by Dennis Crouch
In this past summer’s Power Integrations v. Fairchild decision (Power Integrations I), the Federal Circuit held that the entire market value rule cannot be used to calculate infringement damages unless the patentee proves that the unpatented features in the accused product did not influence consumer demand. The patentee had not met that burden and so the $140 million verdict was vacated and remanded. Power Integrations, Inc. v. Fairchild Semiconductor Intl., Inc., 894 F.3d 1258 (Fed. Cir. June 3, 2018) (altered on rehearing)
On petition, the original panel has revised its opinion — but maintained its judgment vacating the damage award. Power Integrations II.
In the revised opinion, the court pulled back from the level of proof required. In particular, under the old language, the court required proof that the non-patented features were not relevant to and did not influence the consumer purchasing decision. The new formulation requires the patentee seeking EMVR damages show that the non-patented features “did not cause consumers to purchase the product.” The relevant blackline edits are in the following paragraph:
Where the accused infringer presents evidence that its accused product has other valuable features beyond the patented feature, the patent holder must establish that these features
are not relevant to consumer choicedo not cause consumers to purchase the product. . . . When the product contains other valuable features, the patentee must prove that those other featuresdid not influence purchasing decisionsdo not cause consumers to purchase the product.
The result here is a revival of the EMVR as a way to calculate patent damages, although it will still be disfavored.
In the original opinion the panel had also provided an example situation where it “may be appropriate” to apply the entire market value rule — notably where the non-patented features of an accused product are “simply generic and/or conventional and hence of little distinguishing character.” In the revised opinion, the court added a tiny-bit more explanation with the example “such as the color of a particular product.”
These remands have to stop. This case started in 2009. It has been litigated for 9 years. Now the Federal Circuit overturns another jury verdict and sends the patentee back to go. Start all over. It will be 4-5 more years. This interference and delayed justice has to stop. Patents have become impossible to enforce. The jury decided the damages. It is not the business of the courts to be giving them all these stupid rules to follow. If the jury says it is reasonable, then it is reasonable. Because they won’t let these verdicts stand, there is no practical possibility of enforcing a patent. Because there is no practical possibility of enforcing a patent, patents no longer promote progress in the useful arts.
So all you need is one patent on another feature and no entire market rule.
This is another one where we have the burden shifted to the patent owner. I would think it would be fair to shift the burden to the infringer.
When you think about the big picture this test is offensive. A company infringes your patent. You can’t stop them from infringing because of eBay. You probably aren’t going to get treble damages.
And..now you have to prove that what they are taking of yours is helping them.
It all comes back to Ebay. If there were not that one particular problem, all of the other aspects that you identify would be either no problem or at least less of a problem. So long as injunctions are not the default response to trespass, however, the entire rest of the law of remedies to patent infringement is going to be an unsatisfactory muck.
“So long as injunctions are not the default response to trespass, however, the entire rest of the law of remedies to patent infringement is going to be an unsatisfactory muck.”
Unsatisfactory in what sense? Obviously, to someone that wants an injunction, anything less than that would be unsatisfactory. However, one might argue from the perspective of SCOTUS and/or Congress, the law of remedies to patent infringement is working just as it was intended. Why should a patentee that cannot meet the 4-factor test be entitled to an injunction?
Entitled…?
Maybe you need to realize just what equity is for in relation to the right transgressed (first rule being to make the transgressed as whole as possible).
You place “four factor” as some type of “oh N0es – injunctions are “da worst””
Unsatisfactory in what sense?
Unsatisfactory in the sense articulated in the Constitution (Art. I, §8, cl. 8, “securing for limited times to authors and inventors the exclusive right…” emphases added). Not to put too fine a point on it, but monetary damages do not secure to the inventor his or her exclusive right to the invention.
Part of property ownership is that I, the owner, get to say who does and does not come onto my land. If, instead, I get no say, but the trespasser merely has to pay me rent (set as a “reasonable” royalty by the lights of some party who knows very little by first hand experience of the nature of this trespass), I just do not call that ownership of property in the sense conveyed by the ordinary English language use of those words. Mutatis mutandis, if the infringer of a valid patent is not made to cease from the infringement, but is instead merely obliged to pay the patentee a (so-called) reasonable royalty, that is not “securing… the exclusive right” as the Constitution provides.
Unsatisfactory in the sense articulated in the Constitution (Art. I, §8, cl. 8, “securing for limited times to authors and inventors the exclusive right…” emphases added). Not to put too fine a point on it, but monetary damages do not secure to the inventor his or her exclusive right to the invention.
Meet Greg D., folks. He’s been reading this blog for years and somehow he managed to fall into the grade school trap of interpreting a limit on Congress’ power into a floor or (worse) some kind of positive Constitutional “right”.
News flash: Congress doesn’t have to provide any “rights” whatsoever to inventors if Congress doesn’t want to. The Constitution gives Congress the power, if it wishes to use it, to grant inventors “exclusive rights for limited times”. Nothing — absolutely nothing — in the Constitution forbids Congress from providing inventors with less than that if, in fact, less than that achieves the same thing.
Note that this fundamental truth about the Constitution is also perfectly consistent with the fact that many many thousands of patentees do enjoy “exclusive rights for limited times” because (surprise!) most people don’t want to be threatened with a lawsuit even if the lawsuit doesn’t involve an injunction. The patentee, of course, can practice its patent (once it’s ensured itself that the practice isn’t infringing someone else’s patent — a near impossibility in the “golden age” of computer-implemented junk).
35 USC 154(a)(1) Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States, and, if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof.
Wait, did Congress say a patent contains a grant to the patentee of the right to exclude?
Meet Malcolm. Been reading this blog willfully blind for years.
Another news flash: eBay doesn’t prohibit injunctions and infringers are regular enjoined from practicing patented methods and selling patented articles/compositions.
Please get a grip on reality. You’re lagging way, way behind the curve here.
Does 35 USC 154(a)(1) grant any rights? Congress is certainly specifying the contents of a patent, but I don’t believe that 35 USC 154(a)(1) is enforceable against anyone other than the PTO. Technically, a patentee should be able to sue the PTO if its patent didn’t have those words.
“if, in fact, less than that achieves the same thing.”
The same thing.
What exactly to you Malcolm IS this “the same thing?”
What less than exclusive is still the same thing as exclusive?
What exactly to you Malcolm IS this “the same thing?”
Progress in the useful arts.
That’s not the point of focus that needs to be “achieves the same thing.”
Leastwise, it is not the ONLY part of the focus.
You’ve picked the hortatory portion of the Constitutional clause and omitted the substantive portion.
Maybe if you took care of your conginitve dissonance and realized that TWO parties are involved in a Quid Pro Quo exchange (and that an innovator is having THEIR inchoate right transformed into a full legal property right), you might have a better grasp on patent law fundamentals.
Thank you for your coherent response. (I’m not implying that your responses aren’t always coherent).
If I understand you correctly, your view is that the current law regarding the availability of an injunction for patent infringement does not sufficiently “secure[] for limited times” in accordance with the US Constitution. To be clear, I’m not expressing judgment–just trying to confirm my understanding of your position
Regarding a patent’s status as property, is it your position that a patent is sufficiently similar to real property that it should be treated the same way from a property standpoint?
You are trying to do that Br’er rabbit thing, NS II.
Maybe you should state your position and defend that?
Why do you think I have a position? I simply have a problem with (i) fallacious logic; and (ii) unproven premises asserted as facts, especially when the issue is policy.
Assuming I understand Greg’s position correctly, it is grounded in his interpretation of the Constitution. If I were so inclined, I could argue about that interpretation and/or whether it leads to his conclusion. I might accept his argument entirely, but I won’t delude myself into thinking that his or my understanding is the only possibility.
In your case, you simply assert your premises as fact to make your outcome-driven “arguments”. When challenged, you direct me to educate myself, which confirms that you are unable to justify your premises or even acknowledge them as such. This is especially egregious when the issue is policy. What the law is and what the law should be have very different analytical approaches, which you don’t seem capable of comprehending.
For example, I am fairly certain that you believe (correct me if I am wrong) that a patent is the right to exclude. If so, that raises at least two questions, which you are unable or are unwilling to answer. (1) What is your basis for stating that a “patent is the right to exclude”? and (2) What is meant by “right to exclude”? So far, your answers are: (1) just because; and (2) the right to an injunction. I honestly don’t care about the source of your premise. However, if I understand your position correctly, I do have a problem with circular logic.
“What the law is and what the law should be have very different analytical approaches, which you don’t seem capable of comprehending.”
On the contrary, I have always been very clear about that distinction.
On the other hand, YOU have not – and you engage in what you accuse others of (specifically, “ (i) fallacious logic; and (ii) unproven premises asserted as facts, especially when the issue is policy.“).
THAT’s why I called you out for your Br’er Rabbit approach here, and asked that you state your case or position or whatever, and defend that instead of merely casting stones about.
As to: “If so, that raises at least two questions, which you are unable or are unwilling to answer. (1) ”
BS – asked and answered. And not only by me. This IS something bedrock to patent law, and the fact that you feel compelled to keep asking it (as if it has not been answered – and as if you should not be aware of the answer) is WHY it appears that you are doing nothing but playing the Br’er Rabbit game.
If I understand you correctly, your view is that the current law regarding the availability of an injunction for patent infringement does not sufficiently “secure[] for limited times”…
Yes. That is the position that I am advancing. Of course, to be specially clear, my contention is that Ebay detracts from “securing… the exclusive right.” It is not, in other words, just the “securing” that Ebay gets wrong, but the thing secured (exclusive right).
[I]s it your position that a patent is sufficiently similar to real property that it should be treated the same way from a property standpoint?
Hm. That is a big question. I certainly do not wish to be taken as advancing the position that patents should be treated in all ways as so thoroughly analogous to real property as to be treated in identical manners. There are various ways that the analogy breaks down, such that one must have one rule for real property and another for patents.
That said, in this particular respect (i.e., the right to exclude) I do think that the analogy holds good, and patents should be treated the same as land.
Why should a patentee that cannot meet the (created out of thin air, unconstitutional SCOTUS law-making) 4-factor test be entitled to an injunction?
Gee; how about because millions of patents say so:
“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 …”
Nuff said.
“Why should a patentee that cannot meet the (created out of thin air, unconstitutional SCOTUS law-making) 4-factor test be entitled to an injunction?”
Your question does not properly phrase the law (or the application of power allocated to the Judicial Branch by Congress — as Congress may rightfully do.
It is critical to understand just how — and why — Congress shared its authority and permitted the Courts to apply the four factor equity test.
An error of the Court is in applying that test as if the context of patent law (what patents are, and the purpose of the shared authority) were not controlling factors.
They very much are controlling factors.
IF they were not controlling factors, then the delegation of authority would be unconstitutionally broad.
So long as injunctions are not the default response to trespass, however, the entire rest of the law of remedies to patent infringement is going to be an unsatisfactory muck.
Not sure why you’d say such a silly thing. You think that it’s impossible to fairly calculate damages in a patent case because …?
This seems like the same sort of non-argument that is made by people who whine about subject matter eligibility, e.g., “The issues are just too difficult for my client who seeks an ineligible patent claim to understand, and therefore the only satisfactory solution is to turn subject matter eligibility into a trivial drafting exercise.”
Please stop with the Efficient Infringement mantra that money solves everything.
Well…conveniently for the now PROVEN infringer….the patentee is still left with no evidence of damages since the combo of Dyk and Chen’s (joined with Clevenger this time) view of apportionment is STILL too high bar….and the judge in this case threw out the patent holder’s damage expert testimony on apportionment.
Agree that the shifting of the burden against the EMVR to the patentee is key here (particularly in light of the lack of any practical ability to exclude via an injunction)….but it is par for the course for both Dyk and Chen to help infringers by making damages nearly impossible to prove.
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