or
lack of a commercial market for the invention, even when the claimed
invention is patentable.2 5 Applicants may be more willing to explicitly
concede the latter than the former. 6
While anyone can file a patent application, directed to anything of
his or her choosing, the mere filing of a patent application does not mean
that a patent will ultimately be granted. 27 Patent applicants seek
exclusive rights in their inventions, but may not succeed in obtaining
those rights in the form of granted patents.2 8 To take a very simple
hypothetical, someone could, very literally, "reinvent the wheel" and
attempt to patent the well-known simple machine of a wheel and axle,
but such an attempt would invariably fail-one hopes. Indeed, there is
a certain percentage of patent applicants who simply do not understand
the requirements for patentability. 29 There are also some applicants
who understand the theoretical framework for patentability yet file
patent applications that contravene them through error or less benign
motives.3 Such applications may evidence no recognition that the
patents granted by the USPTO was 50.6% of the number of utility patent
applications filed that year (bearing in mind that the granted patents correspond to
applications that were overwhelmingly filed one or more years earlier). See US.
Patent Statistics Chart: Calendar Years 1963 -2015, USPTO,
https://www.uspto.gov/web/offices/ac/ido/oeip/taf/usstat.htm (last visited Feb. 28,
2018). Of course, generalized statistics only say so much. Keep in mind the joke
about statistical averages: when Jeff Bezos walks into a bar, on average, everyone in
the bar is a multi-millionaire.
24 See Carley et al., supra note 20, at 207; see also MPEP, supra note 13,
§ 711.03(c).
25 See MPEP, supra note 13, § 711.03(c). Abandonment is not "unintentional"
(and thus the patent application is not revivable) where, for example, "the applicant
does not consider the allowed or patentable claims to be of sufficient breadth or
scope to justify the financial expense of obtaining a patent" or where "the applicant
does not consider any patent to be of sufficient value to justify the financial expense
of obtaining the patent[.]" Id.
26 See id.
27 See generally Carley et al., supra note 20, at 207 (providing a detailed
analysis on the percentage of successful patent applications).
28 Id.
29 See, e.g., Dana R. Irwin, ParadiseLost in the PatentLaw? Changing Visions
of Technology in the Subject Matter Inquiry, 60 FLA. L. REv. 775, 814 (2008)
(explaining the broad spectrum of patentable subject matter).
31 See Trzaska v. L'Oreal USA, Inc., 865 F.3d 155, 162 (3d Cir. 2017) (holding
that an employer's alleged disregard of the Rules of Professional Conduct and threat
to terminate a patent attorney's employment for failure to meet patent application
continued...
patent laws permit a limited monopoly in a patented invention only

when the applicant satisfies the conditions for patentability by
disclosing and enabling a new, useful, and non-obvious technical
contribution.3 1
Another crucial thing to understand about the patent system is that
examination is an imperfect process. When a new patent application is
filed with the USPTO, it is generally assigned to a single examiner, who
may or may not be required to have a supervisor sign off on all actions.3 2
While examiners have technical knowledge relevant to the patent
applications they handle, and they generally try to perform their duties
to the best of their abilities, every examiner is still a fallible human
33
without a perfect understanding of all the relevant facts or law.
Examiners can make mistakes, which sometimes take the form of
allowing a patent application that another person would consider
unpatentable.3 4 This highlights how much variability there is in patent
examination. 35 What one examiner deems patentable, another might
not.36 And, of course, the entire set of procedures for appeals from an
examiner's rejection of a patent application and the statutorily-defined
ability of third parties to challenge the validity or patentability of a
granted patent acknowledge that reasonable minds can differ on these
37
questions.
quotas regardless of patentability raises a colorable claim under the New Jersey
Conscientious Employee Protection Act).
31 See, e.g., Brenner v. Manson, 383 U.S. 519, 534 (1966); Sears, Roebuck &
Co. v. Stiffel Co., 376 U.S. 225, 229-30 (1964); Pennock v. Dialogue, 27 U.S. 1, 23
(1829); see also Irwin, supra note 29, at 812-15.
32 See MPEP, supra note 13, §§ 1004, 1005; see also Naira R. Simmons, Putting
Yourself in the Shoes of a Patent Examiner: Overview of the United States Patent
and Trademark Office (USPTO) Patent ExaminerProduction (Count) System, 17 J.
MARSHALL REv. INTELL. PROP. L. 32, 35-36 (2017); Signatory Authority, PAT. OFF.
PROF. ASS'N, http://www.popa.org/about/advocacy/signatory-authority- 1/ (last
visited Dec. 26, 2017).
33 See Simmons, supra note 32, at 33-34 (explaining that patent examiners are
not always familiar with the facts and law relevant to the patent under examination).
34 See id.
35 E.g., lain M. Cockburn et al., Are All PatentExaminers Equal? Examiners,
Patent Characteristics,and Litigation Outcomes, in PATENTS IN THE KNOWLEDGE-
BASED ECONOMY 19 passim (Wesley M. Cohen & Stephen A. Merrill eds., 2003);
Ronald J. Mann, The Idiosyncrasy of PatentExaminers: Effects of Experience and
Attrition, 92 TEX. L. REV. 2149 passim (2014); Sean Tu, Luck/Unluck of the Draw:
An EmpiricalStudy of ExaminerAllowance Rates, 2012 STAN. TECH. L. REv. 10
passim (2012); Shine Tu, InvalidatedPatents andAssociatedPatent Examiners, 18
VAND. J. ENT. & TECH. L. 135 passim (2015); Shine Tu, PatentExaminers and
Litigation Outcomes, 17 STAN. TECH. L. REV. 507 passim (2014).
36 See Cockburn et al., supra note 35, at 22.
3' Ronald J. Mann & Marian Underweiser, A New Look at Patent Quality:
RelatingPatent Prosecutionto Validity, 9 J. EMPIRICAL LEGAL STUD. 1, 12-13
continued...
WARRANTY LIABILITY
It also bears mentioning that examiners face institutional constraints

on how they approach the examination process,3" such as maintaining a
given level of productivity. Examiner performance is evaluated such
that "quality" of examination actions makes up only thirty-five percent
of an examiner's annual performance ratings.3 9 There are well-defined
legal standards for addressing aspects of patentability, requiring
affirmative consideration of certain types of evidence and prohibiting
certain kinds of biases or inferences. 40 But the notion that evaluations
of patentability are completely "objective" is a legal fiction. 41 As once
explained by Judge Learned Hand when considering how to assess
patentability:
There comes a point when the question must be resolved
by a subjective opinion as to what seems an easy step
and what does not. We must try to correct our standard
by such objective references as we can, but in the end the
judgment will appear, and no doubt be, to a large extent
personal, and in that sense arbitrary.42
All this says nothing about how business people view the patents and
patent applications of a competitor, a situation where forms of self-
serving bias or a "sour grapes" attitude may come into play, or even an
"anti-patent" attitude that looks with disfavor on the patent system as a
whole, including all competitor patents.43
If all this makes it seem that the likelihood of any given patent
(2012); see infra Part III.

38 See, e.g., Mann & Underweiser, supra note 37, at 24-29. Various
commentators have also noted how rates of patenting are highly influenced by policy
and the ideological outlooks of patent office administrators, not just "objective"
technical and scientific merits of inventions recited in patent applications. See, e.g.,
Robert C. Post, "Liberalizers"'versus "Scientific Men "' in the Antebellum Patent
Office, 17 TECH.& CULTURE 24passim (1976).
39 Examination Time and the ProductionSystem, USPTO,
https://www.uspto.gov/sites/default/files/Examination / 20Time / 20and / 20the / 20
Production%20System.pdf (last visited Feb. 28, 2018).
40 See Ryan Whalen, Complex Innovation and the Patent Office, 17 CHI.-KENT
J. INTELL. PROP. 226, 235-38 (2018).

41 See Kirsch Mfg. Co. v. Gould Mersereau Co., 6 F.2d 793, 794 (2d Cir. 1925).
This old case does not reflect current law but is nonetheless illuminating. See
Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 17-18 (1966) (setting forth the
current standard for obviousness).
42 Kirsch Mfg. Co., 6 F.2d at 794.
43 See, e.g., MICHELE BOLDRIN & DAVID K. LEVINE, AGAINST INTELLECTUAL
MONOPOLY 79-82 (2008), http://449evine.sscnet.ucla.edu/papers/imbookfinalall.pdf

(arguing that the software industry's practice of creating defensive "patent thickets"
makes it impossible to develop new software without infringing an existing patent);
Catherine Beard, Freedom to Operate 101, NZ BUSINESS, June 2014, at 61.
continued...
application being granted is a matter of speculation, then readers have

grasped an important characteristic of the patenting process. It is that
very characteristic that makes it difficult to know what infringement
risks might later arise from pending patent applications. 44 However,
there are analytics companies that mine USPTO data and sell
proprietary reports about allowance rates for particular technology
centers and even for individual examiners. 45 Anyone seeking more
specific information about the likelihood of allowance of a particular
pending patent application might look to such reports, bearing in mind
that even these sorts of examiner-specific reports do not take into
account the particular subject matter claimed in any given patent
application, the scope of available prior art, or any other substantive
application-specific facts.46
B. Things to Know About Patent Enforcement
Some elementary aspects of patent enforcement and litigation

inform the potential risks posed by pending patent applications and are
therefore worthy of a brief summary. A U.S. patent grants the owner
exclusive rights to make, use, sell, offer for sale, and import the patented
invention, and protects the patent owner against contributory
infringement and inducement of infringement by others. 4 These
various rights conferred by a patent often allow the patent owner a
choice to sue a manufacturer, distributor, retailer, or end user as an
infringer, though patent owners who practice the patented invention
often choose to sue competitors rather than end users who represent
potential customers. 48 The patent owner is not obligated to have
practiced the invention in order to bring an enforcement action,
however. 49 The scope of the rights secured by the patentee is defined
by one or more claims recited in the patent.5 ° Intentional copying is not
44 See AUSTEN ZUEGE, PATENT FREEDOM TO OPERATE SEARCHES, OPINIONS,
TECHNIQUES AND STUDIES 68-79 (2017).

45
Id. at 231-32.
46 Id.
47 35 U.S.C. § 271 (2012). These exclusive rights are subject to certain limits
established by statute and case law, which are beyond the scope of the present
article. See ZUEGE, supra note 44, at 72-79, 335-44.
48 See Colleen V. Chien & Edward Reines, Why Technology Customers Are
Being Sued en Massefor Patent Infringement & What Can Be Done 8 (Santa Clara
Univ. Sch. Of Law Legal Studies Research Papers Series, Working Paper No. 20-13,
2013), http://papers.ssrn.com/sol3/papers.cfm?abstract-id-2318666
[http://perma.cc/QPZ4-87GT].
49 See 35 U.S.C. §§ 154, 271 (2012).
50 See Read Corp. v. Portec, Inc., 970 F.2d 816, 821 (Fed. Cir. 1992), abrogated
in part on other grounds by Presidio Components, Inc. v. Am. Tech. Ceramics

continued...
WARRANTY LIABILITY
a requirement for infringement, except for plant patent infringement,5"

and there is no "innocent infringement" defense. 52 Rather, direct
infringement for utility and design patents is treated like a strict liability
tort,53 and liability can arise whenever an accused product or process
falls within one or more claims of the asserted patent.54
Remedies available for patent infringement include injunctions and
monetary damages.55 Willful infringement can provide for enhanced
damages, up to treble damages, and in exceptional cases attorney fees
can be awarded. 56 There are limits on the availability of pre-suit
damages; for instance, patented articles must have been marked with the
patent number or the accused infringer must have been affirmatively put
57
on notice of infringement by the patent owner.
A rather elementary requirement for the enforcement of patent
rights is that there be a granted patent. 58 It is the granted patent that
provides its owner with the keys to the courthouse, so to speak, to be
able to bring an infringement lawsuit. 59 This is Important Point #1: a
business cannot be suedfor patent infringement (yet) when there is no
grantedpatent.6" This point comes with a number of strong caveats.61
While there may be no granted patent now, a patent may later be
issued.62 What then? And will damages accrue prior to the grant of a
Corp., 875 F.3d 1369 (Fed. Cir. 2017).

51See Imazio Nursery, Inc. v. Dania Greenhouses, 69 F.3d 1560, 1566 (Fed. Cir.
1995).
52 See Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1377 (Fed. Cir.
2017); Hilton Davis Chem. Co. v. Warner-Jenkinson Co., 62 F.3d 1512, 1523 (Fed.
Cir. 1995) (en banc), rev'don other grounds, 520 U.S. 17 (1997).
53 Hilton Davis Chem. Co., 62 F.3d at 1527.
54 Id. at 1520.
55 35 U.S.C. §§ 283-284, 289 (2012) (allowing recovery for design patent
infringements under a unique "total profit" basis).
56 35 U.S.C. §§ 284-285 (2012).
51 See 35 U.S.C. §§ 286, 287(a) (2012); see also Amsted Indus. Inc. v. Buckeye
Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994) (holding that actual notice
under § 287(a) "requires the affirmative communication of a specific charge of
infringement by a specific accused product or device"). However, marking or actual
notice is not required to obtain pre-suit damages under method or process claims.
See Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1581 (Fed. Cir. 1983). But see
Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., 559 F.3d 1308, 1316-17
(Fed. Cir. 2009) (citing Am. Med. Sys. V. Med. Eng'g Corp., 6 F.3d 1523, 1538-39
(Fed. Cir. 1993)) (noting while assertion of both method and apparatus claims
triggers the obligation to mark under 35 U.S.C. § 287(a), the assertion of only the
method claims of a patent containing both method and apparatus claims does not).
58 See 35 U.S.C. §§ 271, 281 (2012).
59 See 35 U.S.C. § 271.
61 See id.
61 See infra Section I.C.
62 See supra notes 35-37.
continued...
patent?
C. Provisional Rights to Pre-Grant Damages
U.S. patent law provides for "provisional rights" to infringement

damages that accrue prior to the issuance of a patent, but with important
limitations.63 These provisional rights were first introduced by the
American Inventors Protection Act of 1999. 64 In particular, a
"reasonable royalty" (and no more) can be obtained for infringement
that occurs between the pre-grant publication of the pending application
and the date of issuance of the patent if, and only if, (a) the infringer had
"actual notice of the published patent application" and (b) "the
invention as claimed in the patent is substantially identical to the
invention as claimed in the published patent application. "65 Treble
damages for willful infringement are expressly excluded from the pre-
grant "provisional rights," though attorney's fees for an "exceptional
case" may still be available at a court's discretion based on the totality
of the circumstances.66
"Actual notice" for accrual of pre-grant damages is a lower
requirement than the notice required for damages to accrue under a
granted patent because no affirmative act by the patentee is required in
the pre-grant period Put another way, pre-grant provisional rights
require only actual knowledge of the published application by a third
party, while after grant, the patentee often must take affirmative steps
to put would-be infringers on notice. 68 However, there is no
63 35 U.S.C. § 154(d) (2012).

64 American Investors Protection Act of 1999, Pub. L. 106-113, § 4504, 113
Stat. 1501A-552, 1501A-564 (1999) (codified as amended at 35 U.S.C. § 154
(2012)).
65 35 U.S.C. § 154(d).
66 35 U.S.C. §§ 284-285 (2012). Typical pre-grant conduct by a party
"infringing" the "provisional rights" of an eventual patentee seem unlikely to be

"exceptional" so as to justify an award of attorney's fees, given that mere provisional
rights are not enforceable and may never become enforceable. See 35 U.S.C.
§ 154(d)(1). However, factors like timing and knowledge could matter. For
instance, "infringement" of provisional rights that takes place after a relevant claim
is indicated to be allowable but before issuance of a patent might constitute
exceptional conduct, if conducted with knowing or willful disregard for the
allowance of the relevant claim.
67 Rosebud LMS Inc. v. Adobe Sys. Inc., 812 F.3d 1070, 1073-75 (Fed. Cir.
2016).
68 Id. ("The alleged infringer must also have notice of the claims of the
published patent application and the fact that the applicant is seeking a patent
covering those claims."); see also Crown Packaging Tech., Inc. v. Rexam Beverage
Can Co., 559 F.3d 1308, 1316 (Fed. Cir. 2009); Amsted Indus. Inc. v. Buckeye Steel
Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994). There maybe an argument,
continued...
WARRANTY LIABILITY
"constructive notice" that gives rise to pre-grant provisional rights

damages.6 9
It is also worth noting that most, but not all, patent applications
publish eighteen months from the claimed priority date. 7 The
published application will include certain pre-publication amendments
to the application.7" Applicants can request early publication (i.e.,
before eighteen months from the priority date),72 or republication of a
previously published application.7 3 However, early publication and
republication requests are both rare.7 4 Design patent applications and
reissue applications are never published before grant. 75 Moreover,
applicants who certify that foreign patent protection is not being sought
can make a (revocable) non-publication request that prevents pre-grant
publication.76 In this context, competitor products may bear cryptic
"patent pending" designations for which the contents of the pending
application (or applications) are not publicly available.7 7 The "patent
however seemingly trivial, that the requirement in § 154(d) of "actual notice of the
published patent application" means knowledge of the published patent application
document, and not merely of the application that was published in another form. See
35 U.S.C. § 154(d)(1). For instance, if a patent owner sent a copy of a patent
application as originally filed to a competitor or cited the application's serial number
(though not its publication number), and that application was published (either
earlier or later) in identical form, but that competitor had no knowledge of the
published patent application document, the competitor's "actual knowledge" may
not be "of the published application" as required by the statute. See id. Here, as
well as with regard to substantial identity of claimed inventions as published and as
granted, any questions about printing errors in a published patent application
document could also be significant. While 35 U.S.C. § 100 provides a few
definitions, "published patent application" is not defined by that section. 35 U.S.C.
§ 100 (2012); 35 U.S.C. § 154(d); Rosebud, 812 F.3d at 1073-75. But see 35 U.S.C.
§ 122 (2012).
69 Rosebud, 812 F.3d at 1073-75.
70 35 U.S.C. § 122(b); 37 C.F.R. § 1.211 (2017).
71 37 C.F.R. § 1.215 (2017).
72 35 U.S.C. § 122(b)(1)(A); 37 C.F.R. § 1.219 (2017); MPEP, supra note 13,
§ 1129.
73 37 C.F.R. § 1.221 (2017); MPEP, supra note 13, § 1130.
74 See Changi Wu, Publication,Nonpublication,and EarlyPublicationof Patent
Application-The Strategy, Avvo (June 23, 2016), https://www.avvo.com/legal-
guides/ugc/publication-nonpublication-and-early-publication-of-patent-application-
the-strategy (noting that early publication may open the door to third-party pre-
issuance submissions and may risk becoming public domain knowledge if a patent is
not issued).
75 37 C.F.R. § 1.211(b).
76 See 35 U.S.C. § 122(b)(2)(B)(i); 37 C.F.R. § 1.213 (2017); MPEP, supra note
13, §§ 1122-1123. Publication of a redacted copy of an application is also available

in some circumstances. 37 C.F.R. § 1.217 (2017); MPEP, supra note 13, § 1132.
77 See Z. Peter Sawicki & James L. Young, "'PatentPending" Is It Real or
Fake News?, ATT'Y L. MAG. (Nov. 2017),
continued...
pending" designation has no enforceable legal significance other than

to serve as a general "copy ...at your own risk" warning.78 But in a
situation where there is no published application, provisional rights to
pre-grant damages are not available. 7 9 On the other hand, patent
applicants can utilize early publication and republication to try to
maximize provisional rights damages before a patent is granted.80
The question of whether the published pre-grant claims are
"substantially identical" to the issued claims involves an inquiry into
the scope and extent of any amendments made prior to issuance.81
District courts have looked at the question of "substantial identity" for
pre-grant damages in the same manner as with intervening rights for
reissue patents and reexamination certificates that amend claims after
grant: as a question of law that involves ascertaining whether the claims
are "without substantive change" such that the scope of the claims is
identical (not just that the same words are used).82
To clarify, claims in a granted patent that were narrowed to
overcome rejections based on prior art cited by the patent examiner,
after publication of the application, would not be "substantially
identical" in this respect.8 3 This is Important Point #2: amendments to
a pending patent application can preclude accrual of pre-grant
provisional rights damages.8 4 Before examination of the application
has begun and before a pending application has been granted, it is a
matter of conjecture as to whether the claims will be amended.
http://www.attomeyatlawmagazine.com/twin-cities/patent-pending-real-fake-news/.
78Id.
7' Kevin King et al., Maximizing PatentDamages: ProvisionalRights and
Marking, LAW360 (July 18, 2017), https://www.law360.com/articles/942436/
maximizing-patent-damages-provisional-rights-and-marking.
8 See id. Another way to more quickly accrue provisional rights when claim
amendments are deemed necessary is to file a continuing application containing the
desired claims, together with a prioritized examination request. See MPEP, supra
note 13, at § 708.08(b). Such a new application will then publish with the new (i.e.,
"amended") claims. See id. Of course, in this scenario, it may be simpler to request
republication, or to obtain allowance of a given application and enforce the resultant
patent upon issuance, than to file another application merely to seek provisional
rights.
81 King et al., supra note 79.
82 See, e.g., Celsis In Vitro, Inc.
v. CellzDirect, Inc., 21 F. Supp. 3d 960, 964-65
(N.D. Ill. 2014) (citing Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346-47 (Fed.
Cir. 1998)); see also 35 U.S.C. §§ 252, 307 (2012).
83 See Sharick Naqi, Comment on ProvisionalPatent Rights, 10 Nw. J. TECH.&
INTELL. PROP. 595, 595, 597-98 (2012); Portfolio Media Inc., To Re-Exam or Not to
Re-Exam? That is the Question, LAW360 (Mar. 31, 2011),
https://www.law360.com/articles/233332/to-re-exam-or-not-to-re-exam-that-is-the-
question.
84 See supra notes 81-82 and accompanying text.
continued...
WARRANTY LIABILITY
While provisional rights encompass direct infringement, as well as

rights related to importation of products made outside the United States
by a patented process, provisional rights do not encompass indirect
infringement by way of inducement of infringement or contributory
infringement.8 5 In this respect, there is a gap in the scope of provisional
rights regarding claims to methods of using a product. This means that
when that product is imported into the United States from abroad the
user can be liable for provisional rights damages but not the supplier
who merely induced infringement.16 However, the supplier could be
7
liable for inducement of infringement after the patent is granted. 1
There is also a gap in provisional right liability regarding contributory
infringement, allowing a third party to escape pre-grant damages for
manufacturing and selling only some of the components of a patented
apparatus-even if that third party does so with explicit intent for such
components to be assembled into an apparatus covered by the pending
patent application claims.8 8
It bears repeating again that if no patent is granted, then the
provisional rights to a reasonable royalty from pre-grant publication
vanish.89 The pre-grant provisional rights only become enforceable
upon the issuance of a granted patent. 90 Additionally, there is a statute
of limitations on enforcement of provisional rights. 91 An action to
collect damages under pre-grant provisional rights must be brought
within six years of the grant of the patent. 92 However, unlike for
damages arising under granted patents, there is no time limit on the
period in which provisional rights damages can accrue before grant. 93
As a purely practical matter, if a commercial product falls within the
claims of a published patent application, but that product is withdrawn
from the market upon the grant of a corresponding patent, there may be
little incentive for the patent owner to file suit to merely recover the
85 Compare 35 U.S.C. § 154(d)(1)(A) (2012), with 35 U.S.C. § 271(b), (c), (f),

(g) (2012).
86 See § 271 (f)(1) ("Whoever without authority supplies or causes to be supplied
in or from the United States all or a substantial portion of the components of a
patentedinvention.., in such manner as to actively induce the combination of such
components outside of the United States in a manner that would infringe the patent if
such combination occurred within the United States, shall be liable as an infringer.")
(emphasis added).
87 See id.
88 Compare 35 U.S.C. § 154(d), with 35 U.S.C. § 271(a).
89 Compare 35 U.S.C. § 154(d), with 35 U.S.C. § 271(a).
90 35 U.S.C. § 154(d).
91 35 U.S.C. § 154(d)(3).
92 Id.
93 Id. Contra 35 U.S.C. § 286 (2012).
continued...
provisional pre-grant "reasonable royalty" damages.94 Unless product

sales can be described as low volume/high value, or the pre-grant
damages cover an unusually long time period in which a considerable
volume of sales occurred, the enforcement may produce only a Pyrrhic
victory in which legal costs exceed the recovery-absent an exceptional
case in which attorney fees are awarded. 9 Then again, it may be
difficult for some businesses to quickly shut down production upon the
grant of a competitor's patent, given the sunk-cost investment that may
have already been made to begin production in the first instance.9 6
II. POTENTIAL STATE COMMERCIAL LAW LIABILITY
A. The UCC Warranty Against Infringement
Aside from U.S. federal patent laws, laws governing commercial

transactions may include warranties to buyers against infringement by
the purchased goods. Liability for the sale of infringing products can
arise under state law modeled on the UCC. Some form of the UCC has
been adopted in every U.S. state. 97 Section 2-312(3) of the UCC states:
Unless otherwise agreed a seller who is a merchant
regularly dealing in goods of the kind warrants that the
goods shall be delivered free of the rightful claim of any
third person by way of infringement or the like but a
buyer who furnishes specifications to the seller must
94 See generally Jerry Hausman et al., Patent Damages and Real Options:
Characterizationof NoninfringingAlternatives Reduces Incentives to Innovate, 22
BERKELEY TECH. L.J. 825, 828 (2007) ("Damages calculated under a reasonable
royalty approach are typically, but not always, less than the damages calculated
under a lost profits approach.").
95 See generally The Relevance of ReasonableRoyalties to Copyright
Infringement Remedies, A.B.A. 1 (Mar. 2012),
http://apps.americanbar.org/litigation/committees/intellectual/roundtables/0312 outli
ne.pdf ("Parties seeking to apply the reasonable royalty analysis frequently used in
the patent litigation arena have sometimes found themselves successful, and other
times frustrated.").
96 See generally The Evolving IP Marketplace:Aligning PatentNotice and
Remedies with Competition, FTC 5 (Mar. 2011),
https://www.ftc.gov/sites/default/files/documents/reports/evolving-ip-marketplace-
aligning-patent-notice-and-remedies-competition-report-federal-
trade/1 10307patentreport.pdf ("At the time a manufacturer faces an infringement
allegation, switching to an alternative technology may be very expensive if it has
sunk costs in production using the patented technology.").
9' See Cornell Law Sch. Legal Info. Inst., Uniform Commercial Code Locator,
CORNELL L. SCH., https://www.law.comell.edu/uniform/ucc (last visited Nov. 21,
2017) (listing the states that have adopted forms of the UCC and noting that
Louisiana has not adopted Article 2 of the UCC).
continued...
WARRANTY LIABILITY
hold the seller harmless against any such claim which

arises out of compliance with the specifications. 98
This provision is referred to as the implied warranty against
infringement ("IWAI" or "WAI"). There are five key elements: (1)
there is no specific agreement to the contrary (because of the language
"[u]nless otherwise agreed"), (2) the seller must be a "merchant
regularly dealing in goods of the kind," (3) the "goods shall be
delivered," (4) the goods shall be delivered free of "the rightful claim
of any third person by way of infringement or the like," and (5) the
buyer has not "furnishe[d] specifications to the seller". 99
There are also certain requirements (notice, statute of limitations,
etc.) imposed upon a buyer seeking to make a valid claim against a seller
for a breach of the warranty against infringement under the UCC.1 00
The so-called vouch-in provision of UCC section 2-607(5) governs how
responsibility for defense of an infringement action is tendered or
demanded, so that the seller may assume the buyer's defense, and when
the other party is bound by the infringement defense. 101 One unique
aspect of this UCC warranty is that it can create liability that extends
beyond the original buyer and seller. 102 Depending on state law
regarding privity, this could allow a claim by a downstream buyer
against the original seller, or could create a daisy-chain of liability with
each downstream buyer potentially having a claim against the seller
immediately upstream, all the way back to the original seller.10 3
Numerous commentators have lamented various ambiguities in
UCC section 2-312.104 Section 2-312 has been infrequently litigated, so
there is little case law elaborating some of its nuances.1 0 5 Comments to
98
U.C.C. § 2-312(3) (AM. LAW INST. & UNIF. LAW COMM'N 2002).
99 Id.
100 See U.C.C §§ 2-607(3)-(6), 2-725 (AM. LAW INST. & UNIF. LAW COMM'N
2002).
101U.C.C. § 2-607(5).
102 Id.
103 See Bryan K. Anderson & Ezekiel Rauscher, Implied Warranty of
NoninfringementDepends on State, LAw360 (June 9, 2015),
https://www.law360.com/articles/663016/implied-warranty-of-noninfringement-
depends-on-state; see also U.C.C. § 2-318 (AM. LAW INST. & UNIF. LAW COMM'N
2002).
104 See, e.g., Karen E. Sandrik, WarrantingRightful Claims, 72 LA. L. REv. 873,
891-98 (2012) (citing William F. Dundine, Jr., WarrantiesAgainst Infringement

Under the Uniform Commercial Code, 36 N.Y. ST. B.J. 214, 214 (1964)); Anderson
& Rauscher, supra note 103.
105 The UCC warranty against infringement comes up infrequently in reported
cases partly because patent owners often avoid suing competitors' customers. See P.
Patrick Cella et al., Exploration of Warrantiesunder Article 2 of the Uniform
Commercial Code, 23 IDC Q. 1, 1, 4 (2013). Even when patent owners are legally
continued...
UCC section 2-312 provide no guidance regarding later-granted patent

rights. 106 While some elements of UCC section 2-312 are relatively
unambiguous in typical scenarios, others are ambiguous in ways unique
to the question of pre-grant patent infringement liability. 10 7 We turn to
the areas that are least straightforward in the context of pending patent
applications, specifically when a product is sold that falls within the
scope of pre-grant claims of a pending patent application that are
granted in a substantially identical form after those products are
delivered to and accepted by a buyer.
B. Key Limitations of the UCC Warranty Against Infringement
It should first be noted that UCC Article 2 covers "goods" and not
services. 10 8 Therefore, patent applications with claims to processes or
methods may be entirely outside the scope of section 2-312. But close
questions can arise with respect to software and computer-implemented
inventions, for instance, which may be "goods" that are patented only
under method or process claims. 10 9
Another area of much uncertainty is the scope of a "rightful claim"
of infringement. There are multiple cases from different jurisdictions
entitled to sue competitors' customers as infringers who "use[]" the patented

invention, businesses may prefer to try to capture future sales to those customers
after suing a direct competitor that is manufacturing, selling and/or importing
infringing products. See id. at 4-6. But this rule of thumb does not always hold, for
instance, when a patent owner engages in forum shopping and names a customer as a
defendant to secure a desired venue, or when the patent owner does not practice the
patent106and therefore does not have an interest in customer perceptions. See id
U.C.C. § 2-312 (AM. LAW INST. & UNIF. LAW COMM'N 2002). Amendments
to the UCC were proposed in 2003 that would have impacted these scenarios, but
those proposed amendments were rejected and withdrawn in 2011. See U.C.C. § 2-
312 (AM. LAW INST. & UNIF. LAW COMM'N 2003) (withdrawn 2011). As discussed
infra Section II.D, a treaty on the international sale of goods more explicitly
addressed this issue.
107 See, e.g., Joel Rothstein Wolfson, An IntellectualPropertyLawyer's Reading
of UCC 2-312, 126 BANKING L.J. 141, 143, 150-51 (2009).
108 U.C.C. § 2-105(1)-(4) (AM.LAW INST. & UNIF. LAW COMM'N 2002). Courts
assess infringement of apparatus and method claims differently. See, e.g., Joy
Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 773-76 (Fed. Cir. 1993).
109 There is no uniform view of when, if ever, software is a "good" subject to
Article 2 of the UCC, though commoditized software is likely to be considered a
"good" under the UCC. See, e.g., Rottner v. AVG Techs. USA, Inc., 943 F. Supp.
2d 222, 229-31 (D. Mass. 2013); see also Andrew Rodau, Computer Software: Does
Article 2 of the Uniform CommercialCode Apply?, 35 EMoRY L.J. 853, 874-75
(1986). "Goods" sold that have no substantial non-infringing use in view of method
claims of a patent present an interesting question here, which may be better
addressed with regard to the timing of delivery (as discussed infra Section II.C)
rather than through a categorical goods versus not-goods dichotomy.
continued...
WARRANTY LIABILITY
dealing with this point, but no definitive standard has yet to emerge,
with past cases retaining a certain vagueness about when a claim crosses
the threshold of being "rightful"-an undefined term coined in the UCC
without any clear analog elsewhere in the UCC or patent law.110 What
can be said is that a "rightful claim" exists in a middle ground,
something less stringent than a definitive finding of infringement,"' but
also at least having an adequate, non-frivolous basis, 1 2 and, in some
jurisdictions, being of a substantial nature that casts a "substantial
shadow" with a significant and adverse effect on the buyer's ability to
use the goods that is reasonably likely to subject the buyer to
litigation. 113 The trouble is that these standards all require some
connection to the merits of the patent infringement claim, even if that
analysis stops somewhere short of a complete adjudication of the merits
of the infringement case. 1 4 State courts may be reluctant to immerse
themselves in such issues, wholly apart from federal preemption
concerns. 115 For that matter, parties may loathe to litigate a UCC
warranty claim that first requires a potentially lengthy and costly
assessment of the merits of the underlying patent infringement claim.
Some courts have also held that contributory infringement and
inducement of infringement under 35 U.S.C. § 271(b) and (c) are
outside the scope of UCC section 2-312, because those particular forms
of patent infringement result from conduct of the buyer after the time
when the goods are "delivered." 1 6 These past cases generally dealt
with situations in which a component or material was supplied to a
buyer who then combined that component or material with other things
to create an infringing product. 1 7 Such rulings represent a significant
110 See Sandrik, supra note 104, at 891-98 (citing William F. Dundine, Jr.,
WarrantiesAgainst Infringement Under the Uniform Commercial Code, 36 N.Y. ST.
B.J. 214, 214 (1964)).
11184 Lumber Co.v. MRK Techs., Ltd., 145 F. Supp. 2d 675, 680 (W.D. Pa.
2001).
112 Id.; see Cover v. Hydramatic Packing Co., 83 F.3d 1390, 1394 (Fed. Cir.
1996).
113 EZ Tag Corp. v. Casio Am., Inc., 861 F. Supp. 2d 181, 184 (S.D.N.Y. 2012);
Phoenix Sols., Inc. v. Sony Elecs., Inc., 637 F. Supp. 2d 683, 695-97 (N.D. Cal.
2009); Pac. Sunwear of Cal., Inc. v. Olaes Enter., Inc., 84 Cal. Rptr. 3d 182, 194
(Cal. Ct. App. 2008); Sun Coast Merch. Corp. v. Myron Corp., 922 A.2d 782, 796-
98 (N.J. Super. Ct. App. Div. 2007).
114
See Cover, 83 F.3d at 1394; EZ Tag Corp., 861 F. Supp. 2d at 184; Phoenix
Sols., Inc., 637 F. Supp. 2d at 695-97; 84 Lumber Co., 145 F. Supp. 2d at 680; Pac.
Sunwear of Cal., Inc., 84 Cal. Rptr. 3d at 194; Sun Coast Merch. Corp., 922 A.2d at
796-98.
115 See Sandrik, supra note 104, at 878-79.
116 E.g., Chemtron, Inc. v. Aqua Prods., Inc., 830 F. Supp. 314, 315-16 (E.D.
Va. 1993); Motorola, Inc. v. Varo, Inc., 656 F. Supp. 716, 718-19 (N.D. Tex. 1986).
11'Chemtron, Inc., 830 F. Supp. At 315; Motorola, Inc., 656 F. Supp. At 717.
continued...
narrowing of upstream seller liability under the UCC warranty against

infringement.
C. Applying the UCC Warranty to Pending Patent Applications
When it comes to goods delivered before a patent is granted that

subsequently infringe (or would infringe) a later-granted patent, the
applicability of the "goods shall be delivered free of the rightful claim
of any third person by way of infringement or the like" provision of the
UCC section 2-312 warranty against infringement is less clear and does
not appear to have yet been litigated in any reported case."' 8 There are
clear tensions between policy that provides buyers with reasonable
certainty that purchased goods can be enjoyed free of patent
infringement claims, and the specific wording of provisions of the UCC
that discuss the warranty only at the time of tender of delivery of the
goods.1 1 9 Unlike infringement of other types of intellectual property,
such as copyrights and trademarks, the pre-grant examination and
publication process associated with patents and patent applications
makes the assessment of a warranty against infringement at the time of
tender a matter of guesswork. 121 It is therefore worthwhile to probe
typical scenarios to further understand when and where the UCC
118 See 3 RICHARD W. DUESENBERG ET AL., SALES & BULK TRANSFERS UNDER
THE UNIFORM COMMERCIAL CODE § 5.04[4] (Matthew Bender 2017) (noting that "the
language of the statute is not altogether clear" regarding infringement claims arising
subsequent to sale and discussing analogous case law decided prior to the Uniform
Commercial Code).
119 Compare U.C.C. § 2-725(2) (AM. LAW INST. & UNIF. LAW COMM'N 2002)
("[B]reach of warranty occurs when tender of delivery is made, except that where a
warranty explicitly extends to future performance of the goods and discovery of the
breach must await the time of such performance the cause of action accrues when the
breach is or should have been discovered."), with Am. Container Corp. v. Hanley
Trucking Corp., 268 A.2d 313, 318 (N.J. Super. Ct. Ch. Div. 1970) ("The purchaser
of goods warranted as to title has a right to rely on the fact that he will not be
required, at some later time, to enter into a contest over the validity of his
ownership.").
120 Trademark and copyright registrations are entirely optional. See, e.g., 15
U.S.C. § 1125(a) (2012) (discussing liability in a civil action for misrepresentation
of origin or ownership with no mention of an initial requirement of registration by
the individual claiming damages); 17 U.S.C. §§ 102(a), 408(a) (2012) (stating how
copyright protection arises, and that copyright registration is not necessary to receive
such protection). For that matter, trademark and copyright registrations do not
involve applicant-drafted "claims" as with utility patents, which removes much
ambiguity present with respect to patent applications. See FederalCopyright
Registration,SUNSTEIN, https://sunsteinlaw.com/practices/copyright-portfolio-
development/copyright-pointers/federal-copyright-registration/ (last visited Mar. 30,
2018); Trademarkprocess, USPTO, https://www.uspto.gov/trademarks-getting-
started/trademark-process#stepl (last visited Mar. 30, 2018).
continued...
WARRANTY LIABILITY
warranty against infringement applies with respect to pending patent

applications.
In a situation where goods are delivered before a patent application
has published with a relevant claim substantially identical to one in a
later-granted patent (following the "provisional rights" framework
discussed above), there may be reason to say that the goods were
"delivered" before a "rightful claim" arose, thereby rendering the UCC
warranty against infringement inapplicable.1 21 This is because not even
"provisional" rights accrue to the eventual patent owner in these
situations. 122
There would be a chilling effect if competitors and other third
parties were forced to treat all pre-grant patent claims as creating a
"rightful claim," when many times such pending claims represent
applicant overreaching and will be rejected by the USPTO as
unpatentable, requiring significant narrowing amendment(s) in order to
have a chance of patentability.1 23 Moreover, even though federal patent
law generally treats direct infringement like a strict liability tort, that
does not necessarily provide a compelling reason to hold sellers liable
under state commercial law for products delivered to buyers before a
patent is issued or an application is published, when the sellers had no
way to determine what the patent applicant is even seeking to protect,
and when federal patent laws deny even "provisional rights" to the
(eventual) patentee before publication.1 24 In other words, even though
no liability exists at the time the goods are delivered to the buyers, later-
arising liability for sellers under the UCC would be contrary to the spirit
of prior court decisions holding that only liability at the time of delivery
is actionable.1 25 This is further supported by UCC section 2-725(2),
which provides that:
A breach of warranty occurs when tender of delivery is
made, except that where a warranty explicitly extends to
future performance of the goods and discovery of the
121U.C.C. § 2-312 (AM. LAW INST. & UNIF. LAW COMM'N 2002).
122 35 U.S.C. § 154(d) (2012) (giving the circumstances where provisional rights
arise).
123 Mark A. Lemley & Bhaven Sampat, Is the Patent Office a Rubber Stamp?,
58 EMORY L.J. 181, 182 (2008).
124 Even if, for instance, the patent applicant provided the text of an unpublished
claim to the seller, this would still seem inadequate, given that patent claims can
have terms with special meanings that can be ascertained only through review of the
entire patent application and the prosecution history. See, e.g., Phillips v. AWH
Corp., 415 F.3d 1303, 1304 (Fed. Cir. 2005) (en banc) (describing the difficulty in
understanding a term and the resources often used to ascertain the meaning as used
in the claim).
125 See supra note 116 and accompanying text.
continued...
breach must await the time of such performance the

cause of action accrues when the breach is or should
126
have been discovered.
And yet, in contrast, some cases suggest a broad policy underlying
the UCC that "[t]he purchaser of goods warranted as to title has a right
to rely on the fact that he will not be required, at some later time, to
enter into a contest over the validity of his ownership." 127 This broader
and more general policy objective suggests that sellers should be liable
under the UCC warranty against infringement even in situations in
which liability arises "by surprise" when a patent later issues, creating
a downstream infringement claim. 128 This would allow buyers to rely
on good faith purchases. 12 9 Moreover, assigning liability to the original
seller even before a patent issues avoids a "hot potato" situation, in
which goods covered by a patentable claim of a pending patent
application are resold over and over again until some unfortunate
downstream buyer is left holding the now-infringing goods when the
patent eventually issues.1 30 Thus, there are pragmatic policy reasons,
supported by case law,131 which suggest that the absence of a granted
patent or even the absence of provisional rights at the time of delivery
should still fall under the implied warranty against infringement.
In another situation where "infringing" goods are delivered after a
patent application is published with claims that are substantially
identical to those in the later-granted patent, then the availability of
"provisional rights" under federal patent law suggests that a "rightful
claim" exists at the time of delivery under UCC section 2-312 if the
seller was aware of the published patent application. 13 2 This is a less
ambiguous scenario, in that federal patent law explicitly provides
provisional rights. 133 But given that the federal provisional rights are
126 U.C.C. § 2-725(2) (AM. LAW INST. & UNIF. LAW COMM'N 2002) (emphasis
added).
127 Yttro Corp. v. X-Ray Mktg. Ass'n, Inc., 559 A.2d 3, 5 (N.J. Super. Ct. App.
Div. 1989) (quoting Am. Container Corp. v. Hanley Trucking Corp., 268 A.2d 313,
318 (N.J. Super. Ct. Ch. Div. 1970)).
128 See id. (suggesting that statutory warranty of title should include
infringement by any third party).
129 The concept of good faith purchases arises under other provisions of the
UCC and under other bodies of law, and is the subject of much disagreement. See
Alan Schwartz & Robert E. Scott, Rethinking the Laws of GoodFaith Purchase, 111
COLUM. L. REV. 1332, 1333-38 (2011).
130 Anderson & Rauscher, supra note 103.
131 See supra notes 127-29.
132 35 U.S.C. § 154(d) (2012); U.C.C. § 2-312(3) (Am. Law Inst. &; Unif. Law
Comm'n 2002); see Sandrik, supra note 104.
133 35 U.S.C. § 154(d).
continued...
WARRANTY LIABILITY
only enforceable once a patent issues, 134 sellers might still avoid
provisional rights liability if no patent ever issues. If the UCC warranty
against infringement is interpreted to track underlying intellectual
property rights as closely as possible, then there is a strong argument
that the UCC warranty against infringement should only establish a
"rightful claim" against the seller if a patent has issued by the time a
warranty against infringement claim is formally made. While such an
approach might encourage buyers to delay bringing warranty against
infringement claims, and certainly undercuts the ability to fully and
completely ascertain seller liability at the time of delivery, it
nonetheless balances those concerns by avoiding enlargements or
reductions in the provisional rights granted to patent owners by federal
patent laws. It seems that some ambiguity around the timing of a
warranty claim is an acceptable burden if it means that substantive
liabilities are clearly defined in relation to those established by the
underlying intellectual property rights.
To the extent that damages under provisional rights would be
available but for evidence that the seller knew of the published
application at the time of delivery, the question is a closer one. Under
federal patent law, provisional rights do not attach in the absence of
knowledge of the published application by the infringer. 3 5 Sellers are
able to search for and review publicly available published patent
application claims to ascertain potential risk. 3 6 But the patent laws do
not place any duty on sellers to conduct such searches for pending
patent applications.37 Therefore, in the absence of actual knowledge
by the seller, there is a strong argument that there is no rightful claim
under the UCC warranty against infringement. The mere placement of
a "patent pending" notice on goods by the patent applicant would not
seem sufficient here, in that the words "patent pending" do not apprise
the public of the scope of patent rights sought by the applicant. 3 8 A
134 Id.
135 35 U.S.C. §154(d)(1)(B); see also Rosebud LMS Inc. v. Adobe Sys. Inc., 812
F.3d 1070, 1075 (Fed. Cir. 2016) (interpreting § 154(d)'s "actual notice" requirement
to include actual knowledge of the published patent application).
136 Searchfor Patents,USPTO, https://www.uspto.gov/patents-application-
process/search-patents (last updated May 24, 2017, 2:06 PM).

137 In contrast, it might be said that the patent laws placed an implied duty on
parties to do so with regard to granted patents, in view of the strict liability nature of
direct patent infringement. See Hilton Davis Chem. Co. v. Warner-Jenkinson Co.,
62 F.3d 1512, 1527 (Fed. Cir. 1995) (en banc), rev'd on other grounds, 520 U.S. 17
(1997).
138 Indeed, in a global marketplace, the "patent pending" designation does not
even apprise competitors of the jurisdictions in which patent protection is sought.

See Sawicki & Young, supra note 77. A patent application pending in another
country may not permit the applicant to ever enforce patent rights in the United
continued...
notice that includes a patent application publication number would be a

different situation, though, again, federal laws require actual notice
rather than constructive notice provided by patent (application)
marking, which suggests that such marking would only be effective if
the seller of the goods later accused of infringement actually saw the
marking.13 9 If the buyer, but not the seller, had actual knowledge of the
published patent application, provisional rights damages would be
available against the buyer, though there is an argument that fairness
should not permit a buyer to pass infringement liability on to the seller
when the buyer was aware of the liability risk and did not inform the
seller. 140 It would be reasonable for courts to fashion an equitable
estoppel under such a scenario to limit the warranty against
infringement.
In a situation in which goods are delivered after a patent application
has been published, but the claims undergo significant amendments
before a patent is later granted (whether those amendments are made
before or after delivery of the goods), "provisional rights" are not
available under federal law. 141 Such a scenario is analogous to
situations where goods are delivered when there is no published patent
142
application, and the same ambiguities arise.
In any event, these points are untested and courts have not yet
offered guidance on UCC claims arising from a warranty against
infringement stemming from pre-grant delivery of goods. 143 Regardless
of how courts eventually decide such issues, the UCC does provide a
four-year statute of limitations on warranty claims, which runs from
breach when tender of delivery is made, regardless of the aggrieved
party's lack of knowledge of the breach. 144 This means that long delays
between delivery of goods and the eventual grant of a patent (which do
sometimes occur) 14 1 could act as a bar to a UCC warranty claim that
States-though priority claims to earlier-filed foreign patent applications is possible.

35 U.S.C. §§ 119, 361 (2012).
139 This outside chance of putting infringers on notice might be enough to
encourage the practice by patent applicants. Further, in such a situation a reasonable

inference based on evidence that the seller had access to the goods would seem to be
sufficient to state a claim that would survive a motion to dismiss under Rule 12(b)(6)
of the Federal Rules of Civil Procedure. Cf Rosebud, 812 F.3d at 1074-75
(interpreting the "actual notice" requirement of § 154(d) to mean "personal
information or knowledge" rather than "affirmatively acting to provide notice").
140 A treaty closes this loophole for the international sale of goods. See
discussion infra Section II.D.

141 35 U.S.C. § 154(d) (2012).
142 Id.
143 See 3 DUESENBERG ET AL., supra note 118, § 5.04[4].
14 4
U.C.C. § 2-725 (AM. LAW INST. & UNIF. LAW COMM'N 2002).
145 Id.
continued...
WARRANTY LIABILITY
would otherwise be rightful.

Lastly, it must be underscored that UCC section 2-312 deals with an
implied warranty that is imposed by default when the parties are silent
on the matter. 146 The implied warranty against infringement can,
however, be disclaimed by agreement of the parties. 147 This is
Important Point #3: sellers should consider including a specific term
regardingany warrantyagainstinfringement in sales contracts. Parties
can more explicitly assume warranty liabilities, disclaim them entirely,
or arrive at a middle-ground position. 48 General disclaimers might be
effective, 149 but most jurisdictions will likely require a specific
disclaimer explicitly directed to the warranty against infringement. 5 '
Disclaiming the implied warranty against infringement will not always
be the right approach because some sellers may want to give buyers the
assurance that it applies. But the pros and cons of a disclaimer should
be weighed for all important and going transactions.
Aside from a complete waiver, or the drafting of customized
warranty and indemnification provisions, the parties can also reduce the
statute of limitations period to three years. 151 From the seller's
perspective, a shorter statute of limitations can limit the scope of
potential for warranty against infringement claims based on later-
issuing patents, especially when the patent applicant pursues follow-on
continuing patent applications that may issue many years after a priority
patent application is filed. Ultimately, the inclusion of disclaimers
regarding the warranty against infringement and other modifications of
default UCC provisions will rest on the relative bargaining power of the
15 2
parties and their individual objectives.
Quite frankly, though, the ambiguity of the UCC on the points raised
above suggest that a clarifying revision to UCC section 2-312(3) would
be helpful. Absent such revisions to the UCC, and state laws
implementing the UCC, businesses and their legal counsel engaged in
commercial transactions in the United States should consider overriding
the implied warranty against infringement of the UCC with customized
contract terms that address the liability that the seller assumes, if any,
for delivery of goods (or services) that may later give rise to a claim of
14 6
147 Id.; see MAS Corp. v. Thompson, 302 S.E.2d 271, 275 (N.C. Ct. App. 1983).
148 See MAS Corp., 302 S.E.2d at 275; U.C.C. § 2-316 (AM. LAW INST. & UNIF.
LAW COMM'N 2002); U.C.C. § 2-312.

149 E.g., Landis & Staefa (UK) Ltd. V. Flair Int'l Corp., 60 F. Supp. 2d 14, 23
(E.D.N.Y. 1999).
150 Cf U.C.C. § 2-316(2) (enumerating requirements for exclusion or
modification of implied warranties of merchantability and fitness).
151 U.C.C. § 2-725(1) (AM. LAW INST. & UNIF. LAW COMM'N 2002).
152 See id.
continued...
patent infringement.
D. International Commercial Law Considerations
UCC provisions apply only to activities between parties in the

United States. I5 3 What about sales that cross international borders? The
United Nations Convention on Contracts for the International Sale of
Goods ("CISG" or "Vienna Convention") 154 includes a provision
similar to the UCC warranty against infringement. I5 5 More than eighty
nations have signed on to the CISG. I5 6 The United States has ratified
the CISG, with a reservation opting out of Paragraph 1(b) of Article
1.157 CISG Article 42 provides:
(1) The seller must deliver goods which are free from
any right or claim of a third party based on industrial
property or other intellectual property, of which at the
time of the conclusion of the contract the seller knew or
could not have been unaware, provided that the right or
claim is based on industrial property or other intellectual
property:
(a) under the law of the State where the goods
will be resold or otherwise used, if it was
contemplated by the parties at the time of the
conclusion of the contract that the goods would
153 See U.C.C. § 1-301 (AM. LAW INST. & UNIF. LAW COMM'N 2001).
154 United Nations Convention on Contracts for the International Sale of Goods,
Apr. 11, 1980, 1489 U.N.T.S. 3 [hereinafter CISG].
155 Id. art. 42; Allen M Shinn, Jr., Liabilities Under Article 42 of the U.N.
Convention on the InternationalSale of Goods, 2 MINN. J. GLOBAL TRADE 115, 131
(1993); see also Henry D. Gabriel, A Primer on the UnitedNations Convention on
the InternationalSale of Goods: From the Perspective of the Uniform Commercial
Code, 7 IND. INT'L & COMP. L. REv. 279, 286 (1997); see generally Joseph J.
Schwerha IV, WarrantiesAgainst Infringement in the Sale of Goods: A Comparison
of UC. C. § 2-312(3) and Article 42 of the U.N. Convention on Contractsfor the
InternationalSale of Goods, 16 MICH. J. INT'L L. 441, 442 (1995) (comparing the
warranty of infringement under the UCC and CISG and providing a framework for
deciding when to use which law). A useful compendium of resources related to
CISG article 42 is maintained by the Pace Law School Institute of International
Commercial Law. See, e.g., Pace Inst. of Int'l Commercial Law, Annotated Text of
CISG Article 42, PACE L. SCH., https://www.cisg.law.pace.edu/cisg/text/e-text-
42.html (last visited Dec. 26, 2017).
156 Status: UnitedNations Convention on Contractsfor the InternationalSale of
Goods (Vienna, 1980), UNITED NATIONS COMM'N ON INT'L TRADE L.,

http://www.uncitral.org/uncitral/en/uncitral-texts/salegoods/1 980CISG status.html
(last visited Nov. 22, 2017).
157 Id.
continued...
WARRANTY LIABILITY
be resold or otherwise used in that State; or

(b) in any other case, under the law of the State
where the buyer has his place of business.
(2) The obligation of the seller under the preceding
paragraph does not extend to cases where:
(a) at the time of the conclusion of the contract
the buyer knew or could not have been unaware
of the right or claim; or
(b) the right or claim results from the seller's
compliance with technical drawings, designs,
formulae or other such specifications furnished
by the buyer. 58
Like the UCC, the CISG also imposes certain requirements for a party
to invoke the warranty against infringement provisions. 159 And,
significantly, the CISG also allows buyers and sellers to "exclude the
application of this Convention or, subject to Article 12, derogate from
or vary the effect of any of its provisions. "' 16 In other words, parties
can opt out of the CISG just as with the UCC.
Article 42(1) is actually much clearer than UCC section 2-312 when
it comes to liabilities for sales and deliveries of goods that occur when
a patent application is merely pending, requiring that "at the time of the
conclusion of the contract the seller knew or could not have been
unaware" of the infringement claim. 161 Liability for "provisional
rights" to pre-grant damages under a published application could still
apply.1 62 But the CISG language diverges from the strict liability basis
for patent infringement under U.S. law, and instead requires actual or
imputed knowledge of infringement. 163 More broadly, CISG Article 42
provides an "innocent infringement" defense in the international
158 CISG, supra note 154, art. 42.
159 Id. art. 43; see also id. art. 44 ("Notwithstanding the provisions of paragraph
(1) of article 39 and paragraph (1) of article 43, the buyer may reduce the price in
accordance with article 50 or claim damages, except for loss of profit, if he has a
reasonable excuse for his failure to give the required notice.").
160 Id. art. 6; cf id. art. 12 (relating to requirements that certain agreements be in
writing).
161 Id. art. 42(1).
162 See 35 U.S.C. § 154(d)(1), (4) (2012); see also supra notes 63-66 and
accompanying text.
163 Compare Hilton Davis Chem. Co. v. Wamer-Jenkinson Co., 62 F.3d 1512,
1527 (Fed. Cir. 1995) (en banc), rev'd on other grounds, 520 U.S. 17 (1997) (noting
that "[i]nfringement is, and should remain, a strict liability offense"), with CISG,
supra note 154, art. 42(1) (requiring that "at the time of the conclusion of the
contract the seller knew or could not have been unaware" of the infringement claim).
continued...
commercial warranty context that is otherwise unavailable under U.S.

patent law-and not explicitly provided by the UCC. 16 4 Commentary
on the CSIG indicates that Article 42 was intended to preclude liability
under a patent application that had not been published. 165 The CISG
would therefore seem to preclude all seller liability in situations where
a patent application remains unpublished and no patent has yet issued,
regardless of any "patent pending" notice on commercially-available
products.
Furthermore, a buyer who "knew or could not have been unaware
of' infringement at the conclusion of the contract has no warranty claim
against the seller under the CISG. 166 There is no comparable escape
clause available to sellers under the UCC. 167 One example of a buyer
aware of an unpublished patent application who may have no CISG
warranty claim is an inventor or former employee of the patent applicant
who goes to work for a competitor, or starts his or her own competing
business, and then seeks to buy products from a third party knowing that
current or future patent infringement liability is likely because of
confidential knowledge of the pending patent application obtained via
work for the former employer. In such a scenario, the buyer would have
168
no warranty claim under the CISG.
Assuming that a seller knew or should have known about a
published patent application, and that the buyer did not know or was
164 Hilton Davis Chem. Co., 62 F.3d at 1527; CISG, supra note 154, art. 42(1).
165 U.N. Conference on Contracts for the Int'l Sale of Goods, Commentary on
the draft Conventionfor the InternationalSale of Goods, preparedby the
Secretariat,37, U.N. Doc. A/CONF.97/19 (1991) ("Paragraph (1) introduces an
additional limitation on the liability of the seller in that the seller is liable to the
buyer only if at the time of the conclusion of the contract the seller knew or could
not have been unaware of the existence of the third-party claim if that claim was
based on a patent application or grant which had been published in the country in
question. However, for a variety of reasons it is possible for a third party to have
rights or claims based on industrial or intellectual property even though there has
been no publication. In such a situation, even if the goods infringe the third party's
rights, article 40(1) [later becoming Article 42(1)] provides that the seller is not
liable to the buyer."); see also Pace Inst. of Int'l Commercial Law, Legislative
history of CISG article42: Match-up with 1978 draft to assess relevance of
SecretariatCommentary, PACE L. SCH. (July 12, 1999),
https://www.cisg.law.pace.edu/cisg/text/matchup/matchup-d-42.html.
166 CISG, supra note 154, art. 42(2)(a).
167 Pace Inst. of Int'l Commercial Law, Checklist on the CISG, PACE L. SCH.,
https://www.cisg.law.pace.edu/cisg/biblio/kritzer2.html (last updated June 11, 2004).

However, courts might fashion an equitable estoppel in such a situation to limit
seller liability under the UCC. Cf 3 DUESENBERG ET AL., supra note 118, § 2.04[7]
(noting that some courts have applied equitable estoppel in other UCC contexts
despite the statute's silence on the matter, e.g., the statute of frauds).
168 Pace Inst. of Int'l Commercial Law, supra note 167.
continued...
WARRANTY LIABILITY
reasonably unaware of that published patent application, the seller's

warranty liability to the buyer under "provisional rights" in the United
States should resemble that discussed above with respect to the UCC.
There does not appear to have been a single reported case in the
1 69
United States under Article 42 of the CISG at the time of writing.
This means that relatively little guidance is available on proper
interpretation of that Article, though the CISG benefits from being
much less ambiguous than the UCC regarding potential liability
stemming from pending patent applications.
E. Custom Warranties and Indemnifications
Apart from UCC or CISG provisions that may apply by default,

buyers and sellers can craft their own agreements with customized
provisions governing a warranty or indemnification relating to patent
infringement. 170 Established businesses, whether as buyers or sellers,
often do have their own preferred sales contracts that allocate liabilities
in a desired manner should patent infringement arise.1 71 Such contracts
can extend beyond just the "goods" covered by the UCC and CISG to
include services. 172 However, do these custom-drafted provisions
address-or even contemplate-the situation in which a patent issues
after the delivery of goods?
As one example, contract terms with language regarding "any good
169 See Pace Inst. of Int'l Commercial Law, 3, 000 Cases 10,000 Case
Annotations, UNCITRAL Digest Casesfor Article 42 Plus Added Casesfor This
Article, PACE L. SCH., https://www.cisg.law.pace.edu/cisg/text/digest-cases-42.html
(last updated Oct. 22, 2013). But see Memorandum Order, Tex. Instruments, Inc. v.
Linear Tech. Corp., No. 2:01-CV-00004-DF, 2002 U.S. Dist. LEXIS 5669, at *2-4
(E.D. Tex. Jan. 15, 2002) (severing third parties defending against a claim under
article 42 before any substantive rulings on the claim). Article 42 has, however,
been litigated in other jurisdictions. Digest of Case Law on the UnitedNations
Convention on Contractsfor the InternationalSale of Goods, UNITED NATIONS
COMM'N ON INT'L TRADE L. 209-10 (2016),
http://www.uncitral.org/pdf/english/clout/CISG Digest 2016.pdf [hereinafter Digest
of Case Law].
170 Digest of Case Law, supra note 169, at 33; Darin Klemchuk, Warranty
Against Infringement: UCC Section 2-312, KLEMCHUK LLP (July 4, 2017),
http://www.klemchuk.com/warranty-against-infringement-ucc-section-2-312.
" Michael J. Meurer, AllocatingPatent LitigationRisk Across the Supply
Chain, 25 TEx. INTELL. PROP. J. (forthcoming 2018) (manuscript at 2 n.6) (on file
with Review of Litigation).
172 See John P. McMahon, Applying the CISG Guides for Business Managers
and Counsel, PACE L. SCH., http://www.cisg.law.pace.edu/cisg/guides.html (last
updated May 25, 2010); see also ConstructionLaw Survival Manual, FULLERTON &
KNOWLES, http://www.fullertonlaw.com/uniform-commercial-code (last visited Feb.
26, 2018).
continued...
that becomes the subject of a claim for patent or other proprietary right
infringement" would seem to encompass later-arising claims of patent
infringement, even when the goods are delivered before a relevant
patent issues. In contrast, a contract term that specifies that the seller
"makes no warranty against infringement claims that arise after delivery
and acceptance" of the goods would preclude some claims, though
additional language addressing "provisional rights" would be necessary
to fully address seller concerns-short of a total rejection of any
warranty against infringement. Moreover, language following the
CISG that exempts a seller from a warranty claim where "the buyer
knew or could not have been unaware of the right or claim of a third
party based on industrial property or other intellectual property"1 7' 3 will
help avoid situations in which buyers knowingly push infringement
liability onto sellers via a commercial law warranty. Of course, the sky
is the limit when it comes to possible customized contractual provisions
regarding infringement warranties and indemnities.
The impact of possible downstream patent infringement liability to
a seller will vary depending on the type of goods. For instance,
consumables or other goods with short useful lifespans delivered while
a patent application is pending and immediately put into use may no
longer be in use-or even in existence-by the time a patent later
issues. 174 In contrast, durable goods will more likely still be in use (or
ready for use or further sale) when a patent issues, making the warranty
and indemnification issues surrounding pending patent applications
more acutely significant. 175 Other considerations such as the
availability of non-infringing substitutes, likely costs associated with
product redesigns, regulatory approval requirements, sunk costs of
capital equipment for manufacturing, manufacturing lead times,
seasonal sales fluctuations, sensitivities to negative publicity,
generalized risk-aversion, typical length and elasticity of sales
relationships and other factors, can all influence buyer and seller views
on specific warranty and indemnification provisions in commercial
173 See CISG, supra note 154, art. 42(2); see also Pace Inst. of Int'l Commercial
Law, 2012 UNCITRAL Digest of Case Law on the United Nations Convention on the
InternationalSale of Goods, PACE L. SCH.,
https://www.cisg.law.pace.edu/cisg/text/digest-cases-42.html (last updated July 30,
2012).
174 See generally Johns Hopkins Univ. v. Cellpro, Inc., 152 F.3d 1342, 1366
(Fed. Cir. 1998); Yuri Eliezer, Can I Infringe on a Patent Application That Is
CurrentlyPending?, SMARTUP LEGAL (July 8, 2015),
https://www.smartuplegal.com/learn-center/can-i-infringe-on-a-patent-application-
that-is-currently-pending/ (explaining that patent infringement cannot happen while
a patent is pending).
175 See id.
continued...
WARRANTY LIABILITY
176
contracts.
There are other "loopholes" to infringement liability that should also
be considered when allocating infringement liability under sales
agreements.1 77 For instance, in the absence of enforceable provisional
rights, export of previously-manufactured products covered by a later-
granted patent for use or sale in another jurisdiction is generally
permissible (assuming there is no patent in that other jurisdiction), and
the mere warehousing or destruction of previously-manufactured
products covered by a patent (but not used or offered for sale) does not
constitute infringement. 178 Buyers already operating internationally
may be positioned to take advantage of this "export loophole," though
other buyers could potentially warehouse affected products until export
opportunities arise.
Given the current state of the law surrounding implied warranties
against infringement, custom-drafted commercial contract language has
the advantage of potentially resolving all ambiguities under the UCC
and CISG with respect to later-arising infringement of pending patent
applications. This is Important Point #4: both buyers andsellers should
review sales contracts to assess how warranty and indemnification
provisions assign liability when goods or services become the subject
of infringement allegations based on a patent that issues after delivery
and acceptance. There is no right or wrong way to weigh the many
considerations at play here, but potential later-arising patent
infringement liability should at least be one such consideration.
116 See Steven Kelley & David Allgeyer, Warranties,Remedies, andRelated

Peccadilloes:Steps to Successful ContractNegotiation,ACC DOCKET, 44, 50, 54
(2011); Austin Champion, DraftingEffective IntellectualPropertyIndemnity
Provisions,HARPER BATES CHAMPION (Jan. 19, 2016),
https://www.harperbates.com/news/drafting-effective-intellectual-property-
indemnity-provisions; Paul Humbert, Contractnegotiation:How to analyze and
negotiate warranties,INT'L Ass'N FOR CONTRACT & COM. MGMT. (Nov. 6, 2017,
3:39:19 PM), http://journal.iaccm.com/contracting-excellence-journal/contract-
negotiation-how-to-analyze-and-negotiate-warranties; Negotiations: Sunk Costs,
KARRASS (Nov. 5, 2010); https://www.karrass.com/en/blog/negotiations-sunk-costs/.
177 See ZUEGE, supra note 44, at 72-79 (discussing shop rights, importation of a
product produced abroad by a patented method, temporary presence, and prior use
defenses).
178 Johns Hopkins Univ. v. Cellpro, Inc., 152 F.3d 1342, 1366 (Fed. Cir. 1998)
("Mere possession of a product which becomes covered by a subsequently issued
patent does not constitute an infringement of that patent until the product is used,
sold, or offered for sale in the United States during the term of the patent.").
continued...
III. CHALLENGING A PENDING PATENT APPLICATION
A. Overview
A common question arises whenever a business encounters a

competitor's pending patent application of concern: "How can we try to
prevent this patent application from being granted?" There are indeed
mechanisms to try to challenge pending patent applications, but such
mechanisms are limited. Patent examination is conducted on an ex
parte basis, and the USPTO and legislators have shown little interest in
adopting full-fledged interpartespatent application proceedings before
a patent is granted.17 9 Without question, inter partes examination of
pending patent applications would be a more complex and contentious
process (and would be more expensive) than the current ex parte
regime.1 80 But certain limited opportunities are available to third parties
wishing to make pre-grant submissions to the USPTO in an effort to
prevent the allowance of a particular patent application. These options
are worth entertaining, given the landscape, discussed above, in which
most patent applications result in a granted patent.
At present, there are only two formal mechanisms to challenge the
patentability or pending patent applications in the United States:
protests and third-party pre-issuance submissions. 1 There is an
179 The USPTO conducted two "Peer to Patent" (P2P) pilot programs, one from
June 2005 to June 2007 and another in fiscal year 2011. Press Release, USPTO,
USPTO Launches Second Peer To Patent Pilot in Collaboration with New York Law
School (Oct. 19, 2010) (on file with USPTO), https://www.uspto.gov/about-us/news-
updates/uspto-launches-second-peer-patent-pilot-collaboration-new-york-law-
school; Peer Review PilotFY2011, USPTO,
https://www.uspto.gov/patent/initiatives/peer-review-pilot-fy2011 (last updated Aug.
10, 2011). In this opt-in program, "citizen-experts" identified prior art. Naomi
Allen et al., FirstPilot FinalResults, PEER TO PATENT 2 (June 2012),
http://www.peertopatent.org/wp-content/uploads/sites/2/2013/11/First-Pilot-Final-
Results.pdf. However, this was still not an interpartesexamination program, and
did not involve adversarial or otherwise hostile party involvement. Following the
second pilot program the initiative appears to have been abandoned by the USPTO.
See Lisa Larrimore Oullette, Pierson, Peer Review, and Patent Law, 69 VAND. L.
REV. 1825, 1839-40 (2016).
180 See generally H. Dickson Burton & Allen C. Turner, Inter Partesand Post-
GrantReview and Ex-Parte Re-Examination, LEXOLOGY (Oct. 23, 2015),
https://www.lexology.com/library/detail.aspx?g-ac84ba8d-a6ce-4ef9-ad76-
2941 1b2a1d34 (comparing the proceedings for challenging the validity of granted
patents and their respective advantages and disadvantages).
18135 U.S.C. § 122(c), (e) (2012); 37 C.F.R. §§ 1.290-.291 (2017); MPEP,
supra note 13, §§ 1134, 1441.01, 1901; see generally Austen Zuege, Strategic Third-
Party Submissions Against PatentApplications, INTELL. PROP. TODAY, Dec. 2012, at
26, 26 (providing a procedural overview of third-party pre-issuance submissions).
continued...
WARRANTY LIABILITY
"informal" mechanism available as well. 182 Additionally, in some

circumstances, inventorship of a pending patent application can be
disputed via a derivation proceeding.18 3 These various procedures are
discussed in turn.
B. Protests
Protests can be filed against pending patent applications, with a

listing of information relevant to patentability and a concise statement
of relevance that can include arguments against patentability, but only
in extremely limited circumstances. 184 Protests can only be filed prior
to publication of the pending application, or with the applicant's consent
after publication and prior to allowance. 185 The protestor is not able to
participate after the initial filing of the protest. 186 Of course, filing a
protest before an application publishes is usually impossible, given that
the very existence of the application is usually not public information
187
and the contents of the application are likely unknown.
Situations in which an applicant would consent to a protest are
difficult to imagine. The only meaningful scenario in which protests
are available is for reissue applications, which are based on a
previously-granted patent. 188 So, protests end up being a kind of a
technicality, available only in rare situations-though potentially
189
important in those circumstances.
182 ZUEGE, supra note 44, at 387-88.

183 DerivationProceeding,USPTO, https://www.uspto.gov/patents-application-
process/appealing-patent-decisions/trials/derivation-proceeding (last updated May 9,
2017).
184 35 U.S.C. § 122(c); 37 C.F.R. § 1.291; MPEP, supra note 13, §§ 1901-
1907.07(a).
185 35 U.S.C. § 122(c); 37 C.F.R. § 1.291(b).
186 MPEP, supra note 13, § 1901.07.
187 See 35 U.S.C. § 122(a). Current USPTO practice is to identify an application
serial number for unpublished continuing applications in the continuity data for
published parent applications in the PAIR system, but not to provide public access to
such unpublished application documents. See MPEP, supra note 13, § 101. In such
a scenario, a potential protestor might be aware of the existence of a continuing
application of interest without knowing its specific contents. See id. Another
notable exception is for applications based on a Patent Cooperation Treaty
application (e.g., a national phase entry application), in which the contents of an
unpublished applicant can be surmised, though the U.S. application serial number
will likely remain unknown. See id. § 1893.
188 MPEP, supra note 13, § 1441.01.
189
See id. §§ 1441.01, 1901.04.
continued...
C. Pre-Issuance Submissions
Third-party pre-issuance submissions were introduced by the

America Invents Act in 2011.90 Like "observations" in some other
jurisdictions, 19 1 these pre-issuance submissions resemble protests but
are available in a wider range of situations, albeit based on a slightly
narrower scope of information. In particular, submissions must be
received by the USPTO prior to the later of either (a) six months after
publication or (b) the date a first rejection is given or mailed. 19 2 This
window of opportunity is significant, but also rather short. After the
initial submission, there is no further third-party involvement, 193 and the
USPTO does not permit arguments as to patentability or the submission
of unpublished materials (i.e., only patents, published patent
19 4
applications, and "printed publications" are accepted).
Most potential third-party submitters want to know: is it
strategically worthwhile to make a pre-issuance submission? The
answer to this question naturally varies, depending especially on the
availability and quality of prior art that might be submitted. 195 But a
more general concern is what examiners actually do with third-party
submissions. Are they ever effective? As of September 2014, for
applications with office actions after receipt of a proper third-party
submission, the submission was relied upon by the examiner 12.96% of
the time. 196 From the standpoint of a potential submitter, that seems like
190 Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 8, 125 Stat. 284,
315 (2011).
191See Stephanie Celaire, ThirdParty Observations:A Weapon to Integrate in
Your IP Strategy?, REGIMBEAU (May 13, 2013),
https://www.regimbeau.eu/REGIMBEAU/GST/COM/PUBLICATIONS/20130/ 200
5%200bservation%20de%20tiersSTC EN.pdf (providing an overview of laws
governing pre-issuance observations around the world).
192 35 U.S.C. § 122(e)(1)(B) (2012).
193 MPEP, supra note 13, § 1134.01(11)(B)(3).
194
Id. § 1134.01(111).
195 Kirby B. Drake, Pre-IssuancePatentSubmissions - A New Way to
Participatein PatentProsecution,KLEMCHUK LLP BLOG (Oct. 23, 2015),
http://www.klemchuk.com/339-preissuance-patent-submissions-a-new-way-to-
participate -in-patent-prosecution/.
196 Compare PreissuanceSubmission Statistics, USPTO 5 (Sept. 26, 2014),
https://www.uspto.gov/sites/default/files/patents/init events/preissuance -submission
-statistics 1.pdf, and Submission of Observationsfrom Third Parties,JAPAN PAT.
OFF. (Apr. 7, 2017), https://www.jpo.go.jp/tetuzuki e/t tokkyoe/submission.htm
(stating that December 2013 data from the Japan Patent Office indicates that
information regarding prior art contained in third-party pre-issuance observations
was utilized in reasons for refusal (i.e., in office actions) approximately 73% of the
time), with Supplementary Publication4/2016- Official JournalEPO, EUR. PAT.
OFF., https://www.epo.org/law-practice/legal-texts/official-
continued...
WARRANTY LIABILITY
a disappointingly low number. And yet, more promisingly, one

independent study showed that approximately 40% of pre-issuance
submissions were successful (with approximately 20% leading to
abandonment), and an earlier internal USPTO survey of examiners
indicated that 52% of those surveyed found pre-issuance submissions
197
useful to either a moderate or great extent.
Interviews conducted with USPTO staff in 2013 suggested that a
common problem with many submissions is that submitters are often
well-versed in (and passionate about) the relevant technology but are
unfamiliar with patents and the patenting process, and therefore they
fail to present submitted information in a manner useful to examiners.1 98
Indeed, numerous examiners commented in that survey that the quality
of the concise statements of relevance for submitted information is
important to them. 199 Submitters need not be registered patent attorneys
or agents, but feedback from USPTO personnel and anecdotal accounts
by patent attorneys (the present author included) suggests that
experienced patent practitioners are more likely than non-practitioners
to prepare pre-issuance submissions in a way that results in examiner
reliance on the submitted information as the basis for a rejection. z°
However, from a strategic perspective, the limited ability of a third
journal/2016/etc/se4/p91.html (last updated Sept. 29, 2016) (asserting that European

Patent Office ("EPO") examiners are required to comment on all third-party
observations submitted under Article 115 of the European Patent Convention,
though statistics do not appear to be available regarding the percentage of cases in
which third-party observations are used as the basis for a rejection in the EPO).
197 Sarah Kapelner et al., An Assessment of the Impact ofPre-Issuance
Submissions on the PatentExamination Process, WORCESTER POLYTECHNIC INST.
119 (Dec. 19, 2013), https://web.wpi.edu/Pubs/E-proj ect/Available/E-proj ect-
122013-161237/unrestricted/FINAL PAPERjpdf version.pdf (noting this was a
very limited survey); Braden Katterheinrich & Nicholas Anderson, The 3rd-Party
Submissions Most Likely to Succeed at USPTO, LAw360 (Oct. 27, 2017, 10:37 AM),
https://www.law360.com/articles/976912/the-3rd-party-submissions-most-likely-to-
succeed-at-uspto.
198 Kapelner et al., supra note 197, at 171 (citing an interview with an
anonymous USPTO manager); see also Katterheinrich & Anderson, supra note 197.
199 See generally Kapelner et al., supra note 197, at 117-29 (noting that forty-
seven of the ninety-three examiners responded that concise explanations were
helpful in identifying pertinent parts of submissions, many of those surveyed
providing responses explaining why).
200 See 25 U.S.C. § 122(e) (2012) (stating that "[a]ny third party" may make a
submission); Rule Implementing Third Party Submissions Provision of Leahy-Smith
America Invents Act, 77 Fed. Reg. 42,150, 42,154 (July 17, 2012) (to be codified at
37 C.F.R. pts. 1, 41) (explaining that the submitter may be any member of the public
or an attorney or representative of a party); Katterheinrich & Anderson, supra note
197 (identifying factors correlating with success, such as use of a claim chart instead
of a narrative format and concluding that examiners are more likely to rely on
"submitted references that are of the type most commonly used at the USPTO").
continued...
party to elaborate on submitted cited prior art and the absence of any
requirement for examiners to affirmatively respond to submissions may
caution against "wasting" the best possible prior art. 2" 1 After all, the
applicant is generally free to amend the claims to distinguish the
submitted prior art, which may result in a patent being granted, albeit
with narrower claims. 20 2 This is Important Point #5: a well-drafted and
well-timed pre-issuance submission can urge rejection and possible
narrowingamendments, but in high-stakes situations it may be better to
hold back some or all known prior artfor use in another context.
An ideal scenario for a pre-issuance submission is where there is an
abundance of non-cumulative prior art available, so that some prior art
can be submitted and other prior art held back for potential later use.
Another scenario where pre-issuance submissions makes sense is where
forcing a narrowing amendment to eliminate reasonable royalty
damages under pre-grant provisional rights is important, while the
subsequent grant of a patent with narrowed claims would be acceptable.
For instance, a submission of prior art that is identical or highly similar
to a third-party's product (or process) can either force narrowing claim
amendments or can help build a case that any later-granted claims must
not read on the submitted art-and, by extension, that the similar or
identical product/process of the third-party submitter does not
infringe.20 3 In that way, the submitted prior art acts as both a sword and
a shield. Such an approach may be viable when dealing with pending
claims that are highly ambiguous yet are supported only by the
disclosure of embodiments that are significantly different from the
third-party's product/process.
201 See MPEP, supra note 13, § 1134.01 (stating that the statute requires a
"concise" and not "verbose description" and that the third-party filer "will not
receive any further communications from the Office relating to the submission"
aside from notification of receipt).
202 See John J. Penny & Rory P. Pheiffer, Evaluatingthe Effectiveness of Third
PartyPreissuanceSubmissions, NUTTER (Nov. 2, 2015), https://www.nutter.com/ip-
law-bulletin/evaluating-the-effectiveness-of-third-party-preissuance-submissions
(concluding that filing a third-party submission is risky because it could lead to
applicants amending their claims in ways that increase their chances of success);
Katterheinrich & Anderson, supra note 197.
203 Contra Peters v. Active Mfg. Co., 129 U.S. 530, 538-39 (1889) ("That which
infringes, if later, would anticipate, if earlier."), superseded by statute, Act to Revise
and Codify the Laws Relating to Patents and the Patent Office, ch. 950, 66 Stat. 792,
797 (codified as amended at 35 U.S.C. § 102 (2012)). Strictly speaking, there is no
"practicing the prior art" defense to patent infringement. In re Omeprazole Patent
Litig., 536 F.3d 1361, 1377 (Fed. Cir. 2008) ("It is well-established.., that
'practicing the prior art' is not a defense to infringement."). But from a pragmatic
perspective, a reasonable belief that sale of goods constitutes "practicing the prior
art" equates to a belief that either a finding of non-infringement or a determination of
invalidity is likely.
continued...
WARRANTY LIABILITY
D. Informal Submissions
The informal method of challenging a pending patent application is

to submit prior art to the applicant's attorney, or to the applicant herself.
Prosecuting attorneys, plus the inventor(s) and possibly certain other
persons involved with a given patent application, are under a duty to
disclose material prior art to the USPTO.2 °4 Therefore, any prior art
they receive from a third party must be disclosed to the USPTO to fulfill
that duty of disclosure. 20 5 The consequence of not doing so is a
potential finding of inequitable conduct, which may render any resultant
patent unenforceable.2 °6
One convenient way to make such disclosures to an applicant's
attorney is to pre-fill a USPTO-supplied information disclosure
statement ("IDS") form with all relevant prior art information and send
it to the applicant's attorney.20 7 The IDS form includes space in which
to identify "Pages, Columns, Lines where Relevant Passages or
Relevant Figures Appear" for each of the listed references,20 8 which can
be used to point the examiner to important teachings that might
otherwise be easy to overlook. If the IDS is altered to remove one or
more references or the identifications of particularly relevant passages
204 37 C.F.R. § 1.56(c) (2017); MPEP, supra note 13, § 2001.
205 MPEP, supra note 13, § 2001.06(a).
206 See 35 U.S.C. § 282(b)(1) (2012); Therasense, Inc. v. Becton, Dickinson &
Co., 649 F.3d 1276, 1290-91 (Fed. Cir. 2011) (en banc) (stating that
unenforceability requires findings of both (a) but-for materiality of withheld
information and (b) that the patentee acted with the specific intent to deceive the
USPTO). A finding of unenforceability renders all claims of the patent
unenforceable; this is not a claim-by-claim analysis like invalidity. Therasense,Inc.,
649 F.3d at 1288. However, a patentee can cure a failure to disclose and avoid
unenforceability by submitting the information with a request for supplemental
examination. 35 U.S.C. § 257(c)(1) (2012); 37 C.F.R. § 1.601-.625 (2017); MPEP,
supra note 13, § 2802. Supplemental examination may be requested at any time
during the life of a patent, but in order for it to be an effective cure for inequitable
conduct, supplemental examination must be requested before an unenforceability
defense is raised by an accused infringer. § 257(c)(2)(A); see also Therasense, Inc.,
649 F.3d at 1290-91. Additionally, it may be possible to cure inequitable conduct
through a reissue application, because the America Invents Act removed the
limitation on reissue that the defect sought to be cured was "without any deceptive
intention." See 35 U.S.C. § 251(a) (2012); see also MPEP, supra note 13, § 1448
("[USPTO] will not comment upon duty of disclosure issues which are brought to
the attention of the Office in reissue applications except to note in the application, in
appropriate circumstances, that such issues are no longer considered by the Office
during its examination of patent applications.").
207 Information DisclosureStatement by Applicant- PTO/SB/08a, USPTO,
https://www.uspto.gov/sites/default/files/patents/process/file/efs/guidance/updated-I
DS.pdf (last visited Feb. 27, 2018).
208 Id.
continued...
are altered before submission to the USPTO, that may constitute

inequitable conduct if it conceals relevant information with an intent to
deceive.209 In general, the strategic considerations for the informal
submission of prior art to the applicant's attorney are the same as those
for a formal pre-issuance submission.
E. Derivation Proceedings
Another procedure of note when considering a challenge to a

pending patent application is a derivation proceeding.21 This is a patent
office trial "to determine whether (i) an inventor named in an earlier
application derived the claimed invention from an inventor named in
the petitioner's application, and (ii) the earlier application claiming such
invention was filed without authorization. ' 211 In essence, derivation
proceedings govern disputes over inventorship and the
misappropriation of another's invention.21 2 In certain circumstances,
this may be the most suitable way to challenge a competitor's pending
patent application.
F. Other Options?
If none of the pre-issuance procedures discussed above are legally

available, or if due to strategic considerations none appear suitable, then
a third party will need to await either abandonment or grant of the
pending application. 2 3 After grant, a number of other procedures are
available to challenge an issued patent. These include post-grant
review, inter partes review, proceedings for covered business methods,
and ex parte reexamination, all conducted at the USPTO, as well as
declaratory judgment actions in court. 21 4 The drawback to all such post-
209 Therasense, Inc., 649 F.3d at 1290-91. Supplemental examination or reissue

might be effective to cure such inequitable conduct if pursued before an
unenforceability defense is raised by an accused infringer. See supra note 206 and
accompanying text.
210 35 U.S.C. § 135 (2012). Interference proceedings have been eliminated for
new patent applications, but constitute another type of proceeding that can apply to a
dwindling number of older patent applications. See MPEP, supra note 13,
§ 2301.04.
211 DerivationProceeding,supra note 183.
212 See id.
See Zuege, supra note 181, at 26.
213
See 28 U.S.C. § 2201 (2012); 35 U.S.C. §§ 291, 302, 311, 321 (2012);
214
Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284, 329
(2011); see also 35 U.S.C. § 301(1) (2012); 37 C.F.R. § 1.501 (2017) (informally
referred to as the "poor man's reexam"); Theodore C. McCullough, PriorArt and Its
Uses: A Primer,GROKLAW (Apr. 17, 2006, 12:25 PM),
continued...
WARRANTY LIABILITY
grant activities is cost. 2 15 Pre-issuance submissions are generally much

less costly to prepare and file.2 16
IV. CONCLUSION
Pending patent applications can present a great deal of uncertainty
to third parties attempting to ascertain potential infringement liability.
The UCC and CISG each provide warranties against infringement
enforceable against a seller of goods by default, but the UCC is
particularly ambiguous with respect to liability for the delivery of goods
while a patent application is still pending.217 Revisions to the UCC that
more clearly delineate the scope of the warranty against infringement
for delivery of goods would provide much more certainty to both buyers
and sellers.
However, in the meantime, buyers and sellers can negotiate specific
terms for warranties against infringement, up to and including the
complete elimination of such warranties or the assumption of a full and
unequivocal indemnity against all infringement. 218 The warranty
against infringement is relatively rarely litigated, in large part because
patent owners usually prefer to sue competitors (sellers) than customers
(buyers) but also because sellers will often either intentionally disclaim
all warranties against infringement or will assume full indemnification
of buyers against patent infringement.2 19
But agreements should be drafted and reviewed with the
understanding that patent owners may still be entitled to sue customers
(buyers) and warranty against infringement issues could still arise with
respect to pending patent applications. Practitioners should scrutinize
commercial contracts with an eye toward scenarios in which a patent
issues after tender of delivery, and draft and review contracts with the
same considerations in mind. These contract provisions take on
http://www.groklaw.net/articlebasic.php?story-20060414004039219#note 16.
215 Post-grant proceedings typically cost in the six-figure range, and litigation
into the seven-figure range. AM. INTELL. PROP. L. Ass'N, 2017 REPORT OF THE
ECONOMIC SURVEY 1-112-17, 1-161-66 (2017). Exparte reexamination remains the
least costly post-grant procedure, with costs to the requester more typically in the
five-figure range. Id. at 1-91, 1-97.
216 Cost data for pre-issuance submissions is not available, but the submission
requirements are less onerous that exparte reexamination and the official fees are
lower (and potentially non-existent for a limited number of submitted documents).
See Zuege,
2 17
supra note 181, at 28.
211 See, e.g., Blake D. Morant, ContractsLimiting Liability: A Paradoxwith
Tacit Solutions, 69 TUL. L. REV. 715, 716-17 (1995).

219 See, e.g., Sun Coast Merch. Corp. v. Myron Corp., 922 A.2d 782, 794-95
(N.J. Super. Ct. App. Div. 2007).

continued...
heightened importance in view of (a) the likelihood of any given patent

application being granted, (b) the very limited opportunities to intervene
in the examination of pending patent applications, and (c) the relatively
high cost of post-grant challenges to issued patents (including patent
litigation defense).22
See, e.g., Carley et al., supra note 20, at 215; Doug Harvey, Reinventing the
220
U.S. PatentSystem: A Discussion of Patent Reform Through an Analysis of the

ProposedPatentReform Act of 2005, 38 TEx. TECH L. REv. 1133, 1164 (2006).

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Bluebook 21st ed.

ALWD 6th ed.

APA 7th ed.

Chicago 7th ed.

McGill Guide 9th ed.

MLA 8th ed.

OSCOLA 4th ed.

UNDERSTANDING PATENT AND COMMERCIAL

I. INTRODUCTION .......................................................... 444

-© 2018 Austen Zuege is an intellectual property attorney at Westman, Champlin

short run absent clarifying legislative action. 7 But first, a discussion of

A. Some Background About the Patenting Process

The United States has permitted inventions to be patented since the

7See infra Part II.

issue. 14 If rejected, the applicant has the opportunity to amend the

show is that most patent applications do result in a granted patent, but a

patent laws permit a limited monopoly in a patented invention only

It also bears mentioning that examiners face institutional constraints

(2012); see infra Part III.

J. INTELL. PROP. 226, 235-38 (2018).

MONOPOLY 79-82 (2008), http://449evine.sscnet.ucla.edu/papers/imbookfinalall.pdf

application being granted is a matter of speculation, then readers have

B. Things to Know About Patent Enforcement

Some elementary aspects of patent enforcement and litigation

44 See AUSTEN ZUEGE, PATENT FREEDOM TO OPERATE SEARCHES, OPINIONS,

TECHNIQUES AND STUDIES 68-79 (2017).

in part on other grounds by Presidio Components, Inc. v. Am. Tech. Ceramics

a requirement for infringement, except for plant patent infringement,5"

Corp., 875 F.3d 1369 (Fed. Cir. 2017).

C. Provisional Rights to Pre-Grant Damages

U.S. patent law provides for "provisional rights" to infringement

63 35 U.S.C. § 154(d) (2012).

"infringing" the "provisional rights" of an eventual patentee seem unlikely to be

"constructive notice" that gives rise to pre-grant provisional rights

13, §§ 1122-1123. Publication of a redacted copy of an application is also available

pending" designation has no enforceable legal significance other than

While provisional rights encompass direct infringement, as well as

85 Compare 35 U.S.C. § 154(d)(1)(A) (2012), with 35 U.S.C. § 271(b), (c), (f),

provisional pre-grant "reasonable royalty" damages.94 Unless product

II. POTENTIAL STATE COMMERCIAL LAW LIABILITY

A. The UCC Warranty Against Infringement

Aside from U.S. federal patent laws, laws governing commercial

hold the seller harmless against any such claim which

891-98 (2012) (citing William F. Dundine, Jr., WarrantiesAgainst Infringement

UCC section 2-312 provide no guidance regarding later-granted patent

B. Key Limitations of the UCC Warranty Against Infringement

entitled to sue competitors' customers as infringers who "use[]" the patented

narrowing of upstream seller liability under the UCC warranty against

C. Applying the UCC Warranty to Pending Patent Applications

When it comes to goods delivered before a patent is granted that

warranty against infringement applies with respect to pending patent

breach must await the time of such performance the

process/search-patents (last updated May 24, 2017, 2:06 PM).

even apprise competitors of the jurisdictions in which patent protection is sought.

notice that includes a patent application publication number would be a

States-though priority claims to earlier-filed foreign patent applications is possible.

encourage the practice by patent applicants. Further, in such a situation a reasonable