Post by Patrick Goold.
In 1999, Canadian company, Research in Motion (RIM), launched the Blackberry email pager. The pager was an instant commercial success amongst businesspeople and politicians alike. Behind the Blackberry’s success was its wireless email technology. No longer were emails confined to the desktop but were now easily accessible on-the-go. The technology for which had been invented by RIM founder Mike Lazaridis in the mid-1990s; or so Lazaridis thought. The following year, RIM received a letter from a small Virginia-based company called NTP. The letter alleged that the Blackberry infringed patents NTP held covering wireless technology that an engineer, Thomas Campana, had invented in the mid-1980s. This infringement letter came as a shock to RIM. Only a few months earlier RIM had received its own US patent on the Blackberry’s email technology. As far as RIM was concerned they had created the technology and had the patent to prove it! Yet NTP won their infringement case in Virginia, securing an injunction that threatened to bring the production of Blackberries to a halt. To avoid a complete shutdown, RIM ultimately paid NTP an exorbitant license fee of $612.5 million in 2006.
The RIM case is illustrative of the growing problem of accidental infringement of patent rights. Property rights in tangible property can only be infringed by a limited number of individuals who are in close physical proximity to the tangible good. By contrast, due to the nature of intangibles, patents can be infringed by multiple people regardless of their location. Furthermore, unlike physical goods, with readily ascertainable boundaries, the scope of patent boundaries is unpredictable. The result is inadvertently infringing patent rights is becoming easier and easier in the twenty-first century. Buy a wireless router to use in your small business, and you may unknowingly be using technology that was not licensed by the proprietor; incorporate Bluetooth technology into a new cell phone after searching the patent register, and you may be inadvertently manufacturing a technology whose patent information was buried under a mountain of similar patents; grow crops on your farm and you may later find such crops germinated from patented seeds which were blown by the wind from nearby farm land.
To address this problem, I argue that the liability rule in patent law needs to be reformed. Currently, patent law is a strict liability offense: one is liable for all accidental infringements one commits. In a forthcoming Article, I argue that a negligence liability rule would be better for society. Defendants should not be liable for accidental infringement when they have made reasonable efforts to prevent such infringement. Building on work by Blair & Cotter, and Chiang, the Article applies economic models developed in tort law literature to the problem of patent accidents. Doing so demonstrates how switching to a negligence rule would help reduce the amount of accidents which occur, while simultaneously protecting the inventive incentives at the heart of patent law. Thus, by adopting a negligence rule, we can make a pretty large step towards limiting the growth of the patent accidents problem.