The notion that the US patent system fosters public disclosure of inventions is a joke

A "patent", according to Wikipedia, is "a set of exclusive rights granted by a sovereign state to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention." Yet no one engaged in the business of developing technology ever reads patents for R&D purposes. The reason? Knowledge of a patent enables the patent-holder to claim willful infringement, and willful infringement opens the door to enhanced or even treble damages.

I know of many technology companies with rigorously-enforced policies prohibiting engineering staff from reviewing competitor patents. I was involved in an asset purchase transaction recently in which the acquiring company's in-house lawyers refused to allow their staff to review the very patents they were buying, in case the deal failed to close. This fear of enhanced damages, whether justifiable or not, effectively nullifies the patent system's invention disclosure justification.


A recent case in point is SSL Services, LLC v. Citrix Systems, Inc. (Fed. Cir. Oct. 2014). A careful review of both the Federal Circuit's decision and the lower district court decision in this case reveals that the evidence supporting the determination that Citrix was a willful infringer can be boiled down to the following: (i) Citrix infringed the patents; (ii) the infringement was clear; (iii) the patent claims were valid; (iv) Citrix's arguments in support of invalidity were "meritless" (despite that the applicable claims were initially held invalid by the US PTO in reexamination); and (iv) Citrix knew of (although never read) the patent claims at issue. In other words, Citrix had knowledge of the existence of the patent, and Citrix's non-infringement and invalidity arguments were ultimately unpersuasive. If this is all that's required to be branded a willful infringer, why would anyone ever want to take steps to become aware of, let alone actually review, useful patents in a relevant field of endeavor?

The cost of patent litigation is extraordinary by any measure. The issue of willful infringement is certainly a significant component of this expense. Prodigious sums are expended in discovery, motion practice and jury trials in connection with the rather ancillary question of the defendant's state of mind. Patent litigation in the US is the most expensive in the world; one reason this could be so is because the US is unique in the world in its embrace of punitive damages associated with willful patent infringement. See Samuel Chase Means, The Trouble with Treble Damages, 5 U. Ill. L. Rev. 1999 (2013).

Only the largest asset-rich companies can afford to play this sport of kings. The sheer monetary sums involved in slogging through the district court–Federal Circuit–PTAB shuffle, not to mention the threat of an injunction, provides more than sufficient deterrence to intentional infringement. Piling on enhanced, let alone triple, damages is unnecessary overkill, and is not regarded as a necessary deterrence to infringement anywhere else in the world. More importantly, by its in terrorem effect, the willful infringement doctrine completely subverts the most compelling justification supporting the patent system's government-granted exclusivity.

In order to restore the public invention disclosure rationale and thus "promote the progress of Science and the useful Arts", the doctrine of willful patent infringement must be eliminated.

[excerpted from Redline]


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