When I read eBay v. MercExchange in isolation, I did not appreciate its significance. I found this article (copied below) that helped me understand that the eBay case represented a significant departure in previous practice. The Court recognizes, and this article emphasizes, that it was a general rule in the lower courts to grant injunctive relief after the patent-holder makes his case for infringement. The author describes it as “virtually unheard of for a district court to deny a victorious plaintiff a permanent injunction in patent infringement case.”

After the eBay case, from May 2006 to April, 2011, there were 131 cases where a permanent injunction was issued and 43 cases where a permanent injunction was denied (25% denial rate). The author, writing on the 5th anniversary of the case, explains what negative effects replacing this general rule with the four-factor test has had on patent practice.

The Court’s decision may have been motivated by the need to deal with ‘patent trolls.’ The District Court’s application of the four-factor test in eBay seemed to be concerned with this. It held that the patent-holder’s “willingness to license its patents” and “its lack of commercial activity in practicing the patents” would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. The Supreme Court said that this application was incorrect, and noted that such a rule would affect parties like university researchers and independent inventors. Justice Kennedy, in his concurrence, expressed a concern over the growing industry of ‘patent trolls,’ and flagged the issue for district courts to consider the nature of the patent and the patent-holder when applying the four-factor test.

The author admits that the decision had effects on ‘patent trolls’: “removing the presumption of irreparable injury from the equitable balancing creates the near-impossibility that a company focused solely on monetizing its patents through licensing could not be made whole through money damages alone.”

He argues, however, that the decision also has unintended effects.

The biggest effect is increased cost for patent-holders. The author explains one possibly nonobvious advantage of a permanent injunction over an award of damages is the district court’s continuing jurisdiction over the case when a permanent injunction is granted. Redressing a subsequent infringement is cheaper and quicker when a permanent injunction is in place than having to bring a new case. Just satisfying the four-factor test is more expensive for all parties because it requires proof of non-economic factors such as loss of goodwill or loss of market share.

According to the author, the change to the four-factor test and the fact that district courts’ decisions are reviewable only for abuse of discretion caused an increase in parties’ desire to find alternative means for dispute resolution where it is available. He asserts that the International Trade Commission (ITC) has become a far more desirable forum for patent owners, both non-practicing entities (includes ‘patent trolls’) and practicing entities alike. This is due to the ability to obtain an exclusion order. This option, however, is only available for patent-holders when infringing-goods are being imported into US.

While, the author is probably a little biased because his firm represents patent-holders (presumably some ‘big players’), I found it helpful in explaining the effects of the eBay case.
http://www.ipwatchdog.com/2011/05/15/happy-5th-anniversary-ebay-v-mercexchange/id=16894/

I know it was briefly discussed last class (someone brought it up) but there is a case with major patent implications, currently in the oven. Monsanto v. Bowman. The media is trying to make this a “David v. Goliath” case but the truth is, this case all comes down to a patent holders scope of control. If the SC sides with Bowman it could severely hinder innovation in areas with high barriers to entry and intense R&D. As mentioned in the articles included below, it cost hundreds of millions and over a decade of work to create something like a genetically engineered soybean. If control over such a patented product ceases to exist at some secondary level like a grain elevator, then will the line for some software be drawn in some cyber marketplace? It will be interesting to follow and I believe (even in the face of skeptical questioning at the hearing) the Supreme Court will side with Monsanto.

http://online.wsj.com/article_email/SB10001424127887324162304578302021998753556-lMyQjAxMTAzMDIwNDEyNDQyWj.html?mod=wsj_valettop_email

http://online.wsj.com/article_email/SB10001424127887323495104578314083787339090-lMyQjAxMTAzMDIwNDEyNDQyWj.html?mod=wsj_valettop_email

Notwithstanding the protracted nature of the NTP v. RIM litigation, the ungodly expense, the out-of-control jury verdicts and the (inevitable?) settlement, the patent wars proceed apace.  Here are some links to just a few of the ongoing disputes.

(If you don’t like the “Star Wars” reference, the size of the companies involved has inspired some to characterize these suits as “Clash of the Titans.”

Or maybe James Bond???

Pick your movie metaphor of choice.)

First, there are the “patent trolls,” following in the footsteps of NTP????

Then there are the suits involving Apple, which almost deserve a class of their own:

Apple sues Samsung for the “slide to unlock” feature (among others).  And wins.  (Note the quote here:  “”I don’t know if $1 billion is hugely significant to Apple or Samsung,” [investment banker Christopher] Marlett said. “But there is a social cost here. As a company, you don’t want to be known as someone who steals from someone else. I am sure Samsung wants to be known as an innovator, especially since a lot of Asian companies have become known for copying the designs of innovators.”)

Really?  Well, check out today’s headline: “Samsung patent lawsuit would have left blind iPhone users in the dark.”  Samsung holds a German patent on the text-to-voice technology that Apple puts in its iPhone.  Samsung requested an injunction in a German court, and didn’t get it.  And the headlines come out overwhelmingly against Samsung.  So, I guess it’s OK if Apple uses someone else’s patented technology, but not OK if another company does it?  Or does it just prove that Apple does a better job with p.r.?

Google suing Apple…

Apple countersuing Google …

But wait!  There’re more!  The other big players are also involved ….

Yahoo sues Facebook …

(settles…)

i4i sues Microsoft and wins …

Google (Motorola Mobile) sues Microsoft …

Oh, hell, let’s just show ’em all……

And then there are those who blame the system….

Breaking:  Could some of the “big boys” finally be tiring of the game????

Access to Music:
I attached some different articles that talk about Sean Parker’ s involvement with Spotify and how Metallica and other music artists are more interested in getting involved with Spotify.
http://money.cnn.com/2012/12/06/technology/innovation/spotify-discovery-metallica/index.html

http://venturebeat.com/2011/10/18/sean-parker-web-2-0/

http://www.hollywoodreporter.com/news/spotify-napster-sean-parker-268724

Finally I found another article that shows how Spotify pays back the artists and record labels through royalties.
http://www.nytimes.com/2013/01/29/business/media/streaming-shakes-up-music-industrys-model-for-royalties.html?_r=0

This article describes recent efforts to impose state sales taxes on online retailers.  As you might imagine, “bricks-and-mortar” retailers are complaining that their having to pay state sales tax, while many online retailers remain effectively exempt, is unfair.  There is also strong opposition to the bill, not least because the complexity of complying with 50 different jurisdictions’ sales tax laws can be confusing and oppressive.

Would it make more sense to have one flat tax paid by online sellers that have no geographic presence?  Are there alternative ways to fairly allocate tax responsibilities between online retailers and those with a physical presence?  Should online retailers not have to pay taxes at all?

I read this article this evening, and wanted to include it for future discussion about proposed immigration reform.

Lawyers in the drivers seat article

Here is an article I came across this afternoon — it addresses the very question we were discussing in class today (or, at least, one of the questions): whether the legal profession needs to adapt.

In his paper entitled, “Entrepreneurial Law,” Viktor Mayer-Schönberger makes the following statement:

I’m going to offer some thoughts, and then I’d like to hear opposing views.  My take on this is that it is the same confusion about the difference between “legal risk” and “business uncertainty,” but in reverse.  Now, Professor M-S is suggesting that what we need is more legal uncertainty.  I fail to see how this helps.

In class yesterday, we discussed the fact that the “rules” entrepreneurs do not feel constrained by are largely the “way things are being done” in the particular area in which they want to do business.  There is nothing – except for market demand – that says they have to follow those rules.  If they disregard them, or do things differently, it’s a risk – but only a business risk.  They might be hugely successful, moderately successful, or they might founder – and for any number of reasons.

The point is that they are free to disregard the business “rules.”

That is NOT true of laws.  Entrepreneurs are not free to disregard the law, any more than anyone else is.  Having one regulatory structure in which entrepreneurs are trying to operate, and then changing that structure “iteratively,” “adaptively” and “repeatedly” would simply mean that one’s business was (potentially) lawful one day, heavily regulated the next, and illegal the day after that.  (And yes, I realize that even the most ambitious legal system does not change that quickly, but you take my meaning.)

In such a system, the only actors who would benefit are those who have influence with lawmakers.  This will almost never be entrepreneurs and innovators – particularly disruptive ones, who are seeking to launch a product or a new business model for which the market is unknown, or apparently very small.

An entrepreneur who operates outside of established business parameters is a renegade.  An entrepreneur who operates outside the law is a criminal.  (And of course, we do have those.  Think about it …)

But perhaps I am giving Professor Mayer-Schönberger’s article too “crabbed and literal” a reading.  I welcome thoughts from the class.  Can you perhaps think of examples where the ability to change the legal structures quickly would be beneficial to existing and aspiring entrepreneurs?

This is a unique application of what has come to be a commonly-held viewpoint — that many of the most successful companies fail to innovate despite knowing that they need to.

We’ll read some literature on the subject that explores the issue from the business (and business scholars’) perspective, and see whether that is, in fact, true, and why (if so).  But when companies are very large and influential, they often have other means at their disposal to thwart competition — means that invoke the law: intellectual property acquisition, litigation, and lobbying, just to name a few.

Higher education (and education in general) has been slow to innovate.  Be thinking about this other industries that seem resistant to change.  Why do you think that is?  Are changes less likely – or less needed?  Does the structure of the industry inhibit change?  Are there aspects of some industries that should resist change?  Perhaps in order to preserve things that have a more timeless value?

Here is a recent article that discusses the push for changes to immigration law, to allow more immigrants with high-tech skills to stay and start companies.  But the article alludes to one of the bigger policy challenges: the “high-tech immigrant” issue is being folded in with other issues, such as “amnesty” for the 12M (approximate) immigrants already here without having gone through the legal process, and the related question of what is proper administration of the country’s borders.

Is the “high tech immigrant” issue being “held hostage” by the machinations of D.C.?  Should these issues be decided together?  Separately?  What are the pros and cons of each approach, in your view?  What factors do you think lawmakers are considering in this debate?  What factors do you think they should be considering?