Abstract

Only five or six years ago patents ranked near the bottom of most firms' lists of how to protect their technology, and for good reasons. Courts were generally hostile to patents. As one Supreme Court Justice wrote, “The only patent that is valid is one which this Court has not been able to get its hands on.” Circuit Courts of Appeal routinely struck down a big majority of patents they considered. Patent infringers searched the legal system for courts unfavorable to patent holders. Even when finding for a patent, awards were small; infringing a patent was almost worth the risk. Courts seldom granted preliminary injunctions to stop the infringing, permanent injunctions were difficult to get, and courts often ordered the licensing of infringers. In the 1980s this all began to change, especially with the creation of the Court of Appeals for the Federal Circuit. This court was given authority over every patent appeal case, and closed the doors to other, more friendly, appeal routes. And in action so far the new court appears to have a different attitude toward patents. For example, it has called for easier requirements from patentees and heavier burdens from infringers, and has ruled for the patent in over half its cases. The new circuit court no longer requires that an invention “have a synergistic effect, one greater than the sum of its parts.” And patent holders are also more likely to win preliminary injunctions, as Kodak found out when it lost its instant camera case to Polaroid. Instead of getting the usual period of several years to continue manufacturing while appealing, Kodak had to shut down its operation within less than a year from when it lost the patent case. Patent holders now can expect their rights to run all the way to the very end of the patent life. The circut court said “patent rights do not peter out” as the 17‐year period wears down. And damages are much more favorable to patent holders. Damages now are computed from the day the infringer is notified by the patent holder, rather than from the date of the decision. Harmed parties are more likely to get lost profits as part of their damage claim, they may receive attorneys' fees, and they may even win treble damages if the infringer took no action to investigate the patent holder's notice of complaint when it arrived.