From "Wealth of Ideas" e-newsletter, March 2006

eBay has asked the Supreme Court to overturn the Federal Circuit decision that all but guarantees the injunction for the patent owner barring exceptional circumstances. GPC's Alex Poltorak offers 10 reasons why the Supreme Court should not deny injunctive relieve to patent owners who do not practice their own invention.

The question before the Supreme Court is whether or not the patentees that do not practice their invention, or those who own the patents on inventions they themselves did not invent, should also be entitled to such monopoly. Here are ten reasons why the Supreme Court should affirm the CAFC decision and rule against eBay:

1. The language of the Constitution guarantees the exclusive right (i.e. monopoly) to the authors and inventors without qualifying that these authors should sing their own song if they are song writers or play their own music if they are composers, or that the inventors should build and sell their own inventions. Just as it would be absurd to put such limitations in copyright law, so it is absurd in patent law.
2. Just as composers may not be best suited to perform their own musical composition, which is best left for performers (musicians, singers, etc.) so the inventors may not be the best entrepreneurs, businessmen or mangers and they may not have the wherewithal to bring their own inventions to the market. It has been well recognized in economics that patents serve as a convenient conduit for technology transfer to allow those who invent to transfer their invention to those who can best build and/or sell them. We live in a highly developed industrial society whose hallmark is its high level of specialization. We do not saw, harvest or bake our bread, nor do we sew our clothes. It is just as absurd to require inventors to make and sell their inventions when it is best left to others who are better suited for these tasks.
3. The prevailing philosophy of patent law views a patent as a bargain between an inventor and the State whereby the State induces the inventor to disclose his or her invention to public in exchange for a limited monopoly. It is the disclosure of the invention that the State deems to be good public policy and endeavors to promote, not the practice of the invention that is rewarded by the patent monopoly.
4. The law states that the patent gives the right to the patentee to exclude others from using, making, selling or importing the patented invention. The emphasis is on others. It is inconsequential in the eyes of the law whether or not the inventor practices his or her invention.
5. Moreover, the possession of a patent does not necessarily confer on the patentee the right to practice his or her own patented invention. There may be other patents owned by others that block the inventor from practicing the patented invention. It would be absurd, therefore, to require the patentee to practice a patented invention when the patent does not in and of itself give this right.
6. Taking away the monopoly right from a patentee amounts to a compulsory license. Most economists agree that a compulsory license is a poor incentive to innovate. In fact, most countries that had compulsory licenses abandoned them (Argentina being one of the latest examples). Reviving a compulsory license, which has been long dead, would amount to going back to pre-industrial times.
7. A threat of an injunction is the main factor that motivates infringers to negotiate a license or settle a patent infringement litigation. If taken away, the infringer will be no worse at the end of litigation even if lost, than in the beginning, because under the worst case scenario the infringer will be required to take the same license that it is offered before litigation. This would remove the incentive to license and/or settle and promote litigation.
8. Most small inventors fail to commercialize their inventions mainly due to lack of funds. Denying them the right of injunction on what amounts to an economic basis may be argued to violate the Equal Protection clause of the Constitution.
9. One of the recognized aims of law is consistency and predictability. This is the fundamental rationale behind the Stare Decisis doctrine in the US legal system. It has been a long tradition in the US courts to grant an injunction to a patent owner who proves infringement. Overturning this long-standing tradition would send a patent system into a tail spin and eliminate last vestiges of predictability in the US patent regime which has already been in flux since the landmark Markman and Festo decisions.
10. Lastly, the statute recognizes that a patent is personal property. Consequently, it can be sold, bought, mortgaged and treated in every respect as any other personal property. Denying an injunctive relief right to those who are not the original inventors, but bought the patent, has no basis in the Constitution and has no conceivable rationale. Discriminating against those who enforce a patent not invented by them, would be akin to not allowing a homeowner to enforce her property right against a squatter just because she did not build the home herself.