Uncertainty in IP law and high search costs motivate litigation before any other option

Bell, Abraham-- Professor, Bar-Ilan University Faculty of Law; Professor of Law, University of San Diego School of Law; and Gideon Parchomovsky-- Robert G. Fuller, Jr. Professor of Law, University of Pennsylvania Law School and Professor, Bar-Ilan University Faculty of Law. 2014. “Reinventing Copyright and Patent.” Michigan Law Review 113 (2): 231–78. https://search-ebscohost-com.gonzaga.idm.oclc.org/login.aspx?direct=true&AuthType=ip,cookie,url,uid&db=lgs&AN=99133160&site=ehost-live.

While all areas of the law confront enforcement questions, enforcement is particularly problematic in intellectual property due to the law’s provision of the same expansive list of remedies to all holders of intellectual property rights. The remedy menu includes preliminary and temporary injunctions, actual damages, defendant’s profits, statutory damages, and in particular cases enhanced statutory damages and treble damages.51 Certainly in some cases, one or more of these remedies is appropriate for enforcing intellectual property rights. But just as certainly in other cases, the impressive array of remedial options is too much. The panoply of remedies may deter some kinds of optimal use of protected intellectual property rights, leaving potentially high-value users of the entitlement without a realistic possibility of enjoying the benefits of the intellectual property. In some instances, two other factors may combine with the array of remedy options to complicate further this enforcement problem and lead patent and copyright holders to refrain from voluntarily transacting with potential users of the invention or expressive work. These two factors are the vagueness of intellectual property rights and the high search costs for users. Together, the factors enhance the attractiveness of litigation as opposed to standard licensing. As a result, they may lead owners to rely on infringement litigation to generate revenue rather than licensing their inventions or expressive works. Consequently, owners may make more money by foiling use of intellectual property works than by facilitating use of them. The vagueness of intellectual property rights imposes a significant degree of uncertainty on third parties. Intellectual property law protects intellectual assets not only against direct infringements—that is, cases involving exact replications of the intellectual asset. It also protects against indirect infringements—that is, cases involving close approximations of intellectual assets.52 The former type of protection may be termed central protection and the latter peripheral protection. Peripheral protection of intellectual assets makes it very difficult for third parties to discern the precise boundaries of intellectual assets. Unlike the readily identifiable boundaries of physical assets, the outer contours of intellectual property assets are elusive and indeterminable ex ante. Doctrines such as pattern similarity in copyright law5 and the doctrine of equivalents in patent law54 expose even the most diligent of users to the risk of potential legal liability. Moreover, in many cases, it is unclear whether an intellectual product constitutes protectable intellectual property at all. Patent law requires registration of inventions as a prerequisite for legal protection, but registration of a patent does not actually guarantee that the law protects the invention.55 The validity of intellectual property rights in a new invention may always be attacked in court.56 This means that it is very difficult for potential users of an invention to know whether that work enjoys any legal protection. Roughly half of all registered patents that are attacked in court are found to be invalid.57 In some ways, the situation is even worse in the case of copyright. Copyright law does not require registration of the expression in order for the work to constitute intellectual property,58 and, in any event, registration does not guarantee that the claimed property is actually protectable under law.59 It is often difficult for potential users of expressions to be certain that there is any intellectual property to infringe