Patent Reform 2007: Apportionment of Damages

Patent are business tools that can help ensure some monetary reward for innovative effort.  Although few patent are litigated through final decision, the threat of litigation casts an ever-present shadow on licensing negotiations and inter-corporate dealings.  Of course, any underlying threat is closely related to the size of potential damages and strength of a potential injunction.  In the past two-years, damages in particular have become more important as the Supreme Court’s decision in EBay v. MercExchange lessens the likelihood of injunctive relief.

There has been little scholarly discussion of how ongoing money damages should be assessed when an injunction is denied.  I take the position that a denial of an injunction should not necessarily result in a compulsory license and that there are many times when continued infringement would be considered willful.

The Patent Reform Acts of 2007 (both House and Senate) propose changes to damage calculations that would require specific economic analysis to ensure that any reasonable royalty damage award captures "only [the] economic value properly attributable to the patent’s specific contribution over the prior art."  These calculations would apparently apply to calculations of both past and future damages. CAFC Chief Judge Michel recently testified before Congress — discussing some practical implementation of the damage modifications:

[T]he provision on apportioning damages would require courts to adjudicate the economic value of the entire prior art, the asserted patent claims, and also all other features of the accused product or process whether or not patented. This is a massive undertaking for which courts are ill-equipped. For one thing, generalist judges tack experience and expertise in making such extensive, complex economic valuations, as do lay jurors. For another, courts would be inundated with massive amounts of data, requiring extra weeks of trial in nearly every case. Resolving the meaning of this novel language could take years, as could the mandating of proper methods. The provision also invites an unseemly battle of "hired-gun" experts opining on the basis of indigestible quantities of economic data. Such an exercise might be successfully executed by an economic institution with massive resources and unlimited time, but hardly seems within the capability of already overburdened district courts. Appellate issue would also proliferate increasing complexity and delays on appeal, not to mention the risk of unsound decisions.

I am unaware of any convincing demonstration of the need for either provision, but even if the Committee ultimately concludes that they would represent an improvement over current patent policies embedded in Title 35 of the United States Code, their practicality seems to me very dubious. That is, the costs in delay and added attorneys fees for the parties and overburden for the courts would seem to outweigh any potential gains. Finally, even if the policy gains were viewed as significant, the courts as presently constituted simply cannot implement the provisions in a careful and timely manner, in my judgment.

78 thoughts on “Patent Reform 2007: Apportionment of Damages

  1. Dear Brian,

    I plan to have Part II tomorrow.
    I’ll post in on the new thread, “MercExchange v. eBay: Injunction Hearing.” Thanks for your patience.

  2. Hello. I wonder, just how much trouble did the recent SCOTUS decision make for those of us holding software/process patents? (My company has a smart-card related patent.) Is the patent probably literally worth less in general, or is it just a matter of details like just how similar a claimed infringement is? We are pursuing infringement claims, and I hope they are still worth doing.

  3. Dear Brian,

    Part I, my background:
    I do not like Supreme Court rulings that limit patent rights. My agenda is simple and I wear it on my sleeve – I’m for patent rights, the stronger the better, just like I like my decaf. There is no conflict in that (strong decaf is not an oxymoron) in that I’m naturally high strung and don’t need external stimulation; I like coffee for the taste. I like inventing because I have a god-given talent and I love creating new and useful things comprising apparatus, systems and methods. When anybody diminishes patent rights it has the effect of moving the goal posts while my balls are in play.

    With all my so-called talent, it is damn hard eking out a living as a self-employed inventor. I have been independently inventing, while simultaneously establishing manufactories (some with and some without success) based on my inventions, for a living since being discharged from the Army in 1968 where I served a teacher at Aberdeen Proving Grounds in Maryland. I taught basic electronics including vacuum tubes to classes, some comprising uneducated embittered draftees and some comprising ROTC grads. Most of my students went on to repair helicopter armament in Viet Nam.

    Because of our superior teaching talents, I was selected along with my great friend and drinking buddy, Sgt. Carter, to go to Redstone Arsenal in Alabama to learn the newest technology, including discrete transistors of the NPN and PNP type, so that we could come back to Aberdeen and write new lesson plans for our Signal Corp Electronics School. Black as the ace of spades, Sgt. Carter had to explain to naïve me why we, both good Christians but one white and one black, couldn’t drive to Alabama in his Thunderbird and save some money for ourselves.

    Given my background, I hope you see why I chose not to stand by and ignore a foreigner advocating a Master Plan for us Americans to do away with our independent inventors saying that that would have an “aggregate positive effect on the US economy.” But the Dummkopf doesn’t stop there — he follows up with a comment saying that “…vexatious litigants (including those asserting claims found to be invalid) get to go to prison … .”

    Getting back to business:
    Regarding the KSR ruling, I think what the Supremes did was akin to a bull in a china shop — the Supremes gave witness yet again to the notion that they should leave the heavy patent lifting to the CAFC. It would, of course, be better for We the People if our Supremes had better judgment, but they don’t. Even though the Supremes clearly lack patent-wise judgment, they, unfortunately, seem to have the authority to muck up the KSR china shop as they did. I have strong opinions about testing for obviousness that I’ve been posting on a few patently-O threads. For example:
    link to patentlyo.com

    The CAFC had obviousness testing right all along: Only Teaching, Suggestion, Motivation works — because TSM is based on some tangible evidence, evidence that something is, or evidence that something is not, obvious.

    Part II, regarding the eBay debacle and the Constitution, will be coming soon I hope …

  4. Dear mad “MaxDrei,”

    Please let me know when you are ready for the other fine fitting shoe to fall on your absurdities.

    I am quite ready to drop it. You have been warned that I can be nasty. I prefer not to be.

  5. MaxDrei
    Hate-mongers with your mind-set who advocate the demise of independent inventors to promote an aggregate positive effect on the US economy case ought to be seen for what they are.

    Now, adding salt to the wound, you come along with your “Purity of reasoning” solution, your Master Plan for the America patent system — prison for vexatious inventors “asserting claims found to be invalid.”

    You are a blight, and bad for the health of all. As you well know, hateful thinking can be ghastly contagious You ought to be quarantined lest you influence others similarly weak and feeble minded.

    Perhaps you are certifiable. Take my advice, seek help soon. You’ll thank me later.

  6. Don’t you think prison is a necessary sanction, JOI(TM), for those in contempt of court? Or is the “Rule of Law” something you scorn? For that is who I’m on about: the people who don’t do what the court orders. At the moment we have the example of a young hotel heiress. We would have wished her to have done what the court ordered, wouldn’t we? My prescription is the one that works so well in England, where erstwhile small inventors, like Sir James Dyson, get to be captains of manufacturing industry. Finally, if my remarks are for you so agonising, best read no more of them. It’s bad for your health.

  7. MaxDrei’s proposed Solution: PRISON for American inventors! Incredible!
    MaxDrei wrote this (directly above):
    “…vexatious litigants (including those asserting claims found to be invalid) get to go to prison…”

    MaxDrei’s comment directly above seems to follow-up a prior comment also in this thread above (“Posted by: MaxDrei | May 28, 2007 at 09:38 AM ):
    “So, damages apportionment might lead to the demise of the “small independent non-manufacturing inventor working in high tech”? Is there any reason why anybody should be concerned about the loss of that particular species? Quite the opposite. If they were all to disappear, I can imagine it having an aggregate positive effect on the US economy. …”

    MaxDrei now has a prescription for his master plan:
    “…the demise of the “small independent non-manufacturing inventor…”
    i.e.,
    “…vexatious litigants (including those asserting claims found to be invalid) get to go to prison…”

    MaxDrei,
    Do you not realize how agonizing such remarks are? Have you no conscience?

    Your “Solution” reeks — you know exactly what I mean.

  8. Are we going to get back, one day, to the issue: If the owner of a valid claim, infringed, is denied his permanent injunction (for whatever reason) how much “damages” should he get? All seems quite simple to me. The aggrieved owner of the infringed valid claim ought to be able to recover 1) the costs of his having to take legal action against the infringer and 2) a quantum of money that compensates him for what income he has directly lost, as a result of the infringement. In the case of a non-manufacturer patent owner, the starting point would therefore be “reasonable arm’s length royalty”. Purity of reasoning, in how to set the quantum of damages, is destroyed by muddling it with extraneous factors like 1) we must punish the wilful infringer 2) the corporate bandit must pay more, so he really learns not to do it again 3) the impecunious claimant must get back his enormous legal costs; we can’t award him his costs, so we give him them in the form of a bigger quantum of damages. If there is to be patent reform, then why not find a mechanism, other than enhanced damages, to punish the egregious corporate infringer. Respect for the patent system to my mind demands 1) litigation should be a last resort, which comes automatically when 2) owners of claims found valid and infringed get prompt proportionate injunctive relief 2) vexatious litigants (including those asserting claims found to be invalid) get to go to prison for contempt of court, if they don’t pay the court-assessed quantum of legal costs incurred by the winner. Two Rules: 1)whether a claim is or is not valid can emerge only in inter Partes proceedings, and 2) those proceedings have to be tried by a tribunal that really is competent to assess validity, post-trial.

  9. Small Inventor

    US5838906 “Claim 1. A method for running an application program in a computer network environment, comprising:

    providing at least one client workstation and one network server coupled to said network environment, wherein said network environment is a distributed hypermedia environment;

    executing, at said client workstation, a browser application, that parses a first distributed hypermedia document to identify text formats included in said distributed hypermedia document and for responding to predetermined text formats to initiate processing specified by said text formats; utilizing said browser to display, on said client workstation, at least a portion of a first hypermedia document received over said network from said server, wherein the portion of said first hypermedia document is displayed within a first browser-controlled window on said client workstation, wherein said first distributed hypermedia document includes an embed text format, located at a first location in said first distributed hypermedia document, that specifies the location of at least a portion of an object external to the first distributed hypermedia document, wherein said object has type information associated with it utilized by said browser to identify and locate an executable application external to the first distributed hypermedia document, and wherein said embed text format is parsed by said browser to automatically invoke said executable application to execute on said client workstation in order to display said object and enable interactive processing of said object within a display area created at said first location within the portion of said first distributed hypermedia document being displayed in said first browser-controlled window.”

    This is presumably the broadest claim in the patent, because it is first. I have to say, this is very broad. I am aghast at the breadth of this patent. I think claim 1 would be found invalid in court.

    It covers a browser embedded client side application, which communicates with a server side application. This is the way all internet applications work. This part of the patent could be cancelled out. The application is identified by “type information” basically a file format (like .doc for MS word documents). So basically this patent covers all browser plug ins that identify a file type, and then tell the browser how to interpret and display the information. Uh…. I cannot believ this is a patent, this guy should be a bizillionaire. I can show prior art, I used programs like this back in the early nineties.

    Now to avoid the patent. I want to distribute processes for a single computer application accross a newtork to several computers, to reduce the processing load on a single client side computer. My program uses a server side type identifier based on the name of the file, not the file type. The client side hyperlink is just a file name. It sends the filename accross the network to the server, and the server looks up the untyped name of the file. The server determines that it is a MS Word document and sends the client that information, now the browser runs the appropriate plugin. Actually I have wished it was done like this for some time, rather than having to go and choose to download Acrobat or a Word plugin, what if the server just sent the appropriately formatted data to the browser. This is how Google does it. Check out Google Documents; You can edit and view Word documents on it. It is mostly done server side, and the client just displays an html form, which is standard web protocol.

  10. Small Inventor,

    That is a really good Ben Franklin quotation. It speaks that vanity (i.e. not keeping your invention secret and confidential by good contracting, or not giving it to the public through manufacturing and distribution to boot, is vane, and focusses the inventors efforts on himself, rather than where the attention properly belongs on the “progress of science and the arts” “for the people” “the general welfare” and “common defense”. I think people have changed. We generally expect a bit of ridicule and contempt for those who succeed where we failed. Check out some more modern writers like Stephen Covey (Seven Habits of Highly Effective People), or just watch the Real World, MTV, the Sopranos, Entourage, or any modern television show or movie. In the Spider Man movies, Spider Man, even though he is a super hero is ridiculed by the media. We live an era so interconnected by the internet, the television, automobiles, planes, trains, cell phones, PDAs, blackberries, and boats, that we all know or can know what everyone else has and whether we think they should have it. If I wanted to I could look up a satellite image of where someone lives, and see exactly where their property line sits. People have not changed, but their conception of the interelation between eachother has. Everything is public now: see NSA, Patriot Act, Google Earth, Myspace, Facebook, etc… The existentialists sought to escape the intrusion into their private affairs by the mires of leagions of people swarming around them by seeking a deeper connection with the nature all around them, by succumbing to the powerful thunder, waves, and mountains. The modern dichotomy between what is public domain and what is private is very far on the public side. I think Ben Franklin saw inventors in their garages and on farms being very afraid of what would happen if information relating to their inventions somehow proliferated beyond the distance they could see or travel to easily.

    It would be hard for Ben Franklin to imagine information flowing as easily as it does today. There is a great four part documentary on Nikola Tesla on Youtube.com, check it out. He patented thousands of really great ideas, and even his contemporaries could not envision what he forsaw. Authors as recent as Issac Assimov and Carl Sagan had a hard time predicting what kind of world we would live in today.

    Today we experience much less capitalism and more of a statistical economic manipulation of commodities to suit the stature and superiority of our country. This is why a dollar won’t buy you very much anymore. Everyone owes more than they have, and the value of a dollar must be immediately depreciated, divided in half, and them counter balanced against foreign production estimates. Yikes. In Franklins day, I don’t think there was such a thing as that kind of massive fungibility of goods and commodities. The didn’t even have cars. 99% of things are the same, but the 0.01% that has changed makes a dramatic effect on the way we think. People just are not the same. They are differnet in what theye expect to achieve, in how many technological advances they expect. I personally expect at least one technological advance per day. It makes me laugh at myself.

    Software is such a malleable medium. With the availability of php, java, javascript, Java Server Pages, C++, C, Ruby, Python, Cold Fusion, asp, xml, xhtml, html, among hundreds more languages, I can find a way to write around any software patent. All the inventor has to do is offer his own dowloadable client (public domain). The server side applications are so varied and cross compatible, that a programmer has a very very broad set of choices for accomplishing any given display of data in front of the end user, without using any of the same programming structures, and thus avoiding a patent protecting an invention based one a few of them.

    You know, I agree with a lot of what you are saying. I’ll get to the software patents in a bit…..

  11. “Software patent is too easy to circumvent. I have been programming since I was four. I have prgrammed websites, digital multimeters, motor controllers, video games, calculators, arbiitrary microcontroller exhibitions, and the most cutting edge autonomous robots on the planet. I can avoid any software patent you can show me”

    Come on, Brian… Don’t make me laugh..

    First of all, what is “software patent” ?
    Does PTO have a workable definition of it ?

    Second, try to circumvent something like US4405829 (RSA patent) or US5838906 (web-browser plugin patent owned by Eolas Inc.)
    or 5,801,695 (first of the Townshend’s patents on 56k modem)
    BTW, Brian, is 5,801,695 a “software patent” or a “hardware patent” ?
    Ever heard of hardware and software modems ?

  12. Brian wrote:
    “As far as the Constitution, that is all we have. The founders are dead. They can’t explain what the preferred outcome is, and they would have never thought of eBay”

    Come on, Brian…

    People are the same today as they were 250 years ago
    At least they are still driven by the same motives.

    The Founding Fathers understood very well why this particluiar Clause (Article I Section 8 Clause 8) had to be included in the Constitution to ensure continuing technological and cultural progress in this capitalistic society.

    I just want to give you a little quote:

    “Jealousy and Envy deny the merit or the novelty of your invention; but Vanity, when the novelty and merit are established, claims it for its own… One would not therefore, of all faculties, or qualities of the mind, wish for a friend, or a child, that he should have that of invention. For his attempts to benefit mankind in that way, however well imagined, if they do not succeed, expose him, though very unjustly, to general ridicule and contempt; and if they do succeed, to envy, robbery, and abuse.”
    -Ben Franklin, 1755

  13. Ordinary inventor,

    Please regard this paragraph as not applicable to you.

    “I probably deserve your pity in terms of a career, as I just graduated law school, and am currently seeking a position as a patent attorney or a patent examiner for the USPTO. In that light, I want to make sure I express that my views may change as authority comes to my attention. I had a career as a robotics design engineer before I decided to get a law degree. I have worked the 9am to 11pm workweeks before, and I have made some innovations. I designed software to interpret cutting edge scanning millimeter wave radar data into a three dimensional computer models for interpretation by autonomous robots. I had to sign a confidentiality agreement, and sign all of my IP over to the company I worked for, in order to work there. I participated in a moot court appellate trial in which I represented a small inventor against a large corporation, and one of my best arguments is that small inventors don’t have the capacity to maintain the secrecy and confidentiality of their inventions, which should be given consideration by the courts. It seems like the courts often miss the subtle intent behind the IP clause, to protect the people from governmental power over private matters.”

    This is actually directed at small inventor.

  14. Ordinary Inventor,

    I probably deserve your pity in terms of a career, as I just graduated law school, and am currently seeking a position as a patent attorney or a patent examiner for the USPTO. In that light, I want to make sure I express that my views may change as authority comes to my attention. I had a career as a robotics design engineer before I decided to get a law degree. I have worked the 9am to 11pm workweeks before, and I have made some innovations. I designed software to interpret cutting edge scanning millimeter wave radar data into a three dimensional computer models for interpretation by autonomous robots. I had to sign a confidentiality agreement, and sign all of my IP over to the company I worked for, in order to work there. I participated in a moot court appellate trial in which I represented a small inventor against a large corporation, and one of my best arguments is that small inventors don’t have the capacity to maintain the secrecy and confidentiality of their inventions, which should be given consideration by the courts. It seems like the courts often miss the subtle intent behind the IP clause, to protect the people from governmental power over private matters.

    The term “exclusive” in the 18th century meant something akin to status. When people of that era spoke of clothing or expensive home or neighborhoods, they referred to them as exclusive items. Those items of status were not exclusive by law, but by expense or privilege. I have to admit, much of my knowledge of that time comes from movies. Movies like the Patriot, Bury My Heart at Wounded Knee, Legends of the Fall, and many other historically set movies are somewhat accurate prtrayals of those times, if not overly romanticized. I don’t base my opinions on the romantic characters, portrayed by actors such as Brad Pitt, Mel Gibson, or any of the other fine actors in those films. The producers of those films often hire some of the best authorities on the every day life of people at the times the movies are set, and they can be informative glimpses into the way people lived during that time. I find the lack of long distance communication particularly instructive.

    The founders are a bit more difficult to interpret, because their personas are somewhat mired in legend, and they were in fact visionaries, presumably much more adept at achieving what they desired or went after than the common man, who focused on his family or his work. Many of the foudner’s writings, such as the federalist papers were viewed and received as political statements, meant to sway the opposition to support their positions. This kind of propaganda requires some amount of compromise on their original positions, in terms of the political propaganda’s statements, but builds a chess like configuration of pawns, rooks, and knights to win the battle for a given form of governmental structure. There were many compromises made to the confederate states for the political motives of federalism.

    What is more interesting is that the original intent of the founders is less important than the textually demonstrable commitment exhibited in the histroical constitutional document. During the time of ratification, communication was rudimentary. The people of States, not near Virginia would be hard pressed to accurately identify the founder’s intent. They likely never even saw them. They would be able to interpret the meaning of the language of Clause 8, and all other sections of the constitutional document, which they eventually saw with their own eyes.

    The peoples’ lack of consent to be governed by clause 8 is the strongest limitation of clause 8. A theory of consent is necessary to properly interpret the valid authority of the Constitutional document, specifically Clause 8. The States did not send local people to the Constitutional Convention, they sent their most influential people. The local authorities did not have the means or time to travel to Virginia. I wrote a paper on theories of consent. The States have the authority to consent to contract for themselves, but not for the people, because the State is presumably immortal for as long as the federal government lasts, but the people die and are born every day. The peopele’s lack of consent to federal authority over their lives is best illustrated in the long standing persistent objection to federal taxation, which you can find in the news about once or twice every year.

    Under this practical illustration of non-operating consent, the Federal government has not authority to govern the people directly. The federal government must exercise its authority through the States, for the people. The States have a much stronger mode of operating consent, presence. Under the 10th and 14th Amendments the people are guaranteed the right to live or work in any State. Because the United States federal government cannot guarantee a citizen’s acceptance to any other nation, the federal government cannot rely on a presence based theory of consent.

    What we have here is an inherent limitation of the federal governments constitutional involvement in patent matters, because it is an inherently private property matter. Many recent Court decisions seem to use the inevitable public domain of inventions to the disadvantage of the inventor and advantage to the public. In some cases the promotion of the progress in sciences and arts is correlated to admitting those with the means and motivation to use an invention to have a right to do so. This goes deeper into universal laws, namely, the universal destination of goods. Goods are best used by serving the people, families, and local communities, and taps into deep political ridges between conservatives and liberal, namely the debate between positivists and natural law proponents.

    The phrases “for the general welfare” and “provide for the common defence,” are plainly read as meaning all of Congress’ power is for the common people. Corporations are private entities, and in fact legal persons. The law regards a corporation as a person subject to all the common laws of states, even torts. Corporations are the direct lineage of the Leviathan concept that orginazational entities of the past embodied. The employees of corporations are like the arms, eyes, and ears of that entity. We are after all one big entity, like a honey bee nest: we have workers, queens, builders, scouts, fighters, etc… and honey (money), from which we feed our young and build our homes.

    Dictionaries don’t do you much good in court. Dictionaries just add to the number of words you have to interpret, and eventually your goal is to come full circle anyhow. One professor once consoled me: “Brian, word arguments won’t get you very far.” As far as the Constitution, that is all we have. The founders are dead. They can’t explain what the preferred outcome is, and they would have never thought of eBay. One of the smartest inventors ever thought of the internet much later in history, that is Nikola Tesla. He actually patented the internet long before it cam about.

    Basically the federal courts are in the uncomfortable position of deciding a case between two very real individuals, a private inventor and a corporate Leviathan (with stores of money), and the courts don’t have any real authoprity over the actual entities involved. If a local court decides that eBay can use patented inventions, then the high federal courts can only point to 20 some odd words to stop them, because Congress can only secure the common law right (bounded on the high end by complete exclusivity) of the inventor.

    Software patent is too easy to circumvent. I have been programming since I was four. I have prgrammed websites, digital multimeters, motor controllers, video games, calculators, arbiitrary microcontroller exhibitions, and the most cutting edge autonomous robots on the planet. I can avoid any software patent you can show me. The real problem is that you cannot patent mathematical algorithms. Check out the 70’s case where an inventor tried to patent an algorithm for converting straight binary to human readable binray coded decimal. This process is very valuable to modern computing. It lies at the foundation of all modern computer’s Graphical User Interfaces. That case is: GOTTSCHALK v. BENSON, 409 U.S. 63 (1972).

    Mathematical algorithms are not natural, they are models of natural phenomenon. They should be patntable. They are now. See other modern patents on binary coded decimal. Mathematical equations are the same, they are models of nature, not nature itself. It takes a lot of conception, and reduction to practice to make a mathematical formula valuable.

    Finally, possession is nine thenths of the law. Exlusivity is the gold standard of possession, and that requires a pretty solid fence and perhaps some barbed wire and an electricl current. The States should be regulating your patent affairs, and Congress throught the federal judiciary should be securing the State enforced common law right to your inventions.

  15. Brian,

    The word “exclusive” appears twice, not capitalized. Is there a historical significant or anything else that would modify the plain meaning of “exclusive”?

    I assumed I knew the meaning of “exclusive” and perhaps I do. I vaguely recall thinking about Noah Webster and his early works, but as far as history goes, I am a naïve beginner.

  16. Brian,

    Buy my count, the word “Power” appears 16 times, every time capitalized. Is there a historical significant behind “Power”?

  17. I think what Brian is saying is that corporations and individuals are equal in the eyes of the law, for example, in court. A small inventor is equal to any and all corporations, MS, GM, you name it, and that’s a good thing for us inventors, small, ordinary or otherwise.

    Regarding Brian’s discussion of “secure,” for example, I’ve wondered why that particular word was use for quite some time. So far, I haven’t found any bullshit in Brian’s comments above, to the contrary.

    Which is not to say that I will agree after studying it in context with Brian’s thought:

    “I did not mean to suggest that later statutes override the Constitution. What I mean to say is that the words “power,” “secure,” and “exclusive” in Clause 8 may be interpretted as restrictive.”

  18. Bullshit, Brian

    Is this what you do for a living ? Then I pity you, poor guy

    And BTW, corporations ARE NOT individuals

  19. Dear Brian,

    I plan to enjoy studying your constitutional comments above over the weekend as I ponder my eBay theories. While doing that, if you find it convenient, I would also appreciate your views on the interpretation of the phrases: “provide for the common defence,” and “promote the general Welfare” as found in the Preamble:

    We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

    And also your views on “To regulate Commerce” as in:

    Clause 3: To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

  20. Brian, you are the serious someone with scholarly views regarding the Constitution’s patent clause I have been hoping to engage —

    Thank you for your deeply enlightening constitutional comments which I will be studying and incorporating according to your teachings into my theories regarding the authority or the lack thereof for the Supremes’ eBay decision.

    Working together, perhaps we can create a ground swell within the IP community toward creating a unified amicus position so strong, sensible and sound that it will rise into the lofty chambers of the Supremes so as to unsettle their stupefying eBay edict.

    I will get back to you shortly hoping your will continue our dialogue. Again, thank you for your comments.

  21. Dear ordinary inventor,

    I did not mean to suggest that later statutes override the Constitution. What I mean to say is that the words “power,” “secure,” and “exclusive” in Clause 8 may be interpretted as restrictive. According to research I have done on the meaning of the word secure during the time that Madison and Pinckney drafted Clause 8, the original meaning is not to create a new statutory right, but to protect an existing common law right. I go on further in a paper I wrote for Constitutional Law, to explain how even though the States did not demonstrate a statutory or case history of a right for patents, at the time of ratification the common understanding was that there is a natural law right to what is yours. The Statute of Anne, a Brittish statute passed to limit government monopolies of IP rights is an example of that time.

    An inventor may, by his own secrecy keep what he invents private. He may also, by using contracts, make what he invents public domain, or even strengthen his common law right to it, even after a patent issues.

    The reason big businesses like eBay have an advantage is a finer point of contract law, bargaining power and the Uniform Commercial Code (UCC). Corporations do so much IP contracting and business that they have a set of surrounding circumstances and past performances commensurate with the strictest form of secrecy and confidentiality. The exclusivity right a corporation like eBay possesses is stronger than the exclusivity right that an individual possesses because of the stronger contracts of large businesses. Large businesses consistently use non-disclosure agreements, secrecy agreements, and have gone over their contracts with a fine toothed comb enough to practically make their common law right, based in contract, impermiable.

    Article I Section 8 Clause 8 is not a hammer of justice regning down on Congress or the Courts, making them do the bidding of those 20 some odd words. It is a definition of the scope and purpose of their power, and a restriction on their ability to keep IP for themselves, the government that is. Clause 8 overcomes the anti-government sentiment the founders and Americans in general came to feel towards the Brittish government’s “we own all intellectual property” attitude and practice. Instead of granting Congress unbounded power over IP, through the Necessary and Proper Clause combined with the Commerce Clause, the founders chose to define Congress’ power with a word that engenders defense: “secure,” as in “secure that landing,” or “secure the area.” This is in line with the original State’s federalist idea that the national government should be an entity charged not with governing the rights of the people themselves, but with governing the enforcement of the rights of the individuals by the States and between the States, by preventing big government from taking what the people rightly call their own: such as the knowledge requisite to making and using a patent, and by preventing State borders from diminishing IP rights of individuals.

    Corporations are individuals, the same as small inventors. However, corporations generally have better confidentiality and secrecy agreements.

  22. Dear Brian J.,
    If you read Article V & Article VI, Clause 2 as was suggested last night, you have already been enlightened. In essence, you went astray when you wrote:
    “Article I Section 8 Clause 8 merely provides the statutory hook…”
    There is, of course, nothing “mere” about the Constitution – it is the Supreme Law of the Land according to Article VI, Clause 2 — it is to be interpreted as literally as possible. The Constitution can only be modified by Amendment according to Article V.
    The Constitution trumps all manner of statutes, decisions and edicts from Congress, the Judiciary and the Executive branches of our government, period, end of story.
    If you’d like to read more, you will find a constitutional tutorial in the comment made on Jun 03, 2007 at 07:16 PM in the June 2, 2007 Patently-O thread titled, Patently-O Comment Wars.
    link to patentlyo.com

    Here is the ABSTRACT therefrom. “Put simply in 25 words:
    The Supremes’ eBay ruling reserves a patent’s “exclusive Right” for big businesses while denying a patent’s grant of “the exclusive Right” to independent non-manufacturing inventors.”

  23. Let me get back to you on that.
    I mean, it’s obvious to most that you are just winging it, with no authority comparable to the Framers’ achievement, our Constitution.

    Right now I’m 2 hours past 9 to 5 hours, if you know want I mean.

    In the mean time I suggest you read Article V & Article VI, Clause 2 so we can have a meaningful dialogue.

  24. Regarding the original comment: The Constitution does not require Congress to secure an exclusive right to inventors. Article I Section 8 Clause 8 merely provides the statutory hook for Congress to create laws or spend money to secure to inventors that right. An exclusive right is too absolute to be statutorilly mandatory. It should really be up to the inventor how he wants to oversee his patented use in the public domain. Exclusivity is such a high standard that in truth it would preempt all progress in the useful arts and sciences, and consequently it would be unconstitutional for the courts to require it. Congress authorized the court to grant a property like right to the patentee.

    “Subject to the provisions of this title, patents shall have the attributes of personal property.” 35 U.S.C. 261. The, “A patentee shall have remedy by civil action for infringement of his patent.” 35 U.S.C. 281. “The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable. ” 35 U.S.C. 283. Essentially a patentee is responsible for protecting his property from being used by others. Patent, like real property, is theoretically subject to adverse possession, easements, and the like. Title 35 sets out the limits of patent protection by the courts, but does not go any further than that. Because grants of powers to the government should be limited by the principles of subsidiarity and the 10th Amendment, the remaining powers of patent should remain with the patentee. If the patentee leaves his “door open,” well then the “police” don’t have to get back his property. In like kind, the courts have the power to get the patentee’s property back to him, but are not required to do so by statute or Constitution of the United States.

  25. To “comments” above (May 30, 2007 at 02:46 PM)

    Statutes cannot amend the Constitution. I suggest you read Just an ordinary inventor(TM)’s comments on May 29, 2007 at 04:47 AM and Article V of the Constitution.

    As clearly described, the eBay ruling absolutely corrupted our Constitution, and you said nothing that responds to or deals with that observation.

    Yes, you point out other corruptions that have also occurred. And they also are a damn shame. Each corruption become more threatening to our way of life. Our country is on a slippery slop, but democracy is no easy trip, and it never has been. Our Constitution is the best in the world — few would deny that. It is our job, everyone American’s job, to tackle those corruptions, even when the Supremes screw up. That’s the beauty of our three body checks and balances system, and why we all should fight to regain our Constitutional footing every time we see a slip.

  26. Verisimilidude,

    GuessWho and Small Inventor are correct. The system should be so that a person who takes a risk (quitting a daytime job, not going on vacations to pay for patents/prototypes) has a chance for a real reward.

    You say “I see no economic use for the non-manufacturing inventor or patent rights holder. A method to make the cell phone battery double its lifetime? The only way for this to benefit society is for it to be used by a battery manufacturer or phone manufacturer.”

    That is exactly why one needs injunctions. Let’s say SmallInventor invents the double-lifetime battery. If every phone manufacturer can use it, its added value is nothing so the patent is useless. If SmallInventor can give an exclusive license to the patent to a single manufacturer, he will get up to, but no more than, his just reward for his contribution to society: no company will pay him more than the patents added profits less development and marketing costs.

    And if SmallInventor tries to market by himself or refuses to license the patent to anyone? In the worst case, the patent term eventually runs out. In a better case, another inventor reads the specification and comes up with a work-around. In the best case, he sets up a new small company, reducing unemployment, paying local taxes and otherwise benefiting the community

  27. Verisimilidude asks: “Why should an independent inventor expect so very much more than what industry pays its own?”

    Why don’t you ask Joe Smith? You and he are cut from the same cloth, cry babies stuck in unrewarding corporate engineering jobs. You’ve sold your soul for a weekly pay check and $100 for your invention, and, oh yes, a plaque. Get over it. Buy a Friday night six-pack, suck it up and make the best of life you can, but please don’t disparage the innovation of others for taking the path less traveled and trying to promote progress.

    The Framers’ knew that if Congress created patents, they (Congress and patents) would promote the general welfare for the people. Patents are not to aid and abet inventors – patents are to entice inventors to publish, plain and simple. You got your $100, and, oh yes, a plaque. Why would it make you feel better if independent inventors made out no better than your $100, and oh yes, a plaque?

    Rather, why don’t you enjoy and root root root for the success of brave others?, risk takers, would-be entrepreneurs? Other inventors are not screwing you, they are not your enemies, they are showing you another way to make a living. If you are so bitter, better you should focus on figuring out a way to stick it to the man.

  28. Hey, Verisimilidude, you do get your paycheck every month, don’t you ?
    Why don’t you just shut up, dude ?

    Dozen patents you say ?
    How many of them are valid, especially after KSR ?
    Because of corporate “inventors” like you the patent system is clogged with hundreds of thousands of junk patents, thus diluting the value of a few good patents owned by real independent inventors.

  29. IANAL – I am an inventor with a dozen patents awarded or pending. All of them created for “big corporation” that may or may not be used by them to create products someday but will be used by them to beat up any competitor that unwittingly does something like what I did. My “Compensation” – a hundred dollars and a handshake in addition to my paycheck. Oh yes, and the offer of a plaque for my wall that cost more than the award I got for the issued patent. Why should an independent inventor expect so very much more than what industry pays its own? Its fantasy anyway, Lemelson was an artiste at playing the system not a genius whose ideas had any benefit to society.

    I see no economic use for the non-manufacturing inventor or patent rights holder. A method to make the cell phone battery double its lifetime? The only way for this to benefit society is for it to be used by a battery manufacturer or phone manufacturer. The intermittent windshield wiper? Something so obvious that the mere 3 word description tells enough for a manufacturing engineer to know how make it.

    As for the protection of small business, there are a lot of ways to make that climate more friendly than burdening the small business person with the expenses of patent acquisition and the onerous task of policing infringement. I think most would gladly trade patent protection for tougher laws on predatory business practices. Microsoft killed Netscape by exclusive contracts coerced from joint customers, and with loss leader pricing, not by providing a better browser.

  30. “Maynard G. Crebs” said

    “we all know this stuff already, joe”

    Nice to hear that you agree with me…

  31. Joe Smith is not as smart as he thinks and his generalities he throws out to make himself sound smart is just that -generalities-we all know this stuff already, joe, so clam up and stick to patent law- you know a little about that. Can you dig it, man.

  32. couple of comments:

    a. Compulsory licensing is very high probability constitutional – we’ve had it for years with copyrights and that is the same clause of the Const. See also the claims court, and the radio patent pool act of 1930’s? At any rate, the hill rats think so – so just drop it – it undermines your arguments. Yes, yes, yes, natural rights, founders intent, and all that other mother jazz, but we lost our way many many moons ago probably right around new deal and triumph of the admin state.

    b. Compulsory licensing right now is probably not authorized by statute. An alternative ‘equitable remedy” sans the injunction would be disgorgment, constructive trust and unjust enrichment. In other words, you cannot continue to profit from wrongful conduct at the wronged parties expense. At least that ‘sounds’ in equity. Forcing an agreement between two unwilling parties could not sound in traditional equity.

    c. The apportionment of the pre 1933? act was authorized by statute that allowed recovery of profits (the infringers profit’s, not modern ‘but-for’ lost profits). apportionment was found unworkable, so the act was amended to not less than a RR. So RR was the substitution for the apportionment of the infringers profits. Now BSA is proposing apportionment to an RR. In other words, open season on all patents. Infringement pays better and better every day. Why can’t you just see the greater good in the concentration of wealth and manufacturing power into a few big companies? Hamilton would be proud.

  33. Joe Smith notes

    “Some of the posters here talk as though eBay has entirely eliminated the injunction as a remedy. ”

    Well, that shouldn’t be surprising. We’ve also heard in the past few months that all patents are unenforceable, obvious and non-enabled based on a handful of CAFC and Supreme Court decisions.

  34. Someone asked Joe Smith:

    “Could it be that you are jaded in your views about independent inventors and their patents simply because you are in a miserable boring dead-end job?, ”

    LOL! Anyone who reads this blog regularly is likely to become jaded re the views of so-called “independent inventors.” And that’s a shame because I’m sure there are many reasonable independent inventors out there who are capable of adapting and exploiting ever-changing legal landscapes.

  35. “Without injunctions and with, at most, “fair damages” it is economically irresponsible for a company to do anything but infringe patents.”

    I strongly disagree with both your implied statement that injunctions are gone and with the conclusion you draw.

    I think you need to go back and read the statute. The measure of damages is to be not less than a fair royalty but the primary measure is the loss to the patentee regardless of how much or little money the infringer made on the infringement. For the infringer there is the real danger that the jury will award damages based on some fantasy hypothetical scenario which had no real prospect of ever occurring. On top of that there is the possibility of those damages then being tripled.

    If the patentee and the infringer are both rational and well advised they will settle every time. In negotiation you can control the process. Once you step into a court room you have lost control of the process and your future is in the hands of other people. Trials are a crapshoot and litigants would frequently be better off tossing a coin on the steps of the court house than seeking justice in the court room.

    People aren’t always rational but they do tend to make mistakes in predictable ways. Small inventor, if you are involved in litigation go and read “Why Smart People Make Big Money Mistakes” before formulating or rejecting a settlement offer. Test your feelings against the common mistakes people make about money decisions.

    Some of the posters here talk as though eBay has entirely eliminated the injunction as a remedy. There is nothing in the eBay decision or in the proposed reforms that would eliminate the injunction as the usual remedy. Personally, I agree that in many circumstances an injunction will be the appropriate remedy.

  36. 2″Just an ordinary inventor”

    Hear, hear…

    I am holding US Patent 7,***,*** in my hand right now and reading the cover page:

    “Therefore, this
    United States Patent
    grants to the person(s) having title to this patent the right to EXCLUDE others from making, using, offering for sale or selling the invention throughout the United States of America or importing the invention into the United States of America for the term set forth below, subject to the payment of maintenance fees as provided by law.”
    Jon Dudas, Director of the United States Patent and Trademark Office

    I recieved this worthless piece of paper from USPTO in late 2006, after EBay decision…
    So they just lie to us all
    Somehow the lies must be exposed, and if the people of the United States for some reason are not happy with Article I, Section 8, Clause 8 of the US Constitution, then the Constitution must be changed through a due political process.
    What they do instead is blatantly violating Constitution and calling it “justice”

    As somebody said: “US justice is the best justice in the world money can buy”

  37. Thank you Erez & anoynmousAgent – You said what needed to be said.
    Moreover, what’s happening to our patent system is not constitutional.

    Erez & anoynmousAgent describe the harsh commercial realities of the problems that create untold frustration for many dedicated independent inventors who have spent decades figuring out how to work within the system and make a living, and then along come …
    things like Festo, eBay, KSR, proposed patent reforms and nobody knows what next, and these untoward things systematically move the goal post further and further away. It doesn’t seem right that businesses’ lobbyists should be able to systemically change the rules while the game is being played.

    Are we not missing something?, namely:
    Article I, Section 9, Clause 3: No Bill of Attainder or ex post facto Law shall be passed.

    Further Query: Is the Supremes’ eBay ruling constitutional?
    NO!, the eBay decision is not constitutional! (With all due respect, the Supremes simply made a mistake. Apparently, the Supremes got caught up in the wave of anti-patent fever we have been plagued with. They ought to leave the heavy patent lifting to the CAFC.)

    A patentee is entitled to “the exclusive Right”, plainly and unambiguously meaning,
    THE RIGHT TO EXCLUDE OTHERS FROM PARTICIPATION.
    Whether you call it an injunction or call it something else is semantics. Article I, Section 8, Clause 8, i.e., the patent provision in The Constitution, cannot be modified by patent statute or any other statute UNLESS THAT STATUTE IS IN ACCORD WITH The Constitution – that is the plain unambiguous meaning of Article V & Article VI, Clause 2.

    Most notably, Article I, Section 8, Clause 8 has never been amended:
    “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;”

    Even more remarkable is the fact that the Supremes’ eBay decision does not even mention or refer to The Constitution, not even once.

    The Framers knew what the Supremes do not know, that a patent without “the exclusive Right” is like a tiger without teeth. In their comments above, Erez & anoynmousAgent hit the (commercial realities) nail on the head!

    Where-O-Where are our constitutional attorneys when you need them? How can attorneys stand by and not be offended by what’s been going on!?

  38. Joe,
    Nice to have the real you back.
    In commenting on the Arguendo example (copy below), do I understand you to say that lone inventor and CarMaker get to squabble over the $50 but that CarMaker alone is entitled to the $5000?

    Arguendo:
    (A) A lone inventor patented an Improved Collision Avoidance, ICA, system for a car that could be incorporated into a car on a production line for $50.
    (B) Patent Pirate CarMaker Co. ripped off the inventor and incorporated ICA into its new models and did not offer ICA as an add-on for older models.
    (C) Car buyers flock to CarMaker’s showrooms and buy the new models in droves — allegedly because of the new ICA safety feature, but not provable — and the profit per new model to CarMaker is $5000.
    Question:
    If lone inventor sues CarMaker and prevails, what damages would he be entitled to under the Patent Reform Act of 2007?

  39. Erez – you are right.

    “Without injunctions and with, at most, “fair damages” it is economically irresponsible for a company to do anything but infringe patents”

    This is a statement that has been IGNORED by Joe Smith, Alan McDonald, Max Drei, etc.

    Like I said before, if there is a threat of high damages, there is an incentive for an infringer to buy a license for a minor/moderate payout. But if the WORST threat to an infringer is a minor/moderate payout, the infringer has NOTHING to lose by infringing.

  40. Joe:
    Thanks for your detailed comments. You are right that excessively high damages should not be paid. That said, you did not comment on the concern voiced above, that without injunctions and with, at most, “fair damages” it is economically irresponsible for a company to do anything but infringe patents. Once it becomes economically necessary to infringe a patent, the whole patent system is a waste of time.

    Small Inventor:
    Patent Attorneys are still going to have jobs: a strong patent system still exists in the rest of the world, whatever the US does. Since the US needs a patent system more than the emerging economies, the US will ultimately go back to a fair system. I am just worried for Inventors who have the bad luck to invent now and will lose their dreams.

  41. I have an impression that some of the posters here are from another planet…

    Joe, just where did you see an “arms-length” royalty agreement happily achieved between a lone inventor (or a small startup) and a major tech manufacturer.
    Any examples from the history of Earth ?
    Maybe on Mars ?
    All I can see are some ugly patent court battles.. I am actually preparing for one myself, only want to see how this “patent deform” scam plays out.
    Let me assure you, my little misinformed friend, that no large manufacturer, I repeat, NO large manufactuerr will ever voluntarily take a license from small patent holder without a percieved threat of a MAJOR court loss.
    Injunction used to be such a threat before EBay… Now all they have to fear is the possibility of increased damages… Remove the damages and voila, all invention in America goes the way of dinosaurs (with all the high-tech startups , VCs etc.)
    VCs and small tech companies have already spoken on this subjest – not just spoken – they sent a letter to the Speaker of the House and other major political palyers in Congress. What kind of other proof do you need to understand that damage apportionemnt is BAD for innovation, and it is BAD for America, unless of course you want America to become a third-world country
    Are you American, Joe ?

    And Tom, there won’t be any job security for patent attorneys if small inventors die out… Because they will be quickly followed by high-tech startups…
    After all, what is a high-tech startup ? Just a few bright guys with some good ideas, one or two patents and a business plan.
    Then they go out and look for investors, angel investors at first followed by VCs.
    Patent protection is a fundamental part of this process – without a patent filed no inventor in his right mind will dicslose any details to prospective funders and no investor in his right mind will put a dime into something likely to be stolen the next day by MSs of the world…
    So rejoice for now, patent attorney boys, but better start thinking about career change…

    Somebody mentioned ABC’s “American Inventor” ??? Just give me a freaking break…………….
    Is this your image of a typical independent inventor and invention? Looks like percentage of brainwashed idiots in this country has reached a critical mass. Sad, really sad…

  42. Here’s another problem for the small inventor – ABC’s “American Inventor”.

    When the public sees all the crazy stuff that individual inventors spend their time on from this show, as compared to the few really good ideas, the voices complaining about “junk patents” have a built-in audience.

    All they have to do is say that the patent system spends as much time and energy examining each patent application on this kind of stuff as on cancer drugs and the “waste and abuse” of government spending and the need to “fix the patent system” becomes an easy sell.

  43. Going back to the original question: what would be the effect of the proposed reform on a claim for damages for infringement of the hypothetical ICA, I will take a stab at that question:

    1. The first proposition is that damages are to compensate the plaintiff for his loss resulting from the infringement – it is not to deprive the wrongdoer of the wrongdoer’s profit and indeed can be greater than the profit.

    2. The second proposition is that the damages are to be not less than a reasonable royalty rate.

    3. The third proposition is that in cases of wilful infringement the court can increase the damages up to treble.

    The proposed changes do not effect those old principles.

    I will assume that the “lone inventor” who holds the patent is not in a position to manufacture automobiles. His measure of damages then is simply what he would have gotten as a royalty for the invention if he licenced it or the profit he would have made if he had manufactured and sold the system. Look to whether he was able to licence the technology to any of the multiple other manufacturers around the world. That may set a benchmark for the reasonable royalty. Of course if infringement is already wide spread that might have reduced the royalty that he was able to negotiate but the armslength royalty is still an important reality check. If we have a good arms-length royalty covering comparable volumes then that should be the end of the discussion on the measure of damages (subject to the possibility of treble damages for wilful infringement).

    Suppose that we do not have a good benchmark of an armslength royalty and we need to construct the royalty rate from other data. The proposed amendment says that we need to compensate only for the improvement over the prior art and take out other factors. The premise of the hypothetical is that the ICA is an improvement of an existing technology. If the improvement is purely one of cost rather than performance then the difference between the cost of the new device and the price that would have to be paid for the old device would set an upper bound on the reasonable royalty since we know that there was no market for the old device at the price it could be sold for. The correct royalty would lie somewhere in between zero and the difference in cost.

    Beyond that I think you need more market data and analysis. What does seem clear is that you are not to reward the inventor for the Defendant’s success in product design, manufacturing, marketing and merchandising. Some part of the profit of the whole will be attributable to the Defendants investment in design, plant and inventory. You also need to bear in mind that no manufacturer would ever agree to a royalty rate that transferred all of the potential profit from an improvement to the patent holder. If the best that the manufacturer could reasonably expect after taking the risk of bringing an unproven product to market is to break even then there would be no deal so a royalty that had that effect would never be agreed to and would never be a reasonable royalty.

  44. As inventors we would expect no less than the hogwash theorms that you guys spew out, after all,you’re Justa Patent Attorney and you think all alike(well 99%anyways)-besides, you’re telling us stuff we have already figured out for ourselves. If we have a shitty patent, it will all play out in the marketplace- as in nowhersville,man-zero-zip-zippo-we get it-we don’t need you patent lawyers to tell us things we already know. All we want is for none of this tweaking of the system as it now stands-or a patent won’t be worth jack s“t-that’s all we ask- leave it alone. Now go back to what you were trained to do -prosecute them patents and shut the hell up.Any way it goes its all job security for you guys anyways-so what are you bitchin’ about.

  45. I think, after those last responses, I can rest my case. But, don’t you small inventors understand: the US patent system is the WORST one in the world, for a patent owner with moderate financial resources. In civil law countries, the holder of a good patent claim, even when impecunious, can quickly enjoin the big ugly corporate infringer, and the big corporations know it. In common law America, that simply cannot happen, and the big corporations know it. The one and only thing that the big corporations fear from the small inventor is getting enjoined. How much have you got to invest, before you are at the point of having created real fear, in the mind of the corporation, in USA, and in, say, Germany?

  46. An independent market is a free market. A free market is a marketplace in which no one player controls either the supply or demand. Windows does not sell in a free market because MS is a market maker, if not a monopolist. This is all economics 101. It has nothing to do with inventing.

    If you want to sell a product and be profitable, you need to ensure that the marketplace will accept your product. You also need to have the business and marketing sense to get your product out there and bought by your customers. You also need to respect the IP of others, whether they be big, bad corporations or small inventors.

    I tell all my independent inventor clients that they need to have a business plan, preferably even before they hire me. Just having a “million dollar invention” will not make anyone any money. The business plan has to consider the reality of the marketplace. If it doesn’t, then it is as big a fantasy as that “million dollar invention.”

    If the business plan is to sell the invention/patent to a market maker, then the options are limited because the market is so small–it is just the one company. If the business plan is to offer the patent to many companies in a free market, the prospects are better because the market is so much larger.

  47. 2″Just a Patent Attorney”

    You got it backwords, pal…
    BTW, what kind of crap patents do you write for your clients ? You clearly haven’t been exposed to any high-tech

    What is this “independent invention” or “independent market” nonsense ?
    Do you mean “sold directly to end-user” by this ?
    Does any company out there, even a monopoly like MS, has “independent market” ?
    Let’s see, to run Windoze you need a comp, don’t you ?
    To have a comp built you need a CPU of course (Intel, AMD), motherboard, memory, hard drive, DVD drive etc. etc. etc.
    Do you know any company which can build all of this, in addition to owning all of the related IP ?

    You must be delusional, just like little lemonade Joe …
    I really feel sorry for your clients, but I have trouble believing that a real patent attroney could write such nonsense. Maybe it was Joe Smith posing as a patent attorney…

    The ugly reality of corporate world is that big incumbents will go to extreme length just to prevent any promising innavative startupo with good ideas and real products to reach critical mass to pose a real threat to existing monopolies.
    Just take a look at what happened to Transmeta.

    A promising and WELL-FUNDED startup with some great patented techgnology and real products reduced to patent litigation workshop, thanks to some honest folks at Intel…

  48. Joe and Max have it right.

    Inventing is great. But, in order to profit from an invention, the invention must be sold, either as a product or by assignment/licensing of the patent. In either case, the realities of the marketplace must be considered. In other words, after the invention is made, financial success has more to do with the business and market realities than with how great the invention is. You can either complain about those realities or figure out how to work with them to be successful.

    If an invention is for a device that can be marketed independently of anything else, then welcome to the ranks of small business. Your chance of success is less than the odds you will get in Las Vegas gambling. But, unlike Vegas, your chances of success are dependent upon your business and marketing skills.

    If your invention is an improvement to another device that has no independent market, then you are limiting your chances of success. If your invention is an improvement to something owned by a monopoly, like a Microsoft product, then you better be doing it for your enjoyment because the odds of obtaining any financial reward are going to be slim to none.

  49. Max,
    Don’t be a turncoat on the independent inventor here in the States- you’re in the U.K., I believe-or maybe all you patent attorneys just think alike, wherever you live. I just finished my formal patent app this weekend-wrote it myself, of course-its enabled in the spec and the claims are spot on, as the Brits say- even did my own drawings. To all the small guy inventors out there- you are very capable of doing your own patent-never doubt yourself or your invention-you’re the one who can articulate it the best on paper- get the book ‘Patent it Yourself’-not really that hard to do. Now on to the next provisional- automotive accesory this time-absolutely kickass,plastic, going right to China. Hope this patent reform nonsense wears itself out. Cherrio-pip pip.

  50. Max,
    I don’t know if you ever worked for startup but I did.
    When wokring with large corporations, unless you have the implicit THREAT of a megabucks lawsuit, your chance of getting minor-moderate payout is zero.

    If the WORST CASE for infringing is a minor-moderate payout, no large firm will EVER voluntarily license the patent for minor-moderate license fees – they will merely rip off the invention because, what’s the worst that can happen?? If the infringer loses in court, the infringer pays a minor-moderate payout (which is what they would have had to pay anyhow for licensing); if the large infringer wins in court (and there are MANY factors that would deter a small inventor from even suing in the first place), then the large corporate infringer merely steals the invention without paying a DIME !!!!!
    This is the reality of business.
    Of course, pre-Ebay maybe you would have had a better argument – the inventor would have the threat of an automatic injunction.
    By removing the threat of an automatic injunction (which appears to recede if the infringe merely “incorporates” the stolen invention into a “large” product), the only recourse available for the small inventor to enforce his “right to exclude” is the possibility of a large payoff.
    This is why all of the thieves from the BSA are bribing congressmen to pass this law – they want to finish off the work that the SCOTUS began last year.

  51. MaxDrei,
    Did you really mean to advocate: “the demise of the ‘small independent non-manufacturing inventor working in high tech’”.

    I can understand your sympathy for Joe. Clearly he is the underdog in this thread. And you and I can respectfully disagree about that and who is and who isn’t in touch with reality.

    However, I find it hard to believe that you would advocate “the demise of the ‘small independent non-manufacturing inventor working in high tech’”. That’s not like you at all. I smell a rat.

    Also, I take issue with the ideas in the comment, that:
    “Some correspondents above are following the well-known delusional thinking of private inventors that, unless their entitlement to megabuck royalties increases in proportion to the number of dollars of their personal assets they have invested in their pet ‘invention’, the patents system is defective.”

    Just how did those extreme ideas arise? No serious inventor’s comment in this thread, or any other thread I recall, advances those kinds of ideas or anything akin. It sounds to me like Joe would have come up with those ideas — those ideas are not at all like the sensible, well thought out and edifying comments from you we’ve all become happily familiar with.

  52. So, damages apportionment might lead to the demise of the “small independent non-manufacturing inventor working in high tech”? Is there any reason why anybody should be concerned about the loss of that particular species? Quite the opposite. If they were all to disappear, I can imagine it having an aggregate positive effect on the US economy. Some correspondents above are following the well-known delusional thinking of private inventors that, unless their entitlement to megabuck royalties increases in proportion to the number of dollars of their personal assets they have invested in their pet “invention”, the patents system is defective. Joe Smith tries valiantly to explain reality and, unsurprisingly, all he gets for his trouble is verbal abuse. Shoot the messenger if you like, but he’s only trying to save you from yourselves.

  53. Joe Smith:
    With all due respect, your comments are Hogwash. For example:

    “The problem comes with those inventions which by their nature and from their inception are expected to be merely a small aspect of a much more complicated product. This type of invention is not going to attract venture capital because it is never intended to be a standalone product. It is this type of invention, which generally amount to an unrequested refinement of someone else’s existing product, which causes the problems. If you want to spend your life improving Microsoft products then you should go get a job at Microsoft.”

    Joe, you don’t seem to have made many friends with your comments. That’s because you are really out of touch with reality. For example, you seem to think all independent inventors want to do is attract venture capital. Wrong!

    In my experience, most Venture Capitalists have even less good judgment than you. That’s why the vast majority of their deals go south. They make it up with onerous terms for all comers, so that when they hit one good deal they make up their losses. Why-O-Why would an independent inventor with a potentially profitable business plan want to carry a Venture Capitalist’s losses on his back? Think about it.

    Joe, you make little sense in most of your comments. I think Dr. Phil is right – you are in a miserable dead-end job and you merely want to share your misery. No wonder you don’t like inventing, inventors or have anything positive to contribute to the IP community in general with your comments. You comments reek of sour grapes:

    link to en.wikipedia.org

    My suggestion is that you say less and read more, and try to understand what you read rather than look for every opportunity to foist your naïve negative opinions on others. If you try, I’ll bet you would be able to do a positive attitude turn-around even without professional help. I think I speak for others as well when I say; we’d like to see you develop a healthier IP attitude – you’ll be happier and live longer, and you’ll thank me later.

  54. To all you “small inventors” out there: wake up and smell the $25-a-cup-Starbucks coffee…oh yea that’s right, you can’t afford any because you’ve been robbed into having to live in your second hand car, INVENTION IN AMERICA IS DEAD!

    It’s been killed by corporate greed and lawyers for whom the phrase “pro bono” is just a code word to stay late at the office cheating on the Mrs with the girl from the temp agency.

    “Small Inventors”, you face a future of legalized lawlessness.

    The apportionment arguments are so bogus it’s pathetic. Let me translate one of them (you figure out which) for you, thus:

    If one person shoplifts at Macys, Macys has a legitimate right to recover its losses. If everyone shoplifts at Macys, “the incremental” loss if one more person shoplifts is an epsilon close to zero, hence Macys has no legitimate right to recover from anyone.

    Let me further translate some of he other posters comments for you, since as a “small inventor” you cannot be expected to see the jurists high brow logic:

    Just as small inventors are a detriment to society, so is Macys. Who asked them to CHARGE for their merchandise afterall? What an outrageous concept. Society is clearly being harmed by such thinking.

    Let me translate another argument found here “Small Inventor”, and again I leave it as an exercise for you to figure out which:

    Lets say you have a patent attorney. He’s mediocre. He bills you. You better pay him. Now across the street is another patent attorney. He’s fabuolus!!! When Moses came down from Mount Sinai Moses said two things:

    (1) Oy, is the food ever bad in that hospital, and

    (2) Is dat boy ever good at patent lawyering!

    Whereas the mediocre lawyer is entitled to compensation, the boy genius patent lawyer doesn’t deserve any because who asked him to be of such widespread value “in his field” to be ubiquitously sought after. He should strive to of lesser value, if he wants to earn his keep.

  55. Joe Smith wrote:

    The problem comes with those inventions which by their nature and from their inception are expected to be merely a small aspect of a much more complicated product. This type of invention is not going to attract venture capital because it is never intended to be a standalone product.

    who says that only ‘forever standalone products’ attrack VC $$$ ??

    When I worked at a startup as a programmer, we DID have a standalone product that a large company wanted to incorporate into a larger product.

    Our product by itself was VERY MUCH a standalone project and we had paying customers.

    When we negotiated with the larger company, it was very difficult because it was CLEAR that they just wanted to steal our ideas and incorporate our “stand alone” product into their larger product without giving us a damn cent.

  56. JoeSmith:

    I’m sorry but I am unconvinced by your arguments.

    My example of a cellphone battery was not a new battery but some component, let’s say a circuit or nifty software that doubles battery lifetime. As I said, every single phone manufacturer will have to steal the inventor’s idea to remain competitive and once every phone has the invention the added value is zero. This type of invention is only worth money when you can have a monopoly (I think someone wrote “…by securing for limited times…the exclusive right to their…discoveries” :-))

    As for your example “…an unrequested refinement of someone else’s existing product”. No one is forcing that someone to steal the patented invention. If it is just a refinement, no one will notice it’s lack. In the worst case, they can wait 21 years for the patent term to run out. Ultimately, if the invention is “to someone else’s product” the inventor has no market: to sell his “refinement” he’ll have to violate trademark, copyright and the someone else’s patents. Indeed one would have to be silly to invent something that is only an improvement of a Microsoft program.

  57. Joe wrote:
    “Kearns was plagued by mental illness, went through multiple lawyers (always a bad sign), tried to represent himself (another bad sign) and ultimately recovered less than he had been offered.

    The moral is that if you get greedy and try to shake down major corporations you should expect to have a rough time of it.”

    Joe, you obviously have no knowledge and no shame…
    Bob Kearns wasn’t greedy – he just wanted to set up his own manufacturing facility to produce his intermittent wipers – that’s all.
    The trouble was that everybody was already making those wipers based on stolen design (not just idea – the original design by Bob was actually stolen by all of the major automakers)
    For this reason he turned down a settlement offer from Ford for 30 mil – he just wanted injunction but couldn’t get it…

    Joe, let me ask you this question: Do you really think that inventors like Bob Kearns are a drag on our society and should be eliminated ?

  58. Joe Smith:

    If you think inventors always get to pick and chose what to invent, you are mistaken. Many inventions come on like a blessing, often when you don’t expect it and weren’t looking for it in particular. It would be a loss for the people if progress was forestalled because an inventor didn’t publish his work because of the fear of not being able to sell his invention due to the well known patent pirating policies of big business.

    If you think big businesses in general tend to pay a fair royalty to independent inventors for valuable patents, you are mistaken. Yes, in some cases they might, such as to assert it against a competitor if they can buy the patent or an exclusive license for a given field of use (but of course there is always the NIH syndrome to overcome – some corporate engineer who’s sphere of influence would suffer some if he were to embrace outside innovation).

    In some other cases, the fear of an injunction has made settlements possible, but the Supremes’ eBay decision has diminished that possibility.

    Regarding damages apportionment, what are your thoughts in the “Arguendo” question in the first comment at the beginning of this thread?

    It is not uncommon that an inexpensive innovation adds huge profits that would otherwise not have been unrealized. That is called, “leveraging innovation.” Because of exponentially expansive worldwide markets for hardware and software computer technology, these are examples of extremely fertile fields for leveraging innovation.

  59. “Anyone reviewing the facts surrounding Bob Kearns’ “success” understands the lengths
    thieving infringers will go to destroy the inventor”

    Kearns was plagued by mental illness, went through multiple lawyers (always a bad sign), tried to represent himself (another bad sign) and ultimately recovered less than he had been offered.

    The moral is that if you get greedy and try to shake down major corporations you should expect to have a rough time of it.

  60. Anyone reviewing the facts surrounding Bob Kearns’ “success” understands the lengths
    thieving infringers will go to destroy the inventor in the gristmill of litigation. That’s the job of their patent counsel. Bob with God’s help just outlasted the beating. It was only a Wall Street Journal article that made top level corporate’s aware. I’ll quote the Detroit Free Press interview with an unnamed japanese automakers attorney ” there aren’t enough zero’s to pay him what it was worth”.
    it might be harder to get him to admit that on the record!

    What after Damage apportionment. Soon we’ll see rapists arguing freedom for those who can prove and are willing to pay the going rate for local Hookers!

  61. Dr. Phil – thank you for your concern. I am quite happy thank you.

    To the rest of you who seek to change the terms of discussion: we are talking about apportionment of damages – that is we are talking about those situations where an invention is incorporated into some larger whole and loses its independent existence. The example of the battery is not on point: a battery is a discreet item and any break through in battery design will be patentable and severing the economic value of the patented article from the whole will be relatively easy. Similarly, an invention of a new surgical tool will result in a discrete item.

    The problem comes with those inventions which by their nature and from their inception are expected to be merely a small aspect of a much more complicated product. This type of invention is not going to attract venture capital because it is never intended to be a standalone product. It is this type of invention, which generally amount to an unrequested refinement of someone else’s existing product, which causes the problems. If you want to spend your life improving Microsoft products then you should go get a job at Microsoft.

    If you are going to be an inventor then you should be picking your area of invention to be one where the ideas you come up with are going to be enforceable. If you are going to invent in an area where you know that that the only possible customer is Microsoft then you are going to have trouble.

    As a rule I am not a fan of Microsoft but we should all remember that Microsoft has been willing to reach into its pocket and pay good money to buy out ideas that have been demonstrated to work. While they infringed the Stacker patents they also paid big dollars for Hotmail.

  62. Mr. Smith,
    With all due respect, please pardon me for asking:
    Could it be that you are jaded in your views about independent inventors and their patents simply because you are in a miserable boring dead-end job?, and you shed your advice because misery loves company?
    Didn’t your mommy ever tell you it is not nice to rain on others’ parades?
    Please explain your circumstances and why the childish off-putting attitude. Perhaps therapy would help, or maybe you just forgot to take your meds. I hope you get well soon. Lacking that,
    Please call me – I’d like to have you make a guest appearance.
    Dr. Phil

  63. Compare innovation in computers and in surgical instruments. An innovative surgeon who invents a neat instrument and files an app can still make millions of dollars, no? Are there not many such cases? Is not the climate for innovation in medical devices tons better in USA, even now, than anywhere else in the world? Won’t it always be? What the inventor needs is 1) an instrument that will give an edge in the market to the corporation that offers it on the market, and 2) a pending patent application that might fall into the hands of the competitor and 3) to the purchaser of the app the right to enjoin. These conditions apply in both USA and Germany. But the US market is much bigger, so the value of the innovation to the US manufacturer is heaps more than to the German manufacturer, which might be why it is US medical instrument companies who buy up most of Germany’s medical innovations. The surgeon knows from personal experience that his device works, and will sell like hot cakes. The guy with the bright idea to improve a computer detail probably hasn’t a clue whether it will add value. That also makes a decisive difference. How about biotech? How many successful start-ups there? In USA, plenty. In rest of world, are there any?? Computers are different (for the reason well explained above) but, hey, we knew that already.

  64. Joe Smith,
    What Erez wrote is correct – why would any investor/VC back any start-up if someone like Microsoft can sit on the sidelines, ‘see how things develop,’ and then when the technology develops copy everything and incorporate into their operating system or any other product (M$ has done this NUMEROUS times over 3 decades).

    What Joe Smith is proposing is to put a BIG damper on startups/VCs so the rich BSA giants, who CAN afford to pay reasonable royalities if a patent is valid and infringed, can get richer.
    And for what ????

    I could see raising patentability standards – you may want to argue that not every development deserves a patent – hence some sort of ‘reform.’

    I could see eliminating drug patents – yeah, we don’t get the next generation of drugs, but broke cancer patients today get to afford the cancer drugs.

    But, why for crying out loud, why why WHY change the whole patent code just so BSA giants can lift more ideas from start-ups? What, Microsoft can’t afford a reasonable royalty? Intel? GIve me a freakin’ break !!!!

    What – VCs and startups did not contribute anything to the engine of growth in the past 15 years !!!

    PS – the rich BSA companies that always whine and complain about the $50,000 patent that costs them millions – instead of dumping $$$ trying to bribe congressmen and naive law school professors – if you’re so great, why don’t YOU go and buy up the $50,000 patent – you can afford it – $50,000 is chump change.

  65. SmallInventor is right.

    Timothy, you write “Is there any reason that a patentee should recover the profits received by an infringer from its labor and investment in connection with its entire product when the patentee contributed only a component of that product?”

    The answer is yes, there is a reason. The infringer stole the inventor’s property. No one asked the infringer to put in labor and investment. The world survived many years without the invention and, if the inventor is greedy, the world will survive without it until the patent term runs out.

    Joe Smith, the “realities of markets” are what we choose to make them. In a world of injunctions, SmallInventor can make something new to improve society and has 21 years to see if he can make a profit. If it is a good idea, investors will give him money, he or she will establish a new company and employ people. However, under the proposed laws he can’t be an inventor cause no one will invest in anything.

    Let’s pretend that SmallInventor invents a way to double the battery life of a cellphone. The “realities of markets” will be that every single phone manufacturing corporation will have to infringe the patent to remain competitive. However, since every phone in the market has the stolen technology there is provably no additional profit on the phone.

    These laws will make it impossible for SmallInventor to be an inventor: he or she can better have a 9 to 5 job and do what he’s told than to think out of the box and take risks.

    I am not saying that all innovation will die. Look at the Soviet Union where scientists invented lots of nifty things.

  66. Another check-block on the list of “How to Kill Small Business in America”. As a former government patent attorney I saw how important it was to ensure small business were given a chance to compete and grow amongst the big boys. Where are the small business set asides in the patent law? A global economy is inevitable as is outsourcing to cheaper locals. The ONLY hope for the US Economy is small business innovation – big business is worried only about its shareholders and the bottom line. If Congress does not act to make the patent system more small business friendly – all is lost. See you in China.

  67. small inventor

    When we choose careers we have to accept the realities of the market we go into. Whether the product you want to produce is a widget or pure intellectual property the customer is king and you have to design your business model to suit the customer.

    If high tech involves hundreds of innovations in each product then there is no room for small independent inventors who want to create intellectual property but not products. By its nature production of intellectual property has to be integrated. The transaction costs for companies which actually want to make a product when they have to negotiate with the holders of hundreds of ambiguous patents are simply prohibitive.

    There may be no benefit to the broader society from small independent producers of intellectual property. If you want to play in high tech you either need to go to work for an established player or come up with an idea and turn the idea into an actual product. Small independent inventors holding myriad patents on components of final products are simply a drag on the economy and there is no reason why the system should encourage them.

  68. What ever happened to trusting the jury. The collective recall and wisdom of the jury is more often than not the solution to the damages problem. Presented with both sides of the story they can figure out how much the damages for the infringement should be if they are given the numbers and reminded that damages are intended to make the patent holder whole, not to disgorge the infringer’s profits (if any). Think about inventor John who takes out a 2nd mortgage to promote his new patented widget (i.e. look for investors). Thiefco sees John’s widget, copies it and sells it for $100 each but at a 5 cent per unit profit to keep John out of business. John loses his investors and is out of business before he can start making and selling widgets. John has to give up widgets and get a job to pay back the mortgage and the investors get stuck. What would the damages be under the proposed new method. What would a jury award under a reasonable royalty method? The only real proof of the value is Thiefco’s profits. I’ll bet the jury under the reasonable royalty method would come closer to a fair number. What do you think Thiefco will sell the widget for after the trial?

  69. Judge Michal’s comments fail to take into account the wealth of Supreme Court precedent in this area and, perhaps, presage Supreme Court intervention in the patent damages area in the not too distant future.

    Between 1853 and 1913, the Supreme Court addressed apportionment in more than 35 cases and EVERY time held that a patentee’s recovery had to be limited to the economic value contributed by the patented invention. Those cases addressed the recovery of infringer’s profits and the recovery of the patentee’s lost profits (reasonably royalties as a form of recovery were not widely recognized in that period). The Patent Reform Act simply clarifies that in the reasonable royalty context, the profit to be split between the patentee and infringer in the hypothetical negotiation is the economic value contributed by the inventive step claimed by the patent (i.e., the “patent’s specific contribution over the prior art”) as opposed to the profit on the entire infringing product. I say “clarifies” because that result would be dictated by the Supreme Court holdings from that era, which are still good law, and by pre-Federal Circuit jurisprudence concerning reasonable royalties, both of which have been ignored by the Federal Circuit.

    Judge Michal’s assertion that courts would have to adjudicate the “value of the entire prior art” is highly misleading. A court engaged in an apportionment analysis would never have to review prior art as a patent examiner does before approving a patent application. Apportionment was, as the Supreme Court cases illustrate, largely based on the comparison of the infringing product to noninfringing products. Thus, if a patent disclosed an entire device, which was rare even then, there was, by definition, no noninfringing device to compare it to and the patentee was entitled to the entire profit on the product. If, as was far more common, the patent was (i) for an entire device and the infringer added an improvement or (ii) the patent was an improvement to an existing device, the patentee could recover the difference in profit between the improved/patented device and the unimproved device. Lastly, if the patent was for an improvement, but the improvement provided the entire market value for the product, the patentee could recover the profit on the entire product.

    Thus, to answer the ICA question posed by another commentator, if the patentee could show (as would be its burden under established law) that the entire value of the infringer car was attributable to the improved ICA (as opposed to an improvement to a ICA, which would be a different question), the patentee would be able to recover a royalty based on the entire profit on the car. Otherwise, the parties would split the additional profit made by the patentee from the improved ICA by way of a reasonable royalty. If that result seems unfair, keep in mind the central question that the Supreme Court repeatedly answered in the negative: Is there any reason that a patentee should recovery the profits received by an infringer from its labor and investment in connection with its entire product when the patentee contributed only a component of that product?

    True, the profit on the ICA may not be readily apparent, but it could be determined by the books and records of the infringer (with any doubt as to precision benefiting the patentee), the review of which is a standard part of any patent damages calculation. An exhaustive review of the “economic value of the entire prior art” would hardly be unnecessary.

  70. Joe wrote:
    “It seems to me that a small inventor has a relatively easy solution – all they have to do is publish their price and demonstrate that someone they are dealing with at arms length is actually willing to pay them that price.”

    Joe, the corporate world is uglier than you think…

    When I just started this whole shitty inventing and patenting thing, I was naive – I actually thought you can get something for your invention from one of the large players in the market if you are willing to accept minimal compensation…
    It happens in other industris perhaps, but not in tech.
    Big tech corporations will spend A LOT of money just to prevent you, small independent inventor with a perfectly valid patent, from ever making a dime on your invention.
    So NO, it does not matter how low your price is – no company, I repeat, no company will be willing to buy it from you.
    I tried to play this game years ago, by offering to license or sell patent application for very cheap and failed…

    Indepenedent inventors used to have two factors on their side: injunctions and damage awards. Now injunctions are gone, thanks to Ebay… So what is left ?
    Why would anybody bother to invent and patent anything if there are no means to get any compensation ? I am not talking huge jury awards – just a minimal compensation to the inventor for all the years spent on coming up with invention and all the money spent on prototyping and patenting process. Do you really think it’s too much to ask for ?

  71. “All modern tech products are combinations of hundreds if not thousands of patented features and inprovements.
    How can any court possibly decide such matter if even the makers of those products are sometimes not certain about which patents they infringe ?”

    I think you are expressing the reason why some of us are so concerned about the “gotcha” aspect of accidental infringement.

    It seems to me that a small inventor has a relatively easy solution – all they have to do is publish their price and demonstrate that someone they are dealing with at arms length is actually willing to pay them that price. At present it seems as though damages are being assessed as a tax on the success of the infringer rather than on the basis of any real loss to the patent holder. There aren’t many Federal Court judges who look good in green tights and a feathered hat.

  72. Now we are really getting into the gist of this “patent deform” legislation

    Forget Fist-to-Invent vs. First-to-File… who cares about it ?

    “Damage apportionment” in conjunction with recent EBay decision is the real gotcha

    It looks to me that if this measure passes it will finish us all, I mean small non-manufacturing inventors working in high-tech…

    All modern tech products are combinations of hundreds if not thousands of patented features and inprovements.
    How can any court possibly decide such matter if even the makers of those products are sometimes not certain about which patents they infringe ?
    This will double, triple, quadruple… litigation costs (already at 2-3-4 mil bucks per average case) and will eventually make justice impossible to obtain for all of us – small patent holders.

  73. Well, actually Judge Michel’s observations on the complexity of damages calculations is dead on the mark, and (though he didn’t cite it) it’s a “been there, done that” issue.

    Until the 1930’s, we did damages calculatios the way the bill proposes – establish value separately of the combination and of the prior art, and subtract. That was found to be impractical, and led to too many anomolous awards. The damages statute was amended in 1938 (? from memory) to get to the “reasonable royalty” language we have today.

    It ain’t broke (at least not fundamentally – there are always anomalous outcomes under any law, but no worse here). Don’t fix it.

  74. So the poor CAFC judge is worried that he will have to do more work.

    How about the litigants and district court judges who have to go through a two week jury trial twice, once after the district court’s Markman ruling and again after the CAFC reverses it (about 50% of the time)?

    Not every Markman decision results in a grant of summary judgment as Michel implies. I have heard a judge opine that he will request a motion for summary judgment from each party along with the Markman briefs, but that is very rare. The proposed legislation basically implements this procedure, but without the finality of a judgment.

    I have a case right now with a set of claims that I’m dying to get in front of the CAFC but the district court judge isn’t about to grant summary judgment to either side, so jury trial (probably two) here we go.

  75. Re: “I take the position that a denial of an injunction should not necessarily result in a compulsory license and that there are many times when continued infringement would be considered willful.”

    Under the circumstances, I am constrained to agree with your position, constrained, however, because I don’t think the Supremes’ eBay ruling is constitutional — a patentee is entitled to “the exclusive Right”, meaning, THE RIGHT TO EXCLUDE OTHERS FROM PARTICIPATION, whether you call it an injunction or call it something else is only semantics, and that constitutional patent provision cannot be modified by statute unless that statute is in accord with The Constitution (Article V & Article VI, Clause 2). Article I, Section 8, Clause 8 has never been amended. A patent without “the exclusive Right” is like a tiger without teeth.

    Re: “The Patent Reform Acts of 2007 (both House and Senate) propose changes to damage calculations that would require specific economic analysis to ensure that any reasonable royalty damage award captures ‘only [the] economic value properly attributable to the patent’s specific contribution over the prior art.’ ”

    I previously posted a question about apportioning damages wherein the patented contribution motivates customers to repurchase (replace) the old product thereby creating greater profits on the whole versus lesser profits on (only) the patented contribution:

    Arguendo:
    (A) A lone inventor patented an Improved Collision Avoidance, ICA, system for a car that could be incorporated into a car on a production line for $50.
    (B) Patent Pirate CarMaker Co. ripped off the inventor and incorporated ICA into its new models and did not offer ICA as an add-on for older models.
    (C) Car buyers flock to CarMaker’s showrooms and buy the new models in droves — allegedly because of the new ICA safety feature, but not provable — and the profit per new model to CarMaker is $5000.

    Question:
    If lone inventor sues CarMaker and prevails, what damages would he be entitled to under the Patent Reform Act of 2007?

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