Russ McBee

HR 1908 just passed the US House of Representatives and is awaiting action by the Senate. This bill would enact a plethora of changes to US patent law, constituting the most sweeping revamp of patent law since 1952. Quite a bit has been written about this controversial bill (also see this excellent summary); its supporters include software giants like Google and Microsoft, while its opponents include everyone from pharmaceutical companies to labor unions to inventor advocacy groups.

This bill includes changes to many different areas of patent law, but one change in particular stood out to me: it changes the definition of "willful infringement" in a way which I believe penalizes small companies and individual inventors and which gives a free ride to large corporations.

If you or I, as individual inventors, patent something, and someone else infringes that patent by making or selling the invention without licensing it, the infringer is liable for damages equal to the economic damage actually incurred. If it can be proven that the infringement is willful (i.e., that the infringer knew the invention was patented and deliberately stole the idea), damages can be tripled. The damages are calculated from the date the infringement began.

That seems pretty fair to me. If inventor Jane Q. Public patents something, and she later finds that some mega-corporation stole her idea, she's entitled to triple the economic loss she suffered. This is a strong inducement against potential infringers to behave themselves and license the invention like they're supposed to.

The patent reform bill just passed by the House would change that in a pretty radical way. Under the new law, infringement is only willful if the patent holder notifies the infringer and they keep infringing it anyway. If they stop infringing after being told they've been caught, then economic damages can't be tripled, even for past infringement. Even if the guilty party had been willfully infringing the patent for years, the slate will be wiped clean on treble damages if they stop once they get caught with their hands in the cookie jar.

This will harm small inventors most, since they typically lack the resources to conduct continuous surveillance of the marketplace, looking for infringement by others. Large corporations can (and do) conduct this kind of surveillance, but Jane Q. Public, who invented something in her basement, typically won't have the resources needed to keep an eye on all possible infringers. This provision of the bill seems to me to be a license for large companies to infringe at will. The worst penalty they face is straight economic damage, and even that will be calculated based on the economic added value of the infringed patent.

So, if GM decides to infringe Jane's patent on a new type of brake light that sells for $12, GM would only be liable for $12 per copy, even if they infringed her patent on purpose (see here for the definition of "reasonable royalty").

That just seems wrong to me.