Submarine patent

A submarine patent is a patent based on a patent application that the applicant allowed to languish in the PTO while watching another company make substantial investments in a technology or product that will infringe the yet-to-be-issued patent. Once the other company’s sunk costs are large, the patent applicant obtains the patent, asserts infringement, and demanding supra-competitive royalties for a license to the submarine patent. The company must agree to supra-competitive royalties or forego its production or innovation. As a result, consumers either pay higher prices for the company’s goods, or never get the benefit of the innovation that the company had to abandon.