Punitive Patent Liability: A Comparative Examination
41 Pages Posted: 16 Feb 2018 Last revised: 17 Apr 2019
Date Written: February 5, 2018
Monetary damage awards and permanent injunctions have long been viewed as complementary remedies: damages typically serve as compensation for past realized harm, and injunctions serve as a restriction against future unrealized harm. But some commentary in the patent literature also argues that the potential for injunctive relief is essential to provide deterrence against opportunistic or strategic patent infringement; in other words, that injunctions are in effect a punitive remedy. Given the eBay requirement of irreparable injury for equitable remedies, this assertion raises questions regarding the value of patent injunctions: what measure of monetary remedy, if any, will provide the equivalent deterrence to an injunction, and is there an incommensurable measure of injunctive deterrence that damages cannot provide?
I consider these questions in the context of the global series of disputes surrounding “standard essential patents” (SEPs) in handheld telecommunication devices, a set of disputes sometimes dubbed the “smartphone wars.” This context provides a limiting instance for examining the punitive effects of injunctive relief. I suggest, first, that as a general rule damages may substitute for injunctions to deter bad faith behavior by patent infringers; second, that the literature supports such a substitution of damages for injunctive remedies in instances of bad faith or willfulness; and third, that substitute damages are appropriately modified or enhanced when bad faith or willfulness is found. I show that in the particular context of SEP infringement, these propositions leave open a path to deter strategic behavior by potential licensees, while setting remedial defaults that deter the more serious problem of strategic behavior by SEP owners. In doing so, I draw together and resolve several disparate strands of recent scholarship on patent remedies.
Keywords: patent, injunction, remedies, damages, property, liability, deterrence, FRAND, SEP, standards, eBay, equity
JEL Classification: K41, K42, O31, O32, O34, H41, P14
Suggested Citation: Suggested Citation