Texas Law Review See Also, Vol. 88, p. 221, 2011
14 Pages Posted: 29 Apr 2010 Last revised: 21 May 2014
Date Written: April 20, 2011
In private enforcement systems such as the one for patents, remedies perform the “public” function of determining the optimal amount of protection and deterrence. If every patent were properly granted and had just the right scope to incentivize innovation, then strict enforcement and harsh penalties for infringement would be a good idea. But in a world where too many patents are granted, their boundaries are often ambiguous and scope excessive, things are not so simple. The expected likelihood and magnitude of the penalty determines the number of infringement suits and the litigation resources that will be poured into them. As a result, patent remedies are an important policy lever for determining the correct amount of innovation, which is the underlying goal of the patent system. The Federal Trade Commission's new Report entitled "The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition," issued in March, 2011, highlights the importance of fixing the patent notice system.
Patents are property rights. An effective property rights regime requires a timely, reliable, cost-effective system for providing notice, as well as the right incentives for responding to notice once it is given. Notice serves essentially the same purpose in the patent system as in our system of land ownership. It is socially wasteful for developers to build, only to find out later that the land belongs to someone else, who is now in a position to extract a very large penalty. Prior to building the developer may have had a competitive choice of parcels, but once construction is completed this market has gone from competitive to bilateral monopoly. For the same reasons it is socially wasteful for entrepreneurs to develop new processes or products, only to find out later that they have fallen within the claims of someone else’s patent.
While the problem of patent overbreadth and ambiguity are not easily repaired, the law could do much to improve the notice situation, in particular by increasing private burdens to provide adequate and timely notice to reasonably anticipated infringers, just as the real property system does. In the law of real property parties are required to supplement deficiencies in the public notice system by providing more direct types of notice reasonable for the situation. For both infringement injunctions and patent damages the problems of implementing such a requirement are far more manageable than repairing other elements of the patent system. Further, most of the changes could be placed into effect by the courts without new legislation.
Keywords: patents, intellectual property, notice, remedies, injunction, damages
JEL Classification: A12, D02, D21, D84, K0, K1, K2
Suggested Citation: Suggested Citation
Hovenkamp, Herbert J., Notice and Patent Remedies (April 20, 2011). Texas Law Review See Also, Vol. 88, p. 221, 2011; U Iowa Legal Studies Research Paper No. 11-21. Available at SSRN: https://ssrn.com/abstract=1596789