April 27, 2016

Principles of Equity: Denying Inventors their Constitutionally Promised Exclusivity

By Bryan K. Wheelock, Principal

Article I, Section 8, Clause 8 of the United States Constitution, empowers the United States Congress:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

However, the patent laws enacted by Congress don’t always provide what the Constitution intended.  In Texas Advanced Optoelectrionic Solutions, Inc, v. Intersil Corp., [4:08-CV-451] the district court recently denied the plaintiff patent owner’s motion for a permanent injunction,finding a lack of irreparable harm.  The Court relied upon the fact that the patent owner “viewed a reasonable royalty as sufficient compensation for the Defendant’s past infringement,”  The Court then ordered the parties:

to negotiate a royalty rate to address any future harm to the Plaintiff for the remaining life of the ‘981 patent.  Such supplemental damages shall be for sales in the Unite States of products found to infringe the Plaintiff’s patent from March 2014 until the expiration of the patent.  The parties shall have 30 days from the entry of this order to negotiate a royalty rate.  If the parties require additional time, they may so move the court.  If the parties are unable to successfully negotiate a royalty rate, the Plaintiff may move the court to impose an ongoing royalty rate.

The case arose when, after entering a confidentiality agreement to explore a possible business relationship, Intersil misappropriated TAOS’ trade secrets, and willfully infringed TAOS’ patent.  Despite Intersil’s bad conduct, and the fact the parties were actually competing in the marketplace, the Constitution’s promise of exclusivity is denied on principles of equity.