I/P Law Journals Update for March 2005

In his "May 2005 Report on New Academic Research," Dennis Crouch at the Patenly-O Blog is summarizing and linking to several new law journal articles:

• Douglas G. Lichtman, Substitutes for the Doctrine of Equivalents: A Response to Meurer and Nard, U Chicago Law & Economics, Olin Working Paper No. 244 (May 2005),
• Mark H. Webbink (of RedHat), A New Paradigm for Intellectual Property Rights in Software, 2005 Duke L. & Tech. Rev. 0012 (2005), and
• Donald S. Chisum, Reforming Patent Law Reform, 4 J. Marshall Rev. Intell. Prop. L. 336 (2005), where Chisum writes

Microsoft and others complain about the ability of the “trolls� and other patent owners to not only assert infringement but to take draconian positions on remedies.

First, the trolls are said to always demand a damage royalty based on the whole product even though the patented invention relates to only one part or feature of a product. The Reform Bill’s response: a new section 284(e) on “Determination of Royalties or Damages on Components.� It says about what you would expect it to say: damages only on “value� attributable to the patented “invention alone� and not on elements “otherwise known in the art or contributed by the infringer or its licensors.� I suspect that careful study would show that this is not necessary. Basic principles of compensatory damage law should reach the same result. If a royalty is based on the whole product rather than the part, the appropriate royalty rate should be correspondingly low.

Second, the trolls are said to threaten an injunction against distribution of a whole product—even though the troll is not producing a competing product. The Reform Bill’s response: permanent injunctions shall issue only on a finding that
the patentee “is likely to suffer irreparable harm that cannot be remedied by the payment of money damages.� The court should not presume irreparable harm and must consider, inter alia, equitable factors including “the extent to which the
patentee makes use of the invention.� Again, this probably should be the law undertraditional principles of equity.

For example, patents are often treated as property rights. In property law generally, I am assured by colleagues who teach it or who teach equity that injunctions to protect property rights are not automatic and take into account equitable factors. But I admit that CAFC decisions tend to create a
presumption of irreparable harm—so some legislative correction may be appropriate. Yet owners of patents, valid and infringed, traditionally have a right to enforce them even if they are not producers. If the threat of injunctive relief is softened too much, are they put at too great a disadvantage in terms of bargaining.