Induced Infringement as a Strict Liability Claim: Abolishment of the Specific Intent Requirement

This Note argues that the specific intent requirement for § 271(b) should be abolished.  It shows that the language of § 271(b) does not provide textual support for the specific intent requirement.  Additionally, it argues that the specific intent requirement is contrary to early case law before the enactment of the 1952 Patent Act and is in conflict with many aspects of patent law including the utilitarian policies, the doctrine of equivalents and basic risk allocation.  Finally, this Note demonstrates that the overlapping scope of § 271(b) and § 271(c) necessitates the specific intent requirement because Congress intended § 271(b) with its generic language to cover a broader scope of indirect infringement than the specific situation of § 271(c).  Instead, inducement of § 271(b) should be considered as a strict liability claim.

Indirect Exploitation of Intellectual Property Rights By Corporations and Investors

Competitive pressures and rent-seeking behaviors have motivated companies and investors to develop indirect techniques for beneficially exploiting third-party intellectual property rights (IPRs) that qualitatively depart from the direct exploitation tools honed during the past thirty years of the pro-patent era. Among other things, companies have realized that they do not even need to own IPRs in order to consequently benefit from their exploitation. This phenomenon is labeled here “IP privateering” because of its similarities to an historic method of waging war on the high seas. This Article classifies IP privateering as a species of aggressive non-practicing entities (NPEs). The parameters of this newly identified strategy are probed using a variety of methods. The apparent evolution of this indirect IPR exploitation strategy is also traced among companies. A typology for IP privateering is provided that identifies the key variables associated with this strategy. Examples of privateering, both actual and hypothetical are discussed. The identified privateering scenarios, while small in number, have amounted to well over $3 billion in rent collections and have possibly saved sponsoring companies an order of magnitude more in avoided revenue losses. The infrastructure that supports privateering is discussed as well as how a possible patent oversupply may facilitate this strategy. The social utility of privateering is examined from various points of view including corporate, SME, investor, and inventor. Further questions are posed regarding IP privateering and aggressive NPEs (observing that both actors are likely supported financially by participants operating in the investment capital market), the need for ownership transparency in the innovation system, and whether the legislator should more explicitly design an innovation system that includes boundaries for various IPR strategies.

Practical Considerations In The Indirect Deployment Of Intellectual Property Rights By Corporations And Investors

 

Competitive pressures and rent-seeking behaviors have motivated companies  and investors to develop indirect techniques for beneficially exploiting third-party intellectual property rights (IPRs) that qualitatively depart from the direct exploitation tools honed during the past thirty years of the ongoing pro-patent era. Companies and investors have learned that they do not even need to own IPRs in order to consequently benefit from their exploitation. This phenomenon is labeled here “IP privateering” because of its similarities to an historic method for waging war on the high seas. This Article probes certain practical limitations of this newly identified strategy. Specifically, this Article explores of the range of counterattacks available to the target of a privateering operation and finds that but for certain specific scenarios related to antitrust and market manipulation, the typical target will likely be required to prove that the privateer’s litigation was frivolous before any effective attack can be launched on the sponsor. This Article also explores how the rise of market intermediaries coupled with an oversupply of patents simplifies the sponsor’s task of equipping a privateer operation.

Bitcoin: An Innovative Alternative Digital Currency

Bitcoin is a digital, decentralized, partially anonymous currency, not backed by any government or other legal entity, and not redeemable for gold or other commodity. It relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments. This new currency could also hold the key to allowing organizations such as Wikileaks, hated by governments, to receive donations and conduct business anonymously. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin’s legal status. This Article examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the Federal Securities Acts.

Beyond Confusion – Survey Evidence of Consumer Demand and the Entire Market Value Rule

The doctrine of apportionment serves to limit recovery for patent infringement to the economic value contributed by the infringed patent. However, the entire market value rule allows plaintiffs to base their recovery on the entire value of a product, if an infringing feature of the product is the basis for consumer demand for the product. Large damages awards produced by the application of the entire market value rule have prompted appeals for damages reform. In the recent America Invents Act, the legislature did not address damages reform, noting that the judiciary is currently reinvigorating the doctrine of apportionment. Indeed, the Federal Circuit has recently provided such reform by heightening the evidentiary burden for consumer demand, implying that empirical evidence of consumer demand will be necessary in order to apply the entire market value rule. This Note examines issues related to the admissibility and relevancy of empirical evidence of consumer demand, including how such evidence may be used to apportion damages and effect policy.

Customers, Co-workers and Competition: Employee Covenants in California after Edwards v. Arthur Andersen

California law is well settled that most contractual provisions prohibiting competing with or soliciting customers of a former employer are unenforceable under California Business and Professions Code 16600, unless the activity involves misappropriation of trade secrets or confidential information. Nonetheless, case law appears to hold that a restriction on one type of post-employment activity— hiring away former co-workers—might still be permitted. In 2008, the California Supreme Court once again addressed the scope of section 16600. This Note examines employee nonsolicitation covenants in light of that decision, including whether they remain legally defensible, and whether they retain any value for the employer in today’s social-media-connected society.

Licensee Patent Validity Challenges Following MedImmune: Implications for Patent Licensing

This Article addresses the legal basis for resolving the licensor’s dilemma following MedImmune.  The MedImmune Court’s elimination of the jurisdictional barrier to a patent validity challenge by a licensee in good standing has been viewed by many as a pronounced shift in favor of the licensee in the balance of rights between licensor and licensee in patent license agreements.  Moreover, the Court’s ruling has given rise to a dilemma for patent licensors, namely, how to redress the shift in the balance of rights.  Specifically, the questions to be answered are as follows: (1) Is there a vestige of the doctrine of licensee estoppel to protect a patent licensor from a validity challenge by a licensee in good standing, and (2) if one cannot rely on the doctrine, are explicit contract provisions that prohibit, reduce the incentive for, and/or specify a consequence of, a licensee’s challenge of the validity of a licensed patent enforceable?

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Provigil: A Case Study Of Anticompetitive Behavior

Using the sleep-disorder drug Provigil as a case study, this article exposes a new type of anticompetitive harm that stems from the combination of two distinct activities.  First, brand-name drug firms such as Cephalon, the developer of Provigil, have settled patent litigation by paying generic firms to delay entering the market.  Second, brand firms, frequently at the end of a patent term, have engaged in “product hopping,” switching from one means of administering a drug (e.g., tablet) to another (e.g., capsule).  The story of Provigil demonstrates the anticompetitive harm that can result from the combination of these two activities.

 by Michael A. Carrier*

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Provigil: A Commentary

Michael Carrier’s case study on Provigil offers new support for the view that Big Pharma is to blame for stymieing competition, retarding innovation, and inflating prices in the drug industry. Carrier argues that Cephalon was able to thwart generic entry by a combination of anticompetitive strategies. It entered into a reverse payment settlement agreement with generics seeking to enter the market. Having already spilled considerable ink on the patent settlements issue. I will focus my commentary on Carrier’s “product hopping” claims—essentially, that Cephalon rolled out Nuvigil merely to thwart competition. Since I have no expertise with the relevant products and no particular dog in the fight between Cephalon and its antagonists, I limit myself to three very general observations about the case study and its ostensible morals for public policy.

by Daniel A. Crane*

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Branded Versus Generic Competition?

 Transitions are times of danger in virtually all areas of human life.  More accidents are likely to occur when cars go in and out of parking spaces, or when planes take off or land. More medical mishaps are likely to happen in hospitals when there is a change in shifts between nurses.  The same pattern holds in the law of pharmaceutical patents, during the transition from a fully proprietary regime to one that allows for as many firms as possible to market a generic version of a once-protected pharmaceutical patent.To pass judgment on these issues, it is often necessary to ask the thankless question of whether the supposed advances in science exceed the preclusive effect that arises if the original product is removed from the Orange Book—or official FDA registry of drugs available for sale—in ways that limit competition.

by Richard A. Epstein*

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