Restoring Deterrence: The Case for Enhanced Damages in a No-Injunction Patent System

Forthcoming in 5G and Beyond: Intellectual Property and Competition Policy in the Internet of Things (eds. Jonathan M. Barnett and Sean M. O'Connor, Cambridge University Press 2022)

USC CLASS Research Paper No. CLASS22-2

USC Law Legal Studies Paper No. 22-2

21 Pages Posted: 15 Feb 2022

See all articles by Jonathan Barnett

Jonathan Barnett

USC Gould School of Law

David Kappos

Cravath, Swaine & Moore LLP

Date Written: February 14, 2022

Abstract

Since the Supreme Court’s 2006 decision in eBay, Inc. v. MercExchange, LLC, increasingly large portions of the patentee population have no realistic expectation of securing injunctive relief against adjudicated infringers. This judicially imposed quasi-compulsory licensing regime induces well-resourced infringers to decline a license, appropriate patented technology, and negotiate the terms of use through litigation. Costly and protracted litigation is unlikely to adequately remunerate the patent owner whenever infringers have greater litigation resources, lower opportunity costs, and limited expectations of enhanced damages, which can induce the patent owner to settle for an amount that undervalues its technology. These litigation and settlement dynamics are illustrated through case studies of “holdout” tactics employed by well-resourced infringers in recent litigations involving standard-essential patents. To correct for the underdeterrence and undercompensation effects inherent to a no-injunction regime, it is proposed that courts enhance damages by an appropriately calibrated multiplier in all infringement litigations in which injunctive relief is not a practically available remedy.

Keywords: patents, standard-essential patents, injunctions, patent hold-out, enhanced damages, willful infringement

Suggested Citation

Barnett, Jonathan and Kappos, David, Restoring Deterrence: The Case for Enhanced Damages in a No-Injunction Patent System (February 14, 2022). Forthcoming in 5G and Beyond: Intellectual Property and Competition Policy in the Internet of Things (eds. Jonathan M. Barnett and Sean M. O'Connor, Cambridge University Press 2022), USC CLASS Research Paper No. CLASS22-2, USC Law Legal Studies Paper No. 22-2, Available at SSRN: https://ssrn.com/abstract=4034791

Jonathan Barnett (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

David Kappos

Cravath, Swaine & Moore LLP ( email )

825 8th Ave.
New York, NY 10019
United States

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