JOHN W. SCHLICHER

PATENTS, PATENT LITIGATION, PATENT DISPUTE RESOLUTION AND

SETTLEMENT, LICENSING, ANTITRUST, LAW AND ECONOMICS

 

 

 

Dr. Joseph Rossman Award

 

In February, 2010, John Schlicher received the Dr. Joseph Rossman Memorial Award from the Patent and Trademark Office Society as the author of the most influential article in 2009 in the fields of patents, trademarks and copyrights.  The article was Patent Damages, the Patent Reform Act and Better Alternatives for the Courts and Congress, 91 Journal of the Patent and Trademark Office Society 19 (2009).  These were Mr. Schlicher’s remarks at the presentation at the United States Patent and Trademark Office in Washington. 

 

I am grateful to the Patent and Trademark Office Society for selecting my article in 2009 as deserving of the Joseph Rossman Award. 

 

I am receiving this award for a 2009 article titled, “Patent Damages, the Patent Reform Act and Better Alternatives for the Courts and Congress.”  While I am pleased and honored by this award, the 2009 article should have been unnecessary.  The 2009 article came about due to a bill to amend the Patent Act to change the law on so-called reasonable royalty damages.  The purpose of the bill was to make sure that a patent owner captures as damages no more than the value using some invention adds to a product.

 

In 1992, I said in a book that, in general, the economic value of any patented invention is the difference between the profits someone may earn using that invention and the profits someone may earn using the next best non-infringing substitute invention available during the same time period.  With some refinements, that difference should be the measure of damages.  In 1995, Judge Frank Easterbrook in Grain Processing denied a patent owner any damages for lost profits (because a perfect non-infringing substitute product was available to the infringer) and awarded the patent owner as compensation not less than a reasonable royalty the difference between the profits the infringer earned selling the patented product and the smaller profits the infringer would have earned selling the substitute product (due to somewhat higher production costs).  After a series of further decisions, the Court of Appeals affirmed in 1999 with a lucid explanation by Judge Rader.

 

In 2001, I received the Rossman Award for a 2000 article titled “Measuring Patent Damages by the Market Value of Inventions Given Available Noninfringing Substitute Technology - The Grain Processing, Rite-Hite and Aro Rules.”  That article described the Grain Processing decisions.  The damages problem for improvement inventions was solved.

 

About eight years later, I read the bill mentioned earlier.  After making inquiries, I learned that some people believed damage awards were systematically too high for improvement inventions and the bill was intended to limit them.  The problem was apparently not solved.  In July 2008, I sent a letter to some senators outlining my views on patent damages.  If you read my article, you will see that I was not a big fan of the bill.  A friend suggested that I make those views generally available and, after some revisions and additions, the 2009 article resulted.

 

The influence of the ideas in this article is up to Congress, the courts, and the lawyers.  I hope those ideas help.  However, if the past is any guide, I will not be surprised if someone (hopefully not me) writes another important article on damages ten years from now.  For a variety of reasons, we are a long way from solving all the problems with how patent damages are measured.

 

After Richard Stouffer called to inform me of this award, I did some research on Joseph Rossman.  His name was familiar to me, yet I could not recall exactly why.  In later correspondence, Mr. Stouffer reminded me of Dr. Rossman’s book, The Law of Patents for Chemical, Metallurgical and Pharmaceutical Patents. This rang a bell.  I went to Stanford University in 1969 as a PhD student in the Chemistry Department.  I ended up at Stanford Law School in the early 1970s.  There was no course on patents, so the faculty gave me credit for studying the subject on my own.  One of the books I studied was Dr. Rossman’s.  This means that my earliest understanding of patent law was based, likely in large part, on Dr. Rossman’s work.

 

These memories lead me to wonder whether we would be wise to refocus attention on some issues perhaps closer to Dr. Rossman’s heart.  An example is what should be the utility requirement for a new chemical or a new chemical process?  Surely not Brenner v. Manson.