The influential Intellectual Property Owner’s Association continues to push for patent reform. In particular, the IPO board has voted to support a modification of the rules on damages. The change would explicitly require apportionment of damages. In other words, damages for patent infringement would never be more than the economic value attributable to the innovation.
Proposed amendment:
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less that a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
Where an infringer shows that an apportionment of economic value is necessary to assure that damages based upon a reasonable royalty do not exceed the economic value properly attributable to the use made of the invention, such apportionment shall exclude from the reasonable royalty calculation the economic value shown by the infringer to be attributable to the infringer’s incorporation into the infringing product or process of features or improvements, whether or not themselves patented, that contribute economic value to the infringing product or process separately from the economic value properly attributable to the use made of the invention.
Where the claimant shows that the use made of the invention is the basis for market demand for an infringing product or process, the royalty may be based upon the entire market value of the products or processes provided to satisfy that demand.
The court shall identify all factors relevant to the determination of a reasonable royalty under this section and the court or the jury, as the case may be, shall consider such factors in making the determination.
When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d) of this title.
The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.
IPO also supports changes to the inequitable conduct jurisprudence:
IPO supports legislation to (1) limit or eliminate the unenforceability defense based upon inequitable conduct in patent litigation, (2) eliminate the requirement to disclose the best mode contemplated by the inventor of carrying out the invention, and (3) allow enhanced patent infringement damages to be awarded for “willful” infringement only in limited circumstances, such as those set forth in IPO’s Amicus Brief filed in In Re Seagate Technology LLC.
“A lot of the professors I talk to say that they fear that invention in America is dying”
LOL! Maybe those professors should spend more time inventing things instead of bloviating about their “fears.”
Surely there are new methods of teaching waiting to be discovered. No?
This language terrifies me:
“…. such apportionment shall exclude from the reasonable royalty calculation the economic value shown by the infringer to be attributable to the infringer’s incorporation into the infringing product or process of features or improvements, whether or not themselves patented, that contribute economic value to the infringing product or process separately from the economic value properly attributable to the use made of the invention.”
What exactly does this mean? Let’s say I have a patent to a radical new chip design. I have a claim to the chip, and a dependent claim to a computer comprising the chip.
Now an infringer comes along with a computer comprising my chip. You can bet that claim to said computer isn’t going to be worth squat. The alleged infringer will explain how every milligram of plastic in that box aside from my chip is an “improvement” or “feature”, and will explain how my chip is manufactured in Singapore for 10 cents per unit.
Do you want the Federal Circuit to decide this sort of thing with a de novo standard of review? For all intents and purposes this amounts to the Court scrapping the claims down to the point of novelty. If you’re comfortable with giving the Court that long of a leash then by all means rally the troops behind this legislation. If you value your job and the US tech industry, however, then this legislation might not be for you.
Shouldn’t the results of this proposal simply collapse into the reasonable royalty test. I mean, as a potential licensee, why would I pay more than the benefit licensing this patent would have on my product. I would think that this kind of calculus already occurs in the damages phase. Creating this type of statutory regime is largely unnecessary.
Patent reform is coming – either through Congress or the Supreme Court. Those who have hysterically defended the status quo and refused to engage in meaningful debate about the system have removed themselves from the debate and now risk losing much more than if they had been flexible earlier on.
At the same time that the US is trying to push the TRIPS agreement on the developing world, it is trying to skirt the prohibition on compulsory licensing without calling a spade a bloody shovel. Compulsory licensing is bad enough but the current trend moves toward a regime that is even worse. Not only is it becoming harder to obtain injunctive relief, we have to deal with attempts to slash damages to amounts BELOW the current statutory requirement that they be no less than a reasonable royalty. Why get a license when the patentee is discouraged from suing, and when losing can be cheaper than obtaining a license?
Trying to fix major flaws in a given system by adding more layers of flaws is no fix at all.
Although this is a statute whose wording only a lobbyist could love, I believe that the IPO proposed statute simply codifies the existing Federal Circuit precedent on apportionment of damages and the entire market value rule [or tries to]. That, at least is what the IPO says this is supposed to do.
The IPO membership is made up of entities with a big stake in the US patent system. “Stake” means “interest in the outcome of US patent litigation”. But that interest is not always the interest of the patent owner. That’s the case only 50% of the time. The other 50% of cases impinging on an IPO member are cases where that IPO member is the accused infringer. Thus, the IPO membership is looking or a US patent system that gives fair protection for inventors and, at the same ime, reasonable legal certainty for those looking down the barrel of the patent gun. Therefore, what the IPO writes, from the complete organisation, on behalf of all its members, should carry considerale weight. Patent damages control is not the end of contingency fees. In common law England, with damages no more than compensatory, the contingency fees lawyer is alive, and kicking very effectively, to enable small guys to prevail against mega corporations.
How about basing damages on expedited temporary injunctions as a sort of “file wrapper estoppel”?
In a given infringement case you have a quick hearing where the alleged infringer has to decide whether or not to accept a temporary injunction.
If the “invention” is only 0.0001% of the value of the product, then the alleged infringer would certainly agree to the injunction. Stopping practicing such a minor part of the whole will not cause significant damage.
On the other hand, if the alleged infringer does not agree to an injunction, it implies that the “invention” was actually very important to the whole. If the alleged infringer is ultimately found to be infringing, he/she would certainly be happy to pay a fair and signifcant sum to the owner.
step back, you forgot a doozy: “Bankruptcy reform”
“altruistic”
Dear Sophie_the_just_a_student,
When you finally grow up (And graduate :-), you will find that the world is not a clear case of Black and White. It is all a fog full of gray shades … some darker and some lighter; but no clear dividing line.
One thing you should learn though.
If you see the word “Reform” attached to something, it usually means that wrongdoers are trying to get away with doing more wrong. Consider the phrases “Tort Reform” or “Litigation Reform” or “Insurance Reform”. These are often promulgated by the The Powers To Be (TPTB) for the purpose of reducing their exposure.
And that is what “Patent Reform” is mostly about. Go study the membership list of the Committee to Coral the Clueless … err I mean, the Coalition for Patent Fairness (and Balancement). Yes, they all joined up out of altuistic love for innovation and country, and not for serving their own pecuniary interests.
Of –A lot of the professors I talk to say that they fear that invention in America is dying, and that things like this and the supposed Continuation Rule changes (which harm “real inventors” and creative tiny companies) will only hasten death–, it was professors who argued FOR ending abuse of patent continuations AND who were cited by the USPTO to justify the proposed rule changes.
Are there ANY professors who are saying the proposed rule changes will hasten death?
Separately, most professors discussing Innovation and Its Discontents have been favorable to the ideas therein.
Can somebody please explain to me what the “Intellectual Property Owner’s Association” is?
Is it a lobbying group representing big corporations ?
Because then their positions make sense, in that they are trying to enact changes that let them get away with IP theft.
If they are not, then their positions are quite baffling.
I agree with what many are saying here, for instance, about the dubious merit of a “first to invent” system. But I disagree that the mess is the fault of the USPTO (if that is what anyone is implying). The system is broken because of the abuses of parties with the power to abuse the system, which in most cases means rich companies with poor inventive track records that have to steal in order to have anything worthwhile to their stock value. “Small inventors” and tiny companies simply cannot wreak the kind of havoc that is being witnessed. Technology historians I know at school believe that “the mess” is the smoke & mirrors whining of mega-corporations when they get caught stealing, whose main purpose is the confuse the masses into believing that the problem is due to “a broken system”. One professor I know puts it this way:
“if a patient in a hospital is stealing the hospitals equipment and supplies even as the doctors at the hospital are trying to save his life, and then as a direct consequence he gets sub-optimal care, then whose fault is it? Then if that same thieving patient tries to cover up his crimes by alleging that the hospital ‘is broken’ and staffed by incompetent physicians, who is to be believed? ”
A lot of the professors I talk to say that they fear that invention in America is dying, and that things like this and the supposed Continuation Rule changes (which harm “real inventors” and creative tiny companies) will only hasten death. At least some of you guys are in Europe or other “foreign” countries. When Americans cease to invent, American MEGA corporations with the business power of the US military will have no where to go but to your shores to poach YOUR people’s inventions. They will then spin the same FUD they have been doing here, but to your people, and your patent system will then be alleged to be “broken”.
Maybe it’s not about the system. Maybe it’s about evil, evil corporate superpowers with the means to abuse the system, whoever that system belongs to? But then I’m just a little student so I don’t know what I’m saying anyways. Sorry. :–(
For once I fully agree with softwarevisualization.
Damage Apportionment would be a disaster for all small startups with e.g. some revolutionary software technology ( Let’s take RSA Data Security as an example)
We all know the tactics MS routinely uses to put smaller competitors out of bussiness: shamelessly copy all of the essential features, add many more features, then bundle the “thing” with their monstrous Windoze OS, and voila, your stupid little patent covers only 0.0000000000001 percent of their product, go away, little troll…
Then you are free, of course, to have your lawyer argue with the judge all he can, while charging you 500$ an hour…
If IPO wants to limit damages for willfulness, why does it propose changing the damages statute to allow trebling damages without any finding that the defendant is willful or that the case is exceptional?
Yeah I agree naughtmonkey… what DennistheMenance says is true, but, it’s really a symptom of a broken system. The rule changes fairly incentivise IP theft since the “punishment” is barely stronger than the licensing would have been. Amortized across multiple IP thefts only some of which will be ultimately litigated, that’s a winner for the thieves. They’re not going to recall their thieving instincts because the punishment is less than the recall would cost them, to use an analogy.
Moreover, they are vacuuming out the incentives for IP lawyers to take cases at all by reducing the awards.
This is beautiful
“Where the claimant shows that the use made of the invention is the basis for market demand for an infringing product or process, the royalty may be based upon the entire market value of the products or processes provided to satisfy that demand.”
So let’s paint a picture of what the world will look like after that takes effect.
1) all infringing companies will take special pains to gerrymander their products definitions so that stolen IP can be shown to be a miniscule part of any product’s over-all functionality. You know the quants have profit/risk maximizing logic behind this hammered out into a freaking flowchart already….
When it comes to insulating themselves against judgment, they’ll get no less creative, for instance they’ll create internal studies (as part of their normal product development of course) that will purport to show that only a fraction of consumers wanted or used the function that incorporated the stolen IP and it was not very important to sales etc etc blah blah blah and you-all can stand there before Your Honor and bicker and haggle with the retainer crowd over what fraction of a percentage of a portion of a part of a product in a market your clients IP contributed value to.
Bon Voyage!
But of course that’s what you get when you permit the patenting of every twit and twiddle and shade of a thought that comes into the mind of anyone stupid enough to think they’re a genius for thinking of it in the first place and rushing off to the patent office.
That’s what you get when assume that, if it was obvious, it would be suggested in the literature somewhere.
There are so many just plain goofy notions implied about reality, society, and communication in that measure, it’s hard to know where to start.
It also implies that we’ve come to a point in history in which we’ve exhausted the well of all obvious ideas, and everything left over must be non-obvious if it’s only the least bit technical.
If patents we’re given out only to clearly revolutionary and innovative ideas, that is, if the bar were higher, then it would be a LOT harder for IP thieves to claim that the “invention” was only of small import, now wouldn’t it?
Dennis the mennis said:”Gee, why not just eliminate the penalty for perjury while they are at it?
How about letting people who never went to law school, never took the bar exam, practice law?
How about giving free tickets to Disney World to the CEO of a company that commits IP theft and then willfully infringes.
How about putting patent examiners in prison for 25 years if they are not willing to allow patents filed by companies based on stolen IP that forms the basis of perjured patent filings by that company?”
How about getting yourself a half decent patent system in the first place? how about not having a first to invent system to protect the so called “small inventor” and then have an extraordinarily expensive system to sort out the mess the “small inventor” can’t afford? How about having a system that allows third parties to file observations or something equivalent, an opposition system of some sort? Why is it only the f**king Americans (as per usual) have jury trials for patent cases? (something to do with their blessed constitution I believe). There is a reason the rest of the world thinks you’re crap……………
Gee, why not just eliminate the penalty for perjury while they are at it?
How about letting people who never went to law school, never took the bar exam, practice law?
How about giving free tickets to Disney World to the CEO of a company that commits IP theft and then willfully infringes.
How about putting patent examiners in prison for 25 years if they are not willing to allow patents filed by companies based on stolen IP that forms the basis of perjured patent filings by that company?
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