Courts have Noted Schlicher’s Explanation of Why Injunctions Are the Preferred Remedy in Patent Actions 

 

In 1992, Schlicher explained why injunctions are the preferred remedy in patent actions, and some courts have noted that explanation.  See Matter of Mahurkar Double Lumen Litigation, 831 F. Supp. 1354, 1384 (N.D.Ill. 1993)(Easterbrook, J.) ), aff’d, 71 F.3d 1573 (Fed. Cir. 1995)(“A patent conveys the right to exclude others from making, using, or selling the invention, and this right implies the propriety of an injunction enforcing exclusivity.   The injunction creates a property right and leads to negotiations between the parties.   A private outcome of these negotiations--whether they end in a license at a particular royalty or in the exclusion of an infringer from the market--is much preferable to a judicial guesstimate about what a royalty should be.   The actual market beats judicial attempts to mimic the market every time, making injunctions the normal and preferred remedy.   See Schlicher, Patent Law:  Legal and Economic Principles §§ 1.14, 9.03[1].”).

 

Federal Circuit Recognizes Limits to the Exhaustion Doctrine – Mallinckrodt 

 

In 1992, Schlicher author wrote (contrary to the generally accepted wisdom) that the sale of a patented product did not and should not always exhaust patent rights.  He said the issue should be governed by the approach described in the Supreme Court’s decision in General Talking Pictures.  Later that year, the Court of Appeals defined the exhaustion doctrine in this manner.  Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 701 (Fed. Cir. 1992).  See also Intel Corp. v. ULSI System Technology, Inc., 995F.2d 1566, 1571 (Fed. Cir. 1993) (Plager, J. dissenting)(“The principle of ‘first sale,’ simply stated, is that when a patent owner (or the owner's authorized licensee) sells to another a product which incorporates the patented invention, the other may convey the product to third parties free of any claim of patent infringement. See John W. Schlicher, Patent Law:  Legal and Economic Principles § 8.05[1] (1992).  We are not here concerned with the question of whether and to what extent a patent owner may impose conditions on the sale which bind future transferees.  See id.”).

 

Federal Circuit Rejects Function-Way-Result as the Sole Test of the Doctrine of Equivalents - Hilton Davis 

 

In 1992, Schlicher pointed out that Graver v. Linde did not make consideration of function-way-result the sole test for applying the doctrine of equivalents.  He said that applying a function-way-result test defeated the boundary function of claims, and eliminated the role of claims to provide inexpensive and relatively certain information about the boundaries of the rights. In Hilton Davis, the Court of Appeals agreed.  Hilton Davis Chemical Co. v. Warner-Jenkinson Co., 62 F.3d 1152 (Fed. Cir. 1997).  Judge Nies’ opinion tracked almost precisely his analysis of the development of the doctrine in the Supreme Court.  That analysis proved influential in the Supreme Court’s decision in that case.  Judge Newman referred to Patent Law: Legal and Economic Principles (1992) in her opinion.   

 

Federal Circuit Limits the Misuse Doctrine to Require Proof of Actual Anticompetitive Effects - Windsurfing 

 

In congressional testimony and several articles in the early 1980’s, Schlicher argued that the patent misuse doctrine was unduly restrictive and said there should be no misuse absent proof of actual harmful effects from a patent owner’s manner of exploitation.  See e.g., Testimony of John W. Schlicher, Hearings on S.1841 and S.1535, pp. 177-198 (S. Hrg. 98-1008, 98th Cong., 2nd Sess. April, 1984).  In 1986, the Federal Circuit declared that, unless the Supreme Court had expressly prohibited this approach, misuse required proof of actual harmful effects in some market. Windsurfing Intn. Inc. v. AMF, Inc., 782 F.2d 995 (Fed. Cir. 1986).

 

Supreme Court Eliminates the Presumption of Market Power - Illinois Tool Works 

 

In 1992, Schlicher explained why the law was wrong when it presumed that the seller of a patented product possessed market power for purposes of certain antirust claims.  (“The seller of one hundred percent of the products covered by a patent may not possess market power if there are sellers of noninfringing substitute products that limit its ability to limit market output, and raise price.”)  In 2006, the Supreme Court eliminated this presumption.  Illinois Tool Works Inc v. Independent Ink, Inc., 126 S.Ct. 1281 (2006).

JOHN W. SCHLICHER

PATENTS, PATENT LITIGATION, PATENT DISPUTE RESOLUTION AND

SETTLEMENT, LICENSING, ANTITRUST, LAW AND ECONOMICS