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The Gatekeeper Patent Damages Compromise of S. 515

By Philip S. Johnson

Chief Intellectual Property Counsel, Johnson & Johnson

No patent reform proposal has engendered more controversy than that relating to patent damages. Indeed, patent reform failed in the last Congress due in large part to the inability of those involved to reach a suitable compromise on the patent damages issue.

Many stakeholders involved in the patent reform debate believe there is no need for legislative action on reasonable royalty patent damages, as it is not an issue on which the National Academies recommended action, nor one for which a case has been made that reform is needed. Nonetheless, these same advocates and many others now strongly support the so-called “gatekeeper” compromise reached in the Senate Judiciary Committee, not only because it constructively responds to the complaints of those who perceive there to be inconsistency and unfairness in awards of reasonable royalty patent damages, but because it finally clears the way in this Congress for patent reform of historic proportions.

Nonetheless, it remains true that no showing has been made that any reform in the substantive law of patent damages law is truly needed. Contrary to critics’ assertions of just a few years ago, the number of patent litigations in this country is at least leveling-off, if not declining.

Critics have also wrongly suggested that there are now too many large damages awards. Yet recent experience shows that of approximately 2,700 cases filed each year, fewer than five led to verdicts in excess of $100 million.

Nor have the advocates for a substantive change in patent damages law demonstrated that these few large awards are disproportionate to the damage caused to the patent owner on account of the infringement. Size alone, without reference to the magnitude and duration of the infringement, and the nature of damage caused thereby, does not indicate that the damages award was in any way inappropriate.

While in three prior Congresses, patent damages reform had been the sticking point preventing progress on reform, this logjam was broken with the development of this gatekeeper compromise. This compromise has led to widespread bipartisan support in the Senate Judiciary Committee and beyond, and is now one of the foundations upon which any successful patent legislation will be built.

Download the full article to learn more about how patent damages concerns are exaggerated and how the gatekeeper compromise is moving reform forward

 

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