29 Pages Posted: 22 Mar 2013 Last revised: 7 Oct 2013
Date Written: March 19, 2013
This essay, which builds on my recent work on the law and economics of comparative patent remedies, presents three proposals relating to the enforcement of domestic patent rights. The first, which may be close to being adopted in the United States, is for the courts and the International Trade Commission (ITC) to adopt a general presumption, grounded in patent law and policy, that patent owners who have committed to license their standard essential patents (SEPs) on fair, reasonable, and nondiscriminatory terms are not entitled to permanent injunctions or exclusion orders, but rather only to a damages in the form of an ongoing royalty calculated on the basis of what a reasonable licensor and licensee would have agreed to prior to the adoption of the standard in question. Countries such as Germany that have addressed the issue of remedies for the infringement of SEPs within the context of competition law, while otherwise leaving in place an almost-automatic entitlement to permanent injunctive relief, have in my view taken the wrong tack. Second, I argue that Congress should amend Patent Act § 289, which permits design patent owners to recover the infringer’s profits, so as to require that such awards reflect only the profit derived from the use of the infringed design (and not the entire product of which the design is a part). Such apportionment is the norm in other countries (and in U.S. copyright and trademark law). By contrast, the archaic U.S. design patent rule threatens substantial overdeterrence and overcompensation, as reflected in the recent jury award in Apple v. Samsung. My third suggestion — really more of a thought experiment inspired by Judge Posner’s opinion in Apple v. Motorola than a serious proposal for reform — is to consider whether it would be possible to eliminate the unique U.S. practice of trial by jury in a wide swath of U.S. patent cases by statutorily recasting awards of reasonable royalties as a form of equitable restitution rather than as compensation.
Keywords: patents, remedies, damages, injunctions, standard essential patents, royalties, design patents, jury trial
Suggested Citation: Suggested Citation
Cotter, Thomas F., Reining in Remedies in Patent Litigation: Three (Increasingly Immodest) Proposals (March 19, 2013). Santa Clara Computer and High Technology Law Journal, Vol. 29, 2013; Minnesota Legal Studies Research Paper No. 13-16. Available at SSRN: https://ssrn.com/abstract=2235769