Restoring Deterrence : The Case for Enhanced Damages in a No-Injunction Patent System

Since the Supreme Court’s 2006 decision in eBay, Inc. v. MercExchange, LLC, increasingly large portions of the patentee population have no realistic expectation of securing injunctive relief against adjudicated infringers. This judicially imposed quasi-compulsory licensing regime induces well-resourced infringers to decline a license, appropriate patented technology, and negotiate the terms of use through litigation. Costly and protracted litigation is unlikely to adequately remunerate the patent owner whenever infringers have greater litigation resources, lower opportunity costs, and limited expectations of enhanced damages, which can induce the patent owner to settle for an amount that undervalues its technology. These litigation and settlement dynamics are illustrated through case studies of “holdout” tactics employed by well-resourced infringers in recent litigations involving standard-essential patents. To correct for the underdeterrence and undercompensation effects inherent to a no-injunction regime, it is proposed that courts enhance damages by an appropriately calibrated multiplier in all infringement litigations in which injunctive relief is not a practically available remedy