Is it legal for a company to produce an upgrade kit for another company&#39;s product?
<p>Let's say Acme manufactures two very similar consumer electronic products, "Foo" and "Bar", where Bar is basically a premium version of Foo, having many extra functional features. Physically, one could convert Foo into Bar by adding a relatively simple mechanical part. (This mechanical part is not a software protection dongle, it is really necessary for those extra features to work).</p>

<p>According to the specific state of the market, the "premium" Bar can be sold at a significantly higher price than Foo, despite the production cost difference being very small. Foo is, however, planned to also be produced in large numbers for a market segment which is unable or unwilling to pay for Bar, but it has a very small profit margin. Bar, on the other hand, is planned to be sold at a very high profit margin.</p>

<p>The problem is, that Foo can be converted into Bar by adding a relatively simple mechanical part. Some users might do it for themselves, on their own risk of course, but this in itself is not a problem as it requires some fine mechanics skill (making the part, not adding the part. Adding the part is easy) and most users are expected to buy Bar instead, or buy an official conversion kit (sold at a very high profit margin)</p>

<p>However, what prevents another company from producing such a conversion kit? The price difference between Foo and Bar is big enough and the manufacturing costs for such a "conversion kit" are small enough to be expected that there will be a large demand for it.</p>

<p>That mechanical part in itself is very simple, too simple to be patented. </p>

<p>For this question let's ignore black market conversion kits.</p>

<ol>
<li>Can another company legally produce and sell such a conversion kit? How could Acme legally prevent them from doing so?</li>
<li>Can that other company legally market it as "conversion kit for Acme's Foo to turn it into a shiny new Bar"? How could Acme legally prevent them from doing so?</li>
<li>Do the answers for questions #1 and #2 change depending on the fact whether Acme also sells or doesn't sell such conversion kits?</li>
</ol>

<p>(of course, such decisions will not be made in the real world without consulting legal professionals. I'm more interested in the general principles of this issue)</p>

<p><strong>NO - Not if the premium product is patented.</strong></p>

<p>Even though the parts in the kit might be too simple or generic to be patented, "Bar" might well be patented. Selling a kit with the specific use of turning something into a device that infringes a patent is contributory infringement. </p>

<p>The end user, in applying the kit, is a direct infringer. The patent owner needs to show that someone - even a single individual - is directly infringing in order to successfully go after the volume kit maker.</p>

<p>see 35 US 271 (b)</p>

<blockquote>
  <p>c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, <em>constituting a material part of the invention</em>, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a <em>contributory infringer</em>.</p>
</blockquote>

competition