Putting patents in their place

Congress rewrote patent law last year to reduce the number of unwarranted patents and curb abusive lawsuits by “patent trolls,” but the federal courts have done significantly more than lawmakers to strike a better balance among innovators, consumers and patent owners. A good example is a ruling issued last week that rejected attempts by Apple and Motorola to stop the sale of each other’s smartphones. It was a welcome rebuke to companies that have been tying up the courts with patent infringement claims instead of facing one another in the marketplace.

Dismissing the two companies’ claims in District Court in Chicago, Judge Richard Posner held that neither side had provided sufficient evidence to prove that they had suffered harm from the alleged infringements, none of which involved technologies crucial to the phones’ operation or cachet. Nor had they shown that halting sales of Apple’s iPhone or Motorola’s Android models was more appropriate than ordering the infringer to pay royalties, Posner wrote.

Motorola’s request for an injunction to block sales of the iPhone was particularly inappropriate, Posner wrote, because the company had agreed to make the patented technologies in question available to everyone on reasonable terms as part of a widely used standard for cellphone communications. That point — which a growing chorus of judges and regulators have made recently — is a much-needed rebuttal to efforts by companies such as Motorola to seek injunctions against rivals for using technologies they are all but forced to use.

The ruling also fits into an emerging movement in the courts to bring a greater sense of proportionality to patent law, and to favor financial remedies over barriers to competition. These are important trends because the microchip- and software-powered products of the digital era are far more complicated than those of the Industrial Age, with a single product potentially involving hundreds of technologies that could be covered by patents. Although patent holders are entitled to reasonable royalties for the use of their technology, it makes no sense to bar products from the market because of disputes over patents that cover comparatively minor features.

An early version of last year’s patent overhaul bill would have required the penalties for infringement to be proportional to the technology’s importance to the product, but the provision was too controversial to be included in the final measure. Nor did Congress address the issues posed by technologies that are included in industry standards. Thankfully, the courts are active in both areas, and as Posner’s ruling illustrates, moving the law in the right direction.