Efficient Infringement and the Rule of Law
5 Pages Posted: 11 Feb 2021 Last revised: 10 Mar 2021
Date Written: November 11, 2020
These comments were presented at the Federalist Society's 2020 National Lawyers Convention at the panel titled "Intellectual Property Rights and the Rule of Law". They address a trending narrative that casts opposition to the demands of patent holders as a form of lawlessness. This narrative specifically takes aim at a practice that has been termed “efficient infringement” – the idea that a firm may rationally decide to infringe patents either because it will be too costly for the patent holder to enforce its rights in court, or because it is happy to take its chances in court, where an asserted patent may be invalidated and where damages eventually assessed against the infringer years later will likely be no higher than the royalties that the infringer would have paid anyway under a licensing agreement. Reasonable people can differ over optimal patent scope and policy. Likewise, the PTO and the PTAB can issue and uphold more or fewer patents, and the courts can interpret the Patent Act in ways that we like or dislike. Reasonable people can also seek change through litigation, legislation and administrative channels. All of these mechanisms are organic parts of our tripartite system of government. We will never have a situation in which all partisan interests are equally happy with the rules or the outcome of every case – this is part and parcel of an adversarial legal system. But this is no reason to question the legitimacy of the system itself. So, far from a departure from the rule of law, what we see today in the patent system is the operation of a well-functioning legal regime seeking to address the interests of competing, but largely law-abiding, stakeholders.
Keywords: patent, efficient infringement, holdout, rule of law, PAE, patent troll, NPE
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