Patent Law And Production: Understanding How Patents Affect Your Manufacturing Company

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Manufacturing finished products on behalf of a third party can be financially beneficial. If you own a shop that uses the specifications provided by a customer to produce a final product, it's important to recognize the ways in which patent laws can apply to your business.

To avoid a potential patent infringement lawsuit, here are three things you need to be aware of as you partner with your customers in the future.

1. Know that patents apply to processes, not just products.

While your customer may hold the patent rights to the product they want you to create, it's essential that you realize the process by which that product is manufactured may be patented as well.

Any shortcuts or modifications that your shop makes to the manufacturing process could result in a patent infringement lawsuit. Be sure that you hire an independent attorney to conduct a search for any applicable patents that might cover the process you intend to use. Investing in this due diligence will help you avoid legal problems in the future.

2. Know that your employees may have invention rights.

You want the most skilled and innovative workforce available, since these individuals will help you grow your business, but it's important to recognize that employee contributions to the manufacturing process might be considered inventions according to patent law. To ensure that your shop owns the work performed by your employees, you must have an invention assignment clause included in your contracts.

An assignment clause names your company as the owner of any and all ideas or products created by employees while they are on the clock. Having invention assignment clauses in place ensures that you will not lose out on any potential income that might stem from the innovations of your workforce.

3. Know that you could be held liable for producing products on behalf of a customer if that product infringes on any patent rights.

Just because a customer requests that you manufacture a product doesn't mean that you have the right to make the product. A patent doesn't give the owner rights to production; it grants the right to exclude others from producing the patented product. To ensure that you don't get into any legal trouble as a result of your production activities, it can be beneficial to request indemnification from your customers.

An indemnity clause included in the contracts you sign with your customers will protect you from financial loss in the event of a patent infringement by placing the responsibility for performing due diligence on the customer, not on your company.

Understanding how patent law affects your company will allow you to manufacture products on behalf of your clients without fear of a patent infringement lawsuit in the future. Contact a lawyer like one from Bayer Jerger & Underwood for more information.

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2 March 2016

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