As the foregoing discussion reveals, the case for the default application of the administrative model appears forceful. Yet contrary to the arguments of proponents for the administrative model, patentee opportunism is inherent in that model too. The non-attribution of patentee opportunism to the administrative model lies in the flawed standpoint from which opportunism is viewed. Proponents of the administrative model centre their arguments on the relationship between the economic conditions of users of patented technologies and excessive rewards likely to accrue to patentees. However, as established in Chapter 1, pursuant to Smith’s definition of opportunism, provided there is a chasm between patent law policy and patent monetary remedies, opportunism is inherent.182 In order to elucidate this argument further, it is important to refer to
the relationship between the social welfare objectives of the patent system and enforcement policy.
The patent system is, again as explained in Chapter 1, conceived and operated on the basis that society must forbear static efficiency, otherwise known as ‘free- market’ practices, to secure dynamic efficiency outcomes through the inventive efforts of inventors and their sponsors.183 Society’s forbearance to encourage
inventive outcomes is represented in the legal remedies applied to enforcing
182 See Part I of Chapter 1. 183 Ibid.
patents. This confirms the argument made in Part II of this chapter that legal remedies shape the incentives and constraints of entities in relation to legal entitlements, in this case patents. Society’s forbearance in protecting patent entitlements must be at least commensurate with society’s gains—i.e. marginal social costs equal marginal social benefits (MSC=MSB). Otherwise, the marginal social costs of protecting and enforcing patents would exceed the marginal social benefits of inventions procured, which would make the patent system inefficient. In other words, the utilitarian aims of the patent system would be defeated. For this reason, patent law remedies must not overreach the purposes of patent law policy.
As Opderbeck has argued, there is an ideological gap between patent law policy and enforcement policies as represented in legal remedies, especially monetary remedies.184 This gap is the real cause of patent opportunism, and not merely the
possibility of patent holders securing robust rewards on account of the likelihood of a prohibitory remedy being issued. This gap between patent law policy and enforcement policy is also the reason why Sichelman reasons that the prevailing scheme of monetary remedies applied towards patent enforcement provides excessive incentives to incentivise inventive activities.185 In furthering Opderbeck
and Sichelman’s submission, focus turns in the next part of this thesis to an assessment of remedies under the administrative model, with a view to showing how they foment patent opportunism. In the three chapters that follow, the three monetary remedies of compensatory damages, reasonable royalties and disgorgement will be critically discussed to demonstrate how patent opportunism is aggravated upon their deployment.
184 David Opderbeck, ‘Patent Damages Reform and the Shape of Patent Law’ (2009) 89 Boston
University Law Review 127, 137-138.
185 Ted Sichelman, ‘Purging Patent Law of “Private Law” Remedies’ (2014) 92 Texas Law Review
3.6 Conclusion
This chapter discussed patent opportunism as a function of deficient conception and deployment of legal remedies towards the enforcement of patents. In pursuing this theme, it focused on two major issues: the role of patent remedies in ordering the patent market, and the call for the default application of the administrative model of remedies in patent law. As regards the role of patent law remedies in directing the ordering of the patent market, it has shown that the more prohibitive are patent remedies, the less likely infringement will be encouraged. Conversely, the more lenient are patent remedies, the greater the motive for infringement. This chapter likens legal remedies and the approach to enforcing them to market prices that inform attitudes within a market. This reasoning translates to the patent marketplace. Patent remedies, depending on how they are applied, have effects on the ordering on the patent market. They can make up for the failure of ex ante opportunities, or even render the patent marketplace inefficient in circumstances where they are not optimal.
As regards the case for the default application of the administrative model of remedies to patent law, this call rests on the argument that the bargaining model of remedies impedes access to patents, which in turn brings about sub-optimal social outcomes. Advocates of the administrative model cite allocative inefficiency, the likelihood of extortion and discouragement of innovation as outcomes of the application of the bargaining model. They argue that were monetary remedies the standard remedial facilities available to patent holders, the problem of access to patents would be easily solved and the sub-optimal implications of difficulties in accessing patents would evaporate. This chapter, though, reveals that this default application of monetary remedies may not be an immediate panacea to the problem of patent opportunism until those monetary remedies are of such a nature that they can be reconciled with the utilitarian objectives of patent law. It therefore provides a prelude to a discussion of how the present regime of patent monetary remedies enables opportunism in the ensuing chapters.