Too many authorities view the transfer of patented self-replicating technology (SRT) as either a pure license or a pure sale. If a pure license exists, the patentee can impose post-transfer restrictions on the product's use, frustrating the policy goals of limited monopoly and free alienability of chattels. If a pure sale is triggered, however, the patentee loses all rights through patent exhaustion, allowing the purchaser to replicate the chattel at will. Sensitive to this latter argument, several courts have enforced Monsanto Company's “bag tag” seed licenses, which require Monsanto's farmer customers to destroy all second-generation seed. Urging a middle path, this Note argues that the conveyance of SRT to an end-user must sever the patentee's control over the chattel's use. At the same time, the patentee remains entitled to a reasonable royalty on future replications of the product. This Note explores the doctrinal and policy benefits of such a reform.
Both a License and a Sale: How to Reconcile Self-Replicating Technology with Patent Exhaustion,
5 J. Bus. Entrepreneurship & L.
Available at: https://digitalcommons.pepperdine.edu/jbel/vol5/iss1/1