Double Royalty???

Santa Cruz, CA

#1 Jun 25, 2012
Hello all. I was presented a situation and query by my Boss and the CEO where they are selling a product that is patented. They were contacted by the Patent holder and asked to either enter into a license agreement or cease the marketing and the sale of the product. I am aware that a patent allows the patent holder to prohibit anyone from using, selling and marketing a product without the patent holders permission. The question that was posed to me, over and over, was "since we are purchasing the product from a vendor that is already paying the patent holder a royal why should we pay a second royalty?" I am aware of the stupidity of the question but I have tried to explain it over and over again why it is not considered double royalty and that the patent holder does have the right ask for a royalty in the licensing agreement. I have a a few questions regarding this topic and I would greatly appreciate any help.

1) Does the prohibition of sale, marketing, manufacturing and use of product have to be included in the language of the patent or does the issuance of a patent guarantee those rights?

2) has this concept of "double royalty" ever been discussed in any documented cases and if so which ones?

3) Do my superiors have a point regarding this issue or is my understanding of the laws the correct one?

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