'Patent Trolls' and Patent Remedies

Abstract

Recently, there has been much concern about the activities of patent trolls, patent holders who, at least roughly speaking, seek profit through licensing, rather than providing products or services themselves. Courts and commentators have begun exploring one potential avenue for addressing this concern - namely, reducing access to end-of-suit injunctions against infringement when patents are held by entities who do not compete against potential infringers. Responding both to recent developments and to an article by Mark Lemley and Carl Shapiro, this Commentary cautions against such a rule that categorically discriminates between patent holders based on their business model. Historically, U.S. patent law appears to have been wary of such a rule. Further, high litigation costs, rather than the threat of an end-of-suit injunction, may be more responsible for many of the most troublesome instances of troll-like behavior. Moreover, various concerns - for example, litigation costs, information asymmetries, and the typical length of patent litigation - may limit a patent holder's ability to hold out for an exorbitant reward. Finally, positive harm might result from the categorical restriction of access to injunctions based on a patent holder's business model. Such a categorical approach may act as an unnecessary drag on progress by favoring invention and patent-rights ownership by industry incumbents, while discouraging invention and rights ownership by entities that may be both more efficient inventors or exploiters of patent rights, and less likely to use patents anti-competitively. To the extent holdout based on the threat of an injunction is a major concern, courts' capacity to deny injunctions because of undue hardship or the public interest may provide a substantial answer.