Field-of-use Limitation - USA Case Law

USA Case Law

The US Supreme Court held such arrangements legitimate in General Talking Pictures Corp. v. Western Elec. Co. By way of example, such a license might authorize a licensee to manufacture patented engines only for incorporation into trucks (the "truck field"), or to manufacture such engines only for sale to farmers (the "field of distribution to farmers"). If the licensee exceeded the scope of the licensee, it would commit patent infringement.

The doctrine of the General Talking Pictures case does not apply to a patent owner’s sale (or its licensee's sale) of a product to a customer that imposes a restriction on what the customer may subsequently do with the product. Such sales are governed by the “exhaustion doctrine,” rather than the General Talking Pictures doctrine.

Furthermore, when field-of-use licensing is used to create a horizontal cartel by which product markets are allocated among what would otherwise be competitive licensees, the General Talking Pictures doctrine does not shield the arrangement from the antitrust laws. In Hartford-Empire Co. v. United States, such a cartel based on patents was condemned as an antitrust violation. In United States v. Ciba Geigy Corp., the court found an antitrust violation as to patent licenses that restricted use of purchased drug chemicals but no violation as to licenses that limited the use of the same chemicals by licensees manufacturing them.