Forward Looking Patent Damages

In the wake of eBay, courts and scholars have been working to figure out what to do after denying injunctive relief. A common suggestion is to award an ongoing royalty – often termed a compulsory license. In an impressive body of research stretching back to the year 1660, Lewis & Clark professor Tomás Gómez-Arostegui concludes that “federal courts lack the authority, in either law or equity, to award prospective compensation to plaintiffs for post-judgment copyright or patent infringements.”

Until such time as Congress creates a new form of compulsory licensing, future-damage awards and continuing royalties can only be granted in lieu of a final injunction by consent of the parties.

In non-patent cases, such as accidental death, courts regularly calculate future damages – such as earning capacity. However, in those cases, the award is based on a past tort. In patent cases, prospective damages are based upon future infringing actions.

Looking historically, Gómez-Arostegui could not find a single instance prior to 1789 where the Chancery “awarded a continuing royalty in lieu of a final injunction in infringement cases.” In cases where no injunction was granted, the court did “nothing at all” about ongoing infringement.

How does this cut:

Read the paper here.

47 thoughts on “Forward Looking Patent Damages

  1. JAOI

    I still completely disagree with your interpretation of the Constitution and disagree with you about injunctions, but other than that, we are on the same page.

  2. Dear Lionel,

    May I add that,
    Congress has absolute Constitutional Power to administer our patent system, and it has rightly or wrongly done so. Further, within the Constitution itself, one finds authority for Congress to exercise its Power to moderate “the exclusive Right” under certain constitutionally certified circumstances:
    (A) To regulate Commerce,
    (B) provide for the common defense, and to
    (C) promote the general Welfare.

    Article I, §8, Clause 3: “The Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”
    Thus, in its body of antitrust statutes, Congress imposes certain limits when exercising a patent’s “exclusive Rights” in order to regulate Commerce.

    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.”

    Eminent domain power, when exercised over a patent’s “exclusive Rights,” for national security and defense, is absolutely consistent with the Preamble, i.e., to “provide for the common defence.” Thus, military appropriations bills in peacetime and wartime routinely include allocations for patent royalties.

    If an independent inventor discovered and patented a vaccine for Anthrax, but refused to license or manufacture it for his anti-American religious reasons, eminent domain could absolutely and reasonably be asserted to “promote the general Welfare.”
    Please read more at:
    link to patentlyo.com

  3. “right to an injunction” equals “THE RIGHT TO EXCLUDE EVERYONE ELSE from making, using or selling his invention” My point was that this right is not absolute.

    You are correct that it is not absolute, but historically, there had to be COMPELLING, usually public interest, equities indicating no injunction. The one case I recall was the Milwaukee sludge case, where the patent covered a municipal sewage treatment plant that would have to shut down if the injunction was entered, causing risks of untreated sewage being released, and subsequent sickness.

    If you can show public interest equities like that, then, yes an injunction may not be warranted. But if it is just the case that some megacorporation chose to ignore the “patent troll’s” claim of exclusive rights, then I don’t see the equity in denying the injunction.

  4. JAOI,

    “right to an injunction” equals “THE RIGHT TO EXCLUDE EVERYONE ELSE from making, using or selling his invention”

    My point was that this right is not absolute.

  5. Malcolm,

    Re: “anthrax-tipped missiles”

    That would go too far.

    But a Tommy Gun and maybe a couple hand grenades would be nice (per family member).
    And maybe one Bazooka per household(

  6. A thought just occurred to me; I am sure it will stimulate discussion:

    The same sentiment to soften the penalties for patent infringement that we see in withholding injunctions to let somebody like RIM or ohter proven infringers continue to infringe with payment of a nominal royalty seems to cause otherwise mature adults to bail out idiot investment bankers: “You screwed up and got big and continued to screw up. The penalty for screwing up when you are so big sounds horrendously big, so we will bail you out.”

    Stinks in both cases.

  7. Dear Lionel,

    Re: “‘mano a mano’ means hand to hand.”
    Oops, I made a mistake. Please excuse.

    And when I said, “With all due respect, whether or not ‘fair,’ ‘intent’ has nothing to do with patents” I was also mistaken. Intent, of course, has to do with “willful infringement.”

    Regarding what you wrote recently:
    “‘exclusive right’ does not equal ‘absolute right to injunction.’ That is a misreading of the Constitution.”

    Well, yes, I agree. Below is part of my comment on this link:

    link to patentlyo.com

    Here is one relevant part:
    Thus, Congress has absolute Constitutional Power to administer our patent system, and it has rightly or wrongly done so. Further, within the Constitution itself, one finds authority for Congress to exercise its Power to moderate “the exclusive Right” under certain constitutionally certified circumstances:
    (A) To regulate Commerce,
    (B) provide for the common defense, and to
    (C) promote the general Welfare.

    Excerpt:
    The Patent Clause 8, which has never been amended, in Article I, §8, of The Constitution reads:
    “The Congress shall have Power …
    “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;”

    Above the red ribbon and gold seal on the cover of every United States patent “granted under the law” by the Director of the USPTO, the following is printed:

    “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.” (my emphasis added)

    Thus, a patent does not grant the patentee the right to make, use or sell his invention. Rather, a patent grants the patentee THE RIGHT TO EXCLUDE EVERYONE ELSE from making, using or selling his invention. Under the Constitution, traditionally, when a District Court found that a patent was valid and was infringed, the Judge granted a patent injunction to stop the infringement. The exposure, for any infringer who did not obey the court injunction order, was contempt.

    Most of the 18 Clauses of Article I, Section 8 of the Constitution allow Congress discretion to set the limits for the Powers given to it. For example, the limits of the following Powers granted to Congress are left to Congress’s discretion: taxes; duties; pay debts; borrow money; regulate commerce; rules for naturalization and bankruptcies; coin money; punishments; rules governing military bodies; and to make laws as necessary to fulfill its “Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department thereof.” (Clause 18).

    However, three Clauses of Article I, Section 8 of the Constitution contain SPECIFIC, ENUMERATED LIMITS. The limits in these three Clauses have never been amended.
    The limit in Clause 17 is: “100”:
    The limit in Clause 12 is: “two”;
    The limit in Clause 8 is: “one”;

    It has never even been suggested that the Framers of the Constitution meant for these three specific limits to be interpreted in any way other than plainly, naturally, by the numbers; and so, historically, until the eBay ruling, they have been interpreted literally.

    Clause 17: “The Congress shall have Power …
    “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, …”
    Washington, D.C. is 68 sq. miles; “ten Miles square” = 10 x 10 = 100 sq. miles.

    Clause 12: “The Congress shall have Power …
    “To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;” (emphasis added).
    Congress’s military appropriations (which may include appropriations to pay for patent royalties, discussed below) have never exceeded two years.

    Clause 8: “The Congress shall have Power …
    “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;” (emphasis added).
    The “exclusive Right” means the Right to exclude all but “one,” the inventor (please see a patent’s cover).
    Congress, by permissible statute, i.e., 35 USC 261, gave inventors the further right to formally assign their patents.

    The Exclusive Right Yes, But Only for a Limited Time …

    The Framers give Congress the means and the Power UP FRONT to regulate the “exclusive Right.” By including in Clause 8, “securing for limited Times,” Congress can pass patent statutes that grant more or less time to a patent, and, by statute, Congress has done so. And, also by statute, Congress has the Power to create different types of patents with different lifetimes, as they have done for Design Patents. Congress has also created Trademark statutes that live somewhere between Copyrights and Design patents.

    Thus, Congress has absolute Constitutional Power to administer our patent system, and it has rightly or wrongly done so. Further, within the Constitution itself, one finds authority for Congress to exercise its Power to moderate “the exclusive Right” under certain constitutionally certified circumstances:
    (A) To regulate Commerce,
    (B) provide for the common defense, and to
    (C) promote the general Welfare.

    Article I, §8, Clause 3: “The Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”
    Thus, in its body of antitrust statutes, Congress imposes certain limits when exercising a patent’s “exclusive Rights” in order to regulate Commerce.

    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.”

    Eminent domain power, when exercised over a patent’s “exclusive Rights,” for national security and defense, is absolutely consistent with the Preamble, i.e., to “provide for the common defence.” Thus, military appropriations bills in peacetime and wartime routinely include allocations for patent royalties.

    If an independent inventor discovered and patented a vaccine for Anthrax, but refused to license or manufacture it for his anti-American religious reasons, eminent domain could absolutely and reasonably be asserted to “promote the general Welfare.”

    Please read more at:
    link to patentlyo.com

  8. If JAOI applied his constitutional theories to the 2nd amendment, he’d be complaining about the courts stepping on his “right” to own anthrax-tipped missiles.

  9. “And to get to FOAI’s example of moving into my house, he has not provided any argument as to why the balance of hardships would not weigh in my favor.”

    Good point. I am homeless and you and your family of three live in house with 8 bedrooms, so I can move in and benefit at very little or no cost or inconvenience to you. The public interest is served because visitors to our city don’t get repulsed by seeing my homeless self trying to keep warm in the street outside your mansion and so they will stay in local hotels and leave $$.

  10. “exclusive right” does not equal “absolute right to injunction.” That is a misreading of the Constitution.

    And to get to FOAI’s example of moving into my house, he has not provided any argument as to why the balance of hardships would not weigh in my favor.

    Pre-Ebay, inventors could be denied injunctions where for public policy reasons, so it’s not like the right to an injunction was treated as absolute pre-Ebay. All I am saying is that there are situations (such as those that fit the criteria enumerated in this article) where there would appear to be no upside to granting an injunction and a possibly great downside. Injunctions should be based upon the standard four-factor injunction test. In most cases, this will lead to the granting of an injunction anyway.

  11. Here is completely biased article probably written by big firm/big tech corp… just so you get an idea what (INCORRECTLY, INAPPROPRIATELY) big firm/big tech is selling to MAIN STREET…

    link to wired.com

    Good, to know the well oiled lobby machine is alive and well …

  12. “How can that be anything but wilful infringement?”

    The answer – it can’t be, unless something about the activity. I seem to recall that RIM, after being hit with a $450M judgment and the imminent threat of a permanent injunction, first announced that it had figured out a way to change its system to avoid infringement, but then subsequently settled for $600M+. That says something about the value of an injunction, for better or worse.

  13. “If you accept the (absolutely reasonable) premise that the patentee does not have an absolute right to an injunction, then there is no reason a court cannot decide what a reasonable royalty (which can be elevated in cases of flagrant copying to a punitive level) for the right to continue manufacturing the infringing product.”

    I suppose that statement works just fine as a manifesto, but it’s not very satisfying as a legal argument. Professor Gómez-Arostegui’s paper is very interesting, and persuasively provides reasons why he believes that the federal courts currently lack the authority (not the technical ability) to impose a reasonable royalty on future infringing acts, at least absent the consent of the patentee (and probably not without the consent of both parties). Which part of the professor’s argument or assumptions is incorrect?

    I don’t know whether JAOI or “Friend of American Innovation” have read the article, but they might be interested in knowing that the professor follows up his conclusion that prospective damages or royalty awards are unlawful by arguing that this means that courts should give permanent injunctions MORE often, because, as Friend pointed out earlier, the only alternative is periodic suits to collect (presumably) willful damages.

  14. “If there was no intent to copy …”

    After losing the lawsuit, the infringer can no longer say he is innocent if he keeps on doing what has been proven to be infringement. He has an intent to continue to infringe, even after the Court told him what he is doing is infringing.

    How can that be anything but wilful infringement?

  15. Dear Lionel,

    Re: “no intent to copy”

    With all due respect, whether or not “fair,” “intent” has nothing to do with patents.

    In the real world, I’ve discovered “reasonable” only counts when its person to person, i.e., mano a mano. When a big business is involved, they could give a siht less for reasonable – they would rather see an independent inventor drop dead.

    Our Founding Fathers gave us “the exclusive Right” and there is no wiggly room in that.

    An owner of a proven valid and infringed patent after a Court’s adjudication should be allow to stop infringement, nothing less – anything else is compulsory licensing, and that cannot be construed as to what our Founding Fathers meant to say.

  16. JAOI and FOAI,

    Of course the Inventor is entitled to past damages, but the point of the article was to discuss prospective damages. If the infringement prior to the lawsuit was not willful and the infringement after would be willful only to the extent the infringer keeps making the product, then why should he have to pay treble damages. If there was no intent to copy and the patent holder is only using the patent to extort licenses from innocently infringing practicing companies, then a reasonable royalty is perfectly reasonable.

    Also, the “exclusive right” does not negate the need for equity in our legal system. I do believe that where a decision of infringed and not invalid is reached, the court should definitely lean toward an injunction. However, where it would lead to a grossly inequitable situation, I believe an injunction would be an inappropriate remedy.

  17. “If you accept the (absolutely reasonable) premise that the patentee does not have an absolute right to an injunction, …”
    I do not accept that. How is an exclusive right an exclusive right if others can practice the right?

    “then there is no reason a court cannot decide what a reasonable royalty (which can be elevated in cases of flagrant copying to a punitive level) for the right to continue manufacturing the infringing product.”
    Who said any ongoing royalty has to be “reasonable”? For infringement in the first instance, the patentee is to be awarded damages, to be computed as not less than a reasonable royalty — see 35 USC 284.

    Before adjudication, there may be some doubt as to infringement or validity, but after adjudication, there is not. The adjudicated infringer should not be allowed to pay as his royalty for his compulsory license the minimum the statute provides for cases where there is room for doubt. He is a willful infringer, and the minimum he should pay is treble damages plus whatever attorney fees are needed to bring about payment.

  18. Dear Lionel,

    I beg to differ. Mr. Friend of American Innovation explained the business need an inventor has for the “injunction card.”

    Many believe that the eBay decision is constitutionally unlawful. If you care to review discuss about that, search ebay constitution etc. above.
    E.g.,
    link to patentlyo.com

  19. There is nothing in the Constitution or our patent laws that suggest an injunction should automatically be issued if infringed and not invalid. The Courts are merely applying the law now as it exists for every other type of injunction.

    If you accept the (absolutely reasonable) premise that the patentee does not have an absolute right to an injunction, then there is no reason a court cannot decide what a reasonable royalty (which can be elevated in cases of flagrant copying to a punitive level) for the right to continue manufacturing the infringing product.

  20. Dear Friend of American Innovation,

    You are so so absolutely right. I would like to buy you drinks all night.

    Many who post here are blinded to business reality and cannot see the forest for the trees.

    And of course, like me, most everyone here and in life has his/her own agenda.

  21. Compulsory License.

    What is different about the court determining the royalty from a compulsory license. NOTHING of substance.

    Several foreign countries over the years have had “working” requirements for their patents. If you did not practice your patented invention, then others could go to that country’s Patent Office and ask that it require the patent owner to issue a license, at some royalty rate determined by the Patent Office if negotiations did not yield an agreement. American companies despise these aspects of foreign laws. Why adopt them here?

    “In fact, the phrase ”compulsory license” implies an ongoing right of the licenses to do business in perpetuity without permission from the patent owner. Such a right has no place in U.S. patent law…”
    See 20 House Report No. 96-1307, 96th Cong., 2d Sess. (1980) p 37 at ipmall.info/hosted_resources/lipa/patents/Legislative_History_Process_Patents.pdf –

    Courts violate this rule when they de facto require the issuance of a license by a granting the right to continue to infringe by payment of a court-guessed royalty rate at the end of an infringement suit.

    If the patentee wants to grant a royalty-bearing license to the proven infringer, he is free to do so. If not, then he should be entitled to the injunction that is required to give effect to the Constitutional exclusive right.

    Practically speaking, the power of the patentee to say NO is critical to make sure that when the royalty negotiations proceed, he gets a fair price. Negotiations where one party is not allowed to get up and walk away mean that party gets a lousier deal than if he can walk away. Getting the patentee his legitimate royalty in such a negotiation is what this is all about.

  22. Article I, Section 8: “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”

    Why should I be forced to grant someone (say a competitor) a license under my patents? What part of “exclusive” don’t we understand? I spend $1M plus on litigation, then they get to infringe for some small royalty fee? Why even bother getting a patent?

  23. “I wonder if anyone other than Bloom actually looked the paper before posting.”

    I am getting paid to work, not read blogs, let alone the papers supporting them. :-)

    However, my understanding was that author’s belief was that the courts did not have the authority to determine a license amount. I just believe it’s a mere technicality that leads to headaches for everyone involved with if adhered to.

  24. Lionel Hutz :
    “it’s quite easy to assess”

    The paper is not about the difficulty in making a calculation but about whether the court has the power to impose the remedy.

    I wonder if anyone other than Bloom actually looked the paper before posting.

  25. All this injunction/damages discussion–

    Here’s an idea that I haven’t thought through, hopefully it will trickle through the board.

    What if the primary remedy available to NPE’s was the injunction? An NPE would not be eligible to receive damages, period. Upon filing suit, an NPE could move for a preliminary injunction (maybe relax the criteria for NPE’s), and would only be able to seek a permanent injunction against the defendant.

    If the preliminary injunction is breached, the court could find contempt and levy a fine in an amount equivalent, say, to “lost profits”, and the money would go to the court or government, because it would be a wrong against the court or the public, instead of a wrong against the NPE plaintiff, who effectively lost nothing.

    If a permanent injunction is granted and breached, the court could find contempt and levy the same type of fine, keeping the monies as before, and have the opportunity to treble the amount of the fine with a wilfulness finding.

    If NPE wins, it gets attorney fees.

    NPE gets its injunction and loses nothing.

    A freely negotiated license is encouraged.

    Public has benefit of disclosure, design-arounds are available.

    Question of past/future tort and prospective damages becomes moot–fine is not levied until such time as breach of injunction is demonstrated, and has nothing to do with any wrong to the NPE patentee.

    If NPE patentee ever becomes a practising entity or the invention is practiced by a licensee or assignee, that party would have a separate action for damages following the normal rules only after such time as the invention is practised.

    Maybe I’ll file some method claims to cover the above method of “furthering the aims of 35USC”! Darned immunity…

  26. The Patent Reform bill would also gut damages.

    So I infringe your patent and can’t be enjoined, pay chickenfeed damages and get the Court to order you to give me a cheap license. May as well close the Patent Office.

  27. “I haven’t read the entire paper that we’re talking about here, but the professor’s argument summarized above is simply that absent legislation, the courts CAN’T assess future damages (compulsory royalties for future infringing acts). Whether that’s a good thing that should remain that way is an entirely different discussion.”

    Of course they can. This is the head in the sand logic that escapes me. If the royalty is a percentage of the sale price of every future infringing unit sold, it’s quite easy to assess. $X/unit – Voila.

  28. Let’s use basic logic here:

    If the patent owner obtains a verdict that a company’s product infringed the owner’s patent and that the infringed patent is not invalid, then why should a court-ordered license be prohibited. What is the problem at law or at equity?

    Also, isn’t a granting a one time, fully paid up license an option?

    The alternative is to have the Patentee sue every 6 years (I believe that’s the SOL for back damages) and nobody wins but the lawyers. If the infringer changes the product then he can stop paying the royalty.

    Why issue restraining orders? Just because the last time my client was within 500 feet of Miss Smith he beat her senseless, does not mean he will do it again.

  29. I haven’t read Professor Tomás Gómez-Arostegui’s paper yet, but, as we all now know (all except 6), the Supremes’ eBay decision was unconstitutional.

    At the risk of being a bit boastful, and being quite frank, I’m proud to have been the first (to my knowledge, and my attorneys’ knowledge) to figure out that eBay was Constitutionally unlawful – eBay was my first serious Constitutional foray.

  30. I’m not advocating this view, but maybe the idea of the anti-patent/Coalition for Patent Fairness crowd is to analogize a case where the district court refuses to grant an injunction to a trespass case where the plaintiff is awarded nominal damages. And 3 x 0 = 0, so the infringer gets off scott free. Now of course, we thought there would have to be a trial on the merits to determine the plaintiff’s proof of damages, but who knows what can happen by judicial fiat or special interest legislation? Historically, there were near-automatic grants of injunctions, as noted by several concurring Justices in eBay. Maybe now we’re seeing why.

    After what I’ve seen the last two years in the financial markets, I have no confidence whatsoever that the Federal government can be trusted. In anything. (And I didn’t have much trust before that.)

  31. As noted above, this is academically interesting, but since at that point [trial over] the infringer cannot further contest validity or infringement except by a winning CAFC appeal or until it substitutes a genuine product design-around, and thus faces slam-dunk summary judgment treble damages and attorney fees for continuing to infringe, why would they not want to get help from the judge in negotiating a somewhat reasonable royalty rate at that point as part of a settlement, if they can, instead of contining to make, use, sell or import the infringing product [and convoy sales] at what would then become a HUGE LOSS? ["Making up in volume what you lose on sales" is an old business joke, not a frequent reality] Also, won’t the judge usually have a definite interest in not wanting to have to deal any further with the matter and thus encourage settlement?

  32. My bad earlier in saying that the patentee can collect damages for willful infringement (i.e. treble the amount of damages assessed at the first case). I forgot to mention that the patentee get his attorneys fees and cost as well since it is an exceptional case.

    Against that backdrop, let the patentee and infringer negotiate a reasonable royalty.

    If the infringer does not like this deal, he can stop infringing.

  33. Leopold-

    If an found infringer is willing to pay a one time fee for future infringement through the court and/or agree toa future royalty with a gun to their head – why not have the court expedite it. How many tort cases have judicially “advocated” settlements? A whole bunch!

  34. “…but are they future torts?”

    I think it’s clear that they are, because absent that future activity by the infringer, no further harm to the patentee accrues. That makes it a quite different situation from the future damage that arises from me hitting you on the head last month. I think that’s all the professor is saying.

    “… the law and economics argument of the Chicago school that judges seem to love would argue strongly that forcing a license agreemnt through a threatened injunction is the RIGHT outcome, and not the wrong one as is implied by the current damages changes in Leahy’s bill.”

    I won’t argue with that assertion, but don’t forget that triple damages for future infringement (which is presumably willful unless the product is significantly changed) is a nice bit of leverage for the patentee, even without the threat of an injunction. And if an injunction is denied in the first place, continued infringement without a license could certainly be a factor in a later request for an injunction.

    I haven’t read the entire paper that we’re talking about here, but the professor’s argument summarized above is simply that absent legislation, the courts CAN’T assess future damages (compulsory royalties for future infringing acts). Whether that’s a good thing that should remain that way is an entirely different discussion.

  35. Leopold-

    What do you think of this argument – if we say the future infringement is a future tort (which, I am not sure it is, but) and we provide a reasonable royalty IF the company chooses to continue infringement (noone is forcing them to infrige, it is always their choice) isn’t it perfectly fine to save from doing exactly what “friend” above argues (have serial lawsuits), and put in a place a mechanism, based on judicial efficiency, to allow that infringing act without the court becoming involved (future reasonalbe royalty – which does not vest until the future act by definition)? The infringment was already shown, so the judge is just saving judicial resources and sayin’ – hey, if you keep infringing, pay this amount.

    That argument seems to get around both problems, and follows what was done in the Toyota Prius case, which has been upheld all the way up the chain (as far as I know). I don’t think it has any litigation ongoing.

  36. Leopold-

    That is the argument, but are they future torts? Future torts would argue that each infringment is separate and disparate event, in most cases not only are the events not truly disparate the law does not really treat them that way. The law treats them as a single infringement for purposes of the claim, and then they can treat them as spearate or not depending on the damage calculation used.

    Even if they are future torts though, the law and economics argument of the Chicago school that judges seem to love would argue strongly that forcing a license agreemnt through a threatened injunction is the RIGHT outcome, and not the wrong one as is implied by the current damages changes in Leahy’s bill (which may or may not be a driver of this academic piece).

  37. Let’s see here. This issue arises when the patent owner has sued the infringer, proved the infringer’s product X was infringing and successfully defended against any invalidity or unenforceability claim.

    The question on the table is what to do when the infringer continues to make, use or sell X? In the absence of an injunction, the only fair answer is to allow the patentee to periodically sue to collect damages for willful infringement (i.e. treble the amount of damages assessed at the first case). The case is simple: res judicata as to infringement, validity, etc. The only issues are whether infringer’s new X is the same as the old and how many were sold.

  38. “I accept that, but I think it is a bit too dismissive to say that the form which patent law damages seem to be taking is completely baseless in law, when one of the fundamental precepts of the argument as described is just well, wrong.”

    That’s because what you describe as a “fundamental precept” of the argument is just, well, not a fundamental precept of the argument at all. The argument appears to me to be as follows:

    1) A proposed revision to damages law would allow a court to assign a royalty for future infringement.

    2) Those future infringements are actually future torts.

    3) Although case law provides support for awarding damages for future harms caused by PAST torts, there is no such support for awarding damages for FUTURE torts.

    4) Therefore, the proposed revisions to damages law are a radical change to tort law – in any event, setting future royalties is beyond the legal and equitable powers of courts today.

    It appears to me that you and the good professor are in perfect agreement. Would this be a good time to point out that academics sometimes actually do know what they’re talking about, or at least can present a logically consistent argument?

  39. True anon. I accept that, but I think it is a bit too dismissive to say that the form which patent law damages seem to be taking is completely baseless in law, when one of the fundamental precepts of the argument as described is just well, wrong. Did the Toyota case get denied cert at the USSC? Was this argued in the cert petition?

    I also think that both sides have a strong incentive to deal as that is the most efficient outcome for both sides – see Milton Friedman, Gary Becker, Frank Easterbrook and Richard Posner.

    Dennis, you are a good Chicago grad, doesn’t the current system work based on law and economics theory?

  40. me,

    I also didn’t read, but here’s my thought.

    In accidental death cases, a court awards future damages caused by the past tort. Here, future damages aren’t caused by a past tort (past patent infringement), but future patent infringement (because no injunction was granted).

  41. “WE DO NOT NEED MORE DAMAGES LAW CHANGES! THE CONSEQUENCES ARE FAR REACHING AND WILL HURT THE REAL ECONOMY!”

    He convinced me.

  42. As to the merits of the argument, the good professor seems to be unable to do a basic search on Lexis. Try searching the “tort of patent infringement”.

    Under 35 USC 271(a) patent infringement is a tort, thus from Dennis’ research it would seem that one of the base assumptions of this article is plain WRONG! Am I wrong? I have not read the entire article yet…

    If we treat patent infringment as a tort (which it is) does that mean the entire article is just more poorly designed propaganda bought and paid for by Google?

  43. And the question is, so what?

    If a party are held to be infringing, then they can negotiate a license with the patent owner. Why is this now such a terrible thing? Remember how few cases actually reach a finding of infringement (see Judge Michel’s speech which seems to be about the only fact based analysis of the real cases out there).

    The primary case driving this was RIMM and the real problem there was a judge that did not allow the re-exam to reach its conclusion (of invalidity) prior to the forcing of an injunction on RIMM. These facts are cannot occur now as judges are better educated, and the eBay v MercExchange case removes the injunction problem.

    WE DO NOT NEED MORE DAMAGES LAW CHANGES! THE CONSEQUENCES ARE FAR REACHING AND WILL HURT THE REAL ECONOMY!

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