Efficient Infringement Works

Patent reform veterans agree that its proponents’ penetration of DC policy maker “top of mind” with its misleading patent troll narrative is what led SCOTUS and Congress down the primrose path to the twin disasters of eBay and AIA and everything that has followed both. Inundated with Amicus brief and anti-patent administration input, the Courts accepted Justice Kennedy’s uninformed musings in his concurrent opinion where legislating from the bench he effectively erased patents’ presumption of validity while for certain patent holders he replaced patent exclusivity with compulsory licensing. The term’s congressional use, (which the FTC described later as “unhelpful”) enabled busy salons to say “no” to a conjured bogeyman by saying “yes” to comprehensive patent litigation reform too few had understood. The tactic switched the “burden of persuasion” from patent reform’s proponents (where passing any bill belongs) to the bills’ opponents. And when it comes to arcane patent litigation that is a massive burden. C’mon man! There is no “elevator pitch” to explain why anyone running for the next election should not say “yes “to cash-laden Silicon Valley mega techs on a complicated bill the public doesn’t care about. Better to say “no” to predatory trolls. Pro-patent advocates were back-footed long before they climbed Capitol Hill.

“Efficient infringement” is economically explained in a short essay by economist Adam Mossoff. Below are its closing paragraphs. Efficient infringement may never be as effective as the patent troll meme, but it is short, it efficiently describes an economic practice that is far more prevalent than the occasional abuses of the few patent trolls that remain, and it is readily described even on the shortened elevator rides available on the Hill. Most important it is real and succinctly explains why big tech wants patent litigation revision that adversely affects ALL patent holders and not just abusers.  Efficient infringement is economically sound even though it is unlawful and morally reprehensible. Its use is an insurance policy against lesser-resourced patent holder assertion. It is time Congress and the courts said “no” to efficient infringement!

“In the real world, though, efficient infringement creates more costs than merely the lost licensing profits for the patent owner, or the lost patent itself. The more fundamental problem with efficient infringement is that it undermines the proper functioning of the patent system. It frustrates the promise of the reward to the innovator for one’s creative labors. Once inventors know that the deck of (legal) cards is stacked against them and that they will suffer efficient infringement, they will create less patentable innovation. Without legal security in stable and effective property rights, venture capitalists will not invest in inventors or startups, and the innovation economy will suffer.

The important point is that these negative dynamic efficiency effects from efficient infringement are systemic in nature. This is similar to the concern about systemic costs represented by such causes of action for willful breach of contract as restitution and disgorgement of wrongful gains. As a matter of real-world practice, the costs created by efficient infringement are similar to the broader private and systemic costs created by opportunistic breaches of contract—both threaten the viability of legal institutions and the policies that drive them, such as incentivizing investments and promoting commercial transactions.

Leave a Reply

Your email address will not be published. Required fields are marked *