Breaking the Law to Break into the Black: Patent Infringement as a Business Strategy

Article excerpt

INTRODUCTION

I. APPLICABILITY OF U.S. PATENT INFRINGEMENT LAWS TO
  CORPORATIONS

  A. Current U.S. Patent Laws Deterring Unintentional
    Infringement

  B. Current U.S. Patent Laws Deterring Willful
    Infringement

II. ANALYSIS OF INADEQUATE PROTECTIONS OF U.S. PATENT
  INFRINGEMENT LAWS TO PATENT OWNERS

  A. Inadequate Protections Afforded by Statutory Damages
   and Remedies to U.S. Patent Owners

  B. Inadequate Protections Afforded by the Read Factors Test
   to U.S. Patent Owners

III. PROPOSAL FOR CHANGES TO CURRENT U.S. PATENT
  INFRINGEMENT LAWS FOR UNIVERSAL FEDERAL

  JUDICIAL ADOPTION

  CONCLUSION

INTRODUCTION

Corporations and businesses make important decisions every day that affect their financial viability and market image relative to other competitors in a particular industry. For those organizations that produce innovative technologies, the aggregate of the many decisions made throughout the various stages of development manifests itself through the final product presented to the marketplace or utilized by the organization internally. However, as evidenced by the drastic increase in patent infringement cases brought before U.S. courts each year (there were 2,120 patent suits filed in 19981 and filings increased 111% from 1991 to 20002), circumstances in which organizations produce inventions that infringe the legal rights of other entities occur routinely in the United States.

U.S. patent laws (3) influence the decision-making processes for these technology-producing organizations through the economic consequences (the costs of litigating an average patent case are estimated to be one to four million dollars (4)) and time costs resulting from actual and potential patent infringement litigation, settlements, and liability rulings. Yet despite organizations' knowledge of the possible legal and business repercussions associated with patent infringement, a multitude of U.S. court cases addressing this issue continue to arise each year. (5) Accordingly, a proper analysis of the phenomenon of patent infringement prompts the natural inquiry of whether firms consciously decide to infringe certain patents as a sound business strategy or whether such cases arise spontaneously due to incomplete and careless research of prior art by the infringing firms. Regardless of what empirical research studies indicate as the most frequent explanation, (6) patent infringement may remain an effective business strategy for technology-producing firms, even when not employed willfully, due to the inadequate deterrence function of current U.S. patent laws.

I. APPLICABILITY OF U.S. PATENT INFRINGEMENT LAWS TO CORPORATIONS

A. Current U.S. Patent Laws Deterring Unintentional Infringement U.S. patent laws do not explicitly consider the intention of the alleged infringer in determining whether that entity or person is liable for patent infringement under 35 U.S.C. [sub section] 271, 284, 285, (7) and the "doctrine of equivalents." (8) Consequently, federal courts are not explicitly required to consider the fact that a company willfully produced an infringing technology when determining its liability or the remedy granted to the plaintiff under a facial interpretation of these aforementioned laws. (9) As a result, the deterrence effect of these patent laws works to instill a more comprehensive and careful research effort of prior art by inventors in order to discourage and minimize unintentional infringement.

Under 35 U.S.C. [section] 284, the damages assessed by the jury and/or judge serve this deterrence function against unintentional infringement and are distinct from those awarded in willful infringement cases, (10) except when the unintentional infringement is also considered "exceptional" by the court. (11) However, the inability of these patent laws (12) to effectively deter potential infringers from consciously developing a strategy to infringe upon a patented technology creates a tangential incentive for firms to develop business plans directed at violating these laws. …