JOHN W. SCHLICHER

PATENTS, PATENT LITIGATION, PATENT DISPUTE RESOLUTION AND

SETTLEMENT, LICENSING, ANTITRUST, LAW AND ECONOMICS

 

 

 

Other Professional Activities

 

Antitrust and Patent Misuse Limits on Licensing

 

In the 1980s and 1990s, Mr. Schlicher worked to try to change the antitrust and misuse laws on licensing to remove  counter-productive limits on the options available to patent owners and their licensee.  In 1984, he testified in support of S.1841, the National Productivity And Innovation Act of 1983.  See Testimony of John W. Schlicher, Hearings on S.1841 and S.1535, pp. 177-198 (S. Hrg. 98-1008, 98th Cong., 2nd Sess. April 3, 1984).  (Testimony)  One feature of S.1841 would have changed antitrust law to require application of the rule of reason to determine the legality of all methods of exploiting patents and another would have amended patent law to require that there is no patent misuse unless the patent owner’s conduct in the circumstances would constitute a violation of the antitrust laws.  While this bill was no enacted, the Court of Appeals for the Federal Circuit generally redefined patent misuse in this manner.  The Federal Circuit declared that, unless the Supreme Court had expressly prohibited this approach, misuse required proof of actual harmful effects in some market. Windsurfing Intn. Inc. v. AMF, Inc., 782 F.2d 995 (Fed. Cir. 1986).

 

In March, 1988, H.R.4086 was introduced to make changes to the patent misuse limits on a variety of licensing practices. While that bill is pending, on May 9, 1988, Mr. Schlicher wrote a letter to Congressman Kastenmeier, then Chairman of the responsible subcommittee of the Committee on the Judiciary of the House of Representatives.  (Letter).  In that letter, he made comments and suggested changes to the pending bill, some of which are reflected in the 1988 Patent Act amendments adding sections 271(d)(4)-(5). 

 

Patent Damages

 

In the mid-2000s, various Patent Reform Acts proposed amendments to the damages provisions of section 284. 

One of them was the Patent Reform Act of 2007, Senate bill 1145 and House bill 1908.  This bill would have amended the Patent Act to change the law on so-called reasonable royalty damages.  The proponents of the amendments believed reasonable royalty damage awards were systematically too high and the bill was intended to limit them. In October 2007, Mr. Schlicher sent a letter to Senator Hatch explaining why those amendments were ill-advised.  (Letter)  This proposal also appeared as the Patent Reform Act, Senate bill 1145, January 24, 2008, described in Senate Report 110-259 of the Committee on the Judiciary, January 24, 2008.  In July 2008, Mr. Schlicher sent a letter to Senators Leahy and Hatch outlining the many problems with this proposal and suggesting that Congress leave the problems to the courts.  (Letter)  In January, 2009, Mr. Schlicher published a paper describing why this proposal was unwise, providing a better alternative, and again suggesting that Congress not act on damages at this time.  (Paper)  On March 24, 2009, Mr. Schlicher sent a further letter to Senators Hatch, Leahy, Specter, Feinstein, and Kyl, after a March 10, 2009 hearing on patent damages attended by those Senators.  (Letter)  The Patent Reform Act ultimately enacted did not change damages standards.

 

The America Invents Act Makes Unnecessary and Unproductive Changes to Sections 102 and 103

 

The patent reform bills, S.23 and H.R. 1249, were enacted into law on September 16, 2001.  These bills make fundamental changes in the substance of sections 102 and 103 of the Patent Act that received little attention in the public discussion, reports, and hearings on patent reform.  These changes will cause confusion for decades,  increase the costs born by people and companies affected by the patent system, and probably decrease incentives to make inventions.     

 

On April 10, 2011, Mr. Schlicher sent a letter to three members of the House of Representatives describing the problems with those changes. (Letter)  On May 5, 2011, Mr. Schlicher sent another letter to members of the House and Senate suggesting revisions to these bills to correct the problems and explaining the reasons for those changes. (Letter)  Last minute efforts by Congressman Smith to correct some of the deficiencies in the pending bills failed and the bills became law on September 16, 2011.

 

On June 6, 2011, Mr. Schlicher wrote and circulated a short paper describing the problems with these bills titled “PATENT REFORM AND THE CHANGES TO SECTIONS 102 AND 103 IN THE AMERICA INVENTS ACT (H.R. 1249, S. 23).” (link) These are some excerpts from the summary of that paper. 

 

Summary.  The changes to patent law in the America Invents Act (H.R. 1249, S. 23) are made largely in the name of changing from a “first-to-invent” system to a “first-to-file” system.  Those phrases suggest that Congress is making a three simple changes to the requirements and conditions for a patent in sections 102 and 103.  See sections (1) to (3).  In fact, Congress is making ten and perhaps eleven additional important changes.  See sections (4) to (15).  The title of these bills suggest they will provide incentives for increased inventing by America’s citizens and companies.  It is entirely unclear that the changes to sections 102 and 103 Acts will improve conditions for inventing.  Section (16).  They will probably have the opposite effect.

The America Invents Acts change laws that provided the background for the phenomenal technology-driven economic growth of the United States from 1830 to the present.  Section (17).  The economic problems that sections 102 and 103 of Patent Act addressed in the 19th and 20th centuries are the same problems that exist today and will exist tomorrow.  The supreme irony of the America Invents Acts is that they change current United States patent law to the law that prevailed in the 1790s and early decades of the 1800s.  Section (18).  The patent reformers want to adapt to the needs of the 21st century by returning to the law of the 18th century.  Congress and the courts worked for about 180 years to change those laws in response to actual experience.  Congress now apparently wishes to turn back the clock and start the whole process over again.