Subject: Re: The term "intellectual property" considered useful
From: Thomas Lord <lord@emf.net>
Date: Sun, 28 May 2006 10:36:17 -0700

Seth Johnson wrote:
> The case is a resounding rebuke against the general principle
> approach ("that courts will issue permanent injunctions against
> patent infringement absent exceptional circumstances") applied by
> the Federal Court of Appeals.
>   

That's partly correct.   The court rejected *two* principles, one
stated by the District Court and another stated by the Appeals Court
when it overturned the District Court.

It isn't in dispute, at this stage, whether or not the patent is valid
and violated.   A jury found the patent to be both valid and violated.
That stands.

What is the relief for a plaintiff who's patent has been violated?
Perhaps they are just entitled to some damages?  Or, perhaps,
the court should order the violator to cease practicing the patent.
As in: "Hey, eBay, shut down!"

By analogy:  you and I have played stick-ball in the street for
years and years without incident.   A freakish play one day
sends the ball into a neighbors yard where it smashes their
garden gnome.   The neighbor sues asking for damages (to
replace the gnome) AND asking the court to order us to
never play stick-ball in that street again.   Should the court
grant that injunction?

On the other hand, we hold soccer practice in one yard and
8 times in 9 months a stray ball has broken a neighbor's
window.   In addition to paying for the windows, might it
not be reasonable for the court to order us to hold practice
elsewhere?

District apparently decided *against* injunctive relief for
plaintiff and, in their opinion, stated a general principle as
to why.   If unchallenged, that general principle would then
become precedent for District and lower courts.  

I don't have the full language of District's opinion handy but
the SCOTUS decision quotes it a bit and it's very FSB relevant.
District gave a partial finger to patent trolls.   District (according
to SCOTUS) said that since plaintiff is in the business of
licensing patents, but not in the business of practicing them
themselves, that therefore injunctive relief was not appropriate.
That doesn't say trolls can't collect damages but it would say
that trolls can't easily coerce companies like eBay to settle
by threatening to get an injunction and shut them down.

SCOTUS affirmed Appeals, looking at District's
general principle and saying "No.  No way.   You're just
making that up.   We've long had a way to decide when
injunction is appropriate and that isn't it."   (They are
amusingly snide in pointing out that District acknowledged
the traditional tests but then blew them off.)

So: the door is still open for trolls to get injunctions.

Next, SCOTUS takes on Appeals who were also just "making
stuff up".   Appeals basically said "Injunctive relief is the
default,  there has to be a really good reason not to provide
it."    SCOTUS says "No again.   See, for years and years
now we've been using this four part test in questions of
equity.   Stop making stuff up."

So: patent trolls don't get a free ride to injunction.  A
patent does not function like a restraining order.

This is where your reading goes badly off track:
> They treat that general principle for remedies as arising from
> treating patents as having "the attributes of personal property
> [including] the right to exclude others from making, using,
> offering for sale, or selling the invention" and contrast, and
> dismiss, that approach against the four factor equity test.
>   


They absolutely do no such thing.  Quite the opposite.

SCOTUS *embraces* "patents as personal property".  They
find other language in the statue to help establish that, in
matters of equity (what relief to grant to a successful plaintiff)
patents are *ordinary* property to which the usual rules
apply.   It is on that basis that they insist on the four factor
test.

See, ya got yr property rights, and ya got yr access to relief
for violation of those rights.   Those are, except by statute,
two separate things.   It's often up to the courts to decide what
relief is appropriate once it is well established that the property
rights are violated.   Doesn't matter what kind of property we
are talking about.   The court has some general principles such
as the four factor test for these conditions.  And here we are.

The lower courts now have to go back and reason:

   1) Ok, the patent (the right to exclude) is property.
   2) Defendant's actions violated that property.
   3) Was plaintiff really harmed?  Are they continuing
        to be harmed by defendant's actions?
   4) Are there statutory damages sufficient to make
        plaintiff whole?   Is injunction the only way?
   5) Is it wildly unfair to either party to either
        issue or not issue an injunction?
   6) Is there a public interest against an injunction?

The majority opinion doesn't say much more than "stop
making stuff up, read the law, and go back and apply
the ordinary tests for a property dispute."

J's Kennedy, Stevens, Souter, and Breyer say some
tantalizing stuff in their concurrence.  This *minority*
of the court saw fit to acknowledge, in general terms,
the issues of patent trolls and of the cumulative nature
of invention.   They are concerned that easy injunctions
making trolling too easy -- not the incentive intended.
They are concerned that one little patent violation in
a much larger system is both increasingly the rule and
not reason enough to issue an injunction.   Hey, I've
heard RMS give that speech (only he would also
argue against *damages* and even the right to
take action, for at least software patents).   Basically,
from the free software perspective, there's signs that
this *minority* of the court is starting to "get it."
They even raise an eyebrow at the validity of
a lot of patents in recent years.   They even point
out that as a matter of history, the patent system
is now (in cases like this) doing something that
may be quite different from what it did historically.

They then embrace the four factor test on the grounds
that it is plenty enough (in their view) flexible enough
to respond to recent developments in how patent law
is being used.   "If it ain't broke, don't fix it.":

   "[....]The potential vagueness and suspect validity of some of
   these patents may affect the calculus under the four-factor
   test.
     The equitable discretion over injunctions, granted by the
   Patent Act, is well suited to allow courts to adapt to the
   rapid technological and legal developments in the patent
   system. For these reasons it should be recognized that
   district courts must determine whether past practice fits
   the circumstances of the cases before them. [....] "
                                -- Kennedy et al.

In other words, "Yes, injunctions used to be almost
automatic because of the nature of what was being
patented but that doesn't mean they should be today.
All those earlier injunctions should be understood to
follow from general principles of equity such as the
four factor test.   The `batting average' of injunctions
is not a legal argument in favor of one today -- stick
to the principles and consider them in light of changing
circumstance."

-t