Patent Remedies and Complex Products: Toward a Global Consensus

As I wrote last week:

I've mentioned a couple of times previously my involvement, along with several other scholars from around the world, in the International Patent Remedies for Complex Products (INPRECOMP) project.  (INPRECOMP began as a joint venture between the Center for Law, Science and Innovation (CLSI) at Arizona State University's Sandra Day O'Connor College of Law and the Dickson Poon School of Law at King's College London, and is primarily funded by a gift to CLSI from Intel.)  The manuscript of our long-awaited edited volume, Patent Remedies and Complex Products:  Toward a Global Consensus (Brad Biddle, Jorge L. Contreras, Brian J. Love & Norman V. Siebrasse eds.) is now in the hands of Cambridge University Press, and we are hoping it will be available in hard cover at some point in the not-too-distant future.  Meanwhile, we will be posting the individual chapters on ssrn in the coming days, and I will try to remember to announce of each of them on this blog as they become publicly accessible. 

All of the chapters except for the introduction are now up on ssrn.  So here are links to each of the chapters (except for the introduction, which I will add as soon as I can), followed by its abstract: 

Introduction (available soon)

Chapter 1:  Reasonable Royalties (coatuhored by Thomas F. Cotter, John M. Golden, Oskar Liivak, Brian J. Love, Norman Siebrasse, Masabumi Suzuki, and David O. Taylor):

This chapter (1) describes the current state of, and normative basis for, the law of reasonable royalties among the leading jurisdictions for patent infringement litigation, as well as the principal arguments for and against various practices relating to the calculation of reasonable royalties; and (2) for each of the major issues discussed, provides one or more recommendations. The chapter’s principal recommendation is that, when applying a “bottom-up” approach to estimating reasonable royalties, courts should replace the Georgia-Pacific factors (and analogous factors used outside the United States) with a smaller list of considerations, specifically (1) calculating the incremental value of the invention and dividing it appropriately between the parties; (2) assessing market evidence, such as comparable licenses; and (3) where feasible and cost-justified, using each of these first two considerations as a “check” on the accuracy of the other.

Chapter 2:  Lost Profits and Disgorgement (coauthored by Christopher B. Seaman, Thomas F. Cotter, Brian J. Love, Norman Siebrasse, and Masabumi Suzuki):

This book chapter addresses two types of monetary remedies for patent infringement: (1) recovery of the patentee’s lost profits and (2) disgorgement of the infringer’s profits. Both remedies make a comparison between what actually happened and a hypothetical “but for” world in which no infringement occurred. But the two remedies have substantially different objectives: lost profits are intended to compensate the patentee by restoring it to the position it would have occupied absent infringement, while disgorgement may serve other purposes, including deterrence, recapturing wrongful gains, and encouraging ex ante licensing of patented technology.

Part II addresses several key issues regarding lost profits awards, including the availability and standard of proof, the role of non-infringing alternatives, potential recovery for the sale of related but unpatented goods, whether and how to apportion lost profits awards for complex products, and potential recovery for other infringement-related harms. Part III describes the justifications for, and availability of, the disgorgement (accounting) remedy in major patent systems and, additionally, analyzes a number of questions related to calculating such awards. In both sections, we make recommendations and identify areas for further research.

Chapter 3:  Enhanced Damages, Litigation Cost Recovery, and Interest (coauthored by Colleen V. Chien, Jorge L. Contreras, Thomas F. Cotter, Brian J. Love, Christopher B. Seaman, and Norman Siebrasse):

This chapter discusses the law and policy of monetary awards—including exemplary damages and litigation cost recoveries—that go beyond the compensatory damages to which prevailing parties in patent litigation are normally entitled. Up to treble damages are authorized in the United States for knowing infringement, but attorney fees are awarded only in exceptional cases. The rest of the world tends towards the opposite: attorney fees are awarded as a matter of course, but punitive damages are generally prohibited as against public policy. In this chapter we discuss the theory, law, and policy of enhanced damages and attorney fee awards in the U.S., Europe, and Asia. While the availability of enhanced damages and fees can bring accused infringers that might otherwise “holdout” to the table, care must also be taken to ensure that it does not discourage productive learning from patents or challenges to overbroad and vague patents. Rather than endorsing any single set of doctrinal rules, we recommend further research into a number of unanswered questions about current and potential future configurations, in order to inform future policy-making.

Chapter 4:  Injunctive Relief (coauthored by Norman Siebrasse, Rafał Sikorski,  Jorge L. Contreras, Thomas F. Cotter, John M. Golden, Sang Jo Jong, Brian J. Love, and David O. Taylor): 

Patent systems commonly empower courts to order accused or adjudged infringers to refrain from continuing infringing conduct in the future. Some patentees file suit for the primary purpose of obtaining and enforcing an injunction against infringement by a competitor, and even in cases in which the patentee is willing to license an invention to an accused infringer for an agreed price, the indirect monetary value of an injunction against future infringement can dwarf the amount a finder of fact is likely to award as compensation for past infringement. In some of these cases, an injunction, if granted, would impose costs on accused infringers or third parties that go well beyond the more intrinsic value of the patented technology. This chapter explores the theory behind injunctive relief in patent cases, surveys the availability of this remedy in major patent systems, and suggests a general framework for courts to use when deciding whether injunctive relief is appropriate in individual cases.

Chapter 5:  The Effect of FRAND Commitments on Patent Remedies (coauthored by Jorge L. Contreras, Thomas F. Cotter, Sang Jo Jong, Brian J. Love, Nicolas Petit, Peter Georg Picht, Norman Siebrasse, Rafał Sikorski, Masabumi Suzuki, and Jacques de Werra):

This chapter addresses a special category of cases in which an asserted patent is, or has been declared to be, essential to the implementation of a collaboratively-developed voluntary consensus standard, and the holder of that patent has agreed to license it to implementers of the standard on terms that are fair, reasonable and non-discriminatory (FRAND). In this chapter, we explore how the existence of such a FRAND commitment may affect a patent holder’s entitlement to monetary damages and injunctive relief. In addition to issues of patent law, remedies law and contract law, we consider the effect of competition law on this issue. 

Chapter 6:  The Effect of Competition Law on Patent Remedies (coauthored by Alison Jones and Renato Nazzini):

Although competition law and IP law probably pursue complementary goals, competition laws can (i) affect remedies available for patent infringement; and/or otherwise (ii) limit the conduct of patentees, particularly when transferring or licensing their patents. This chapter discusses the cases in which tensions between the protection of patents in complex products and the competition laws have arisen or may arise, particularly as regards the ability of owners of standard essential patents (SEPs) to monetise their patents either by seeking an injunction against implementers or by refusing to grant licences complying with previously given commitments—generally, commitments to license on fair, reasonable and nondiscriminatory (FRAND) terms. This chapter also examines potential competition law constraints on the pricing of patent licences, other licensing terms, multi-level licensing and level discrimination, patent pools, sale of patent portfolios and patent acquisitions.

Chapter 7:  Holdup, Holdout and Royalty Stacking: A Review of the Literature (authored by Norman Siebrasse):

This article provides a critical review of the theoretical and empirical literature on holdup, holdout, and royalty stacking, as they relate to remedies for patent infringement.