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Wednesday, May 1, 2013

Peter Yu on Comparative Patent Remedies

Posted by Peter Yu

In Comparative Patent Remedies: A Legal and Economic Analysis, Tom Cotter has provided a comprehensive, well-written and highly informative book on comparative patent law. Although the volume’s title suggests coverage of a rather narrow topic—patent remedies—don’t let that title fool you. The book reaches beyond patent remedies to provide an important text from which readers can gain insight into patent law and practice from around the world. The book is more correctly seen as a comparative companion to Tom’s earlier book with Roger Blair, Intellectual Property: Economic and Legal Dimensions of Rights and Remedies.

There is a lot to like about this book. Going methodically from the United States to the British Commonwealth to continental Europe to emerging countries in Asia, the book provides well-supported and easy-to-follow chapters documenting the similarities and differences in some of the world’s most widely-used patent systems. Such comparisons make good sense. As Tom readily acknowledges, the international harmonization efforts in the past two decades—in particular, the WTO’s adoption of the TRIPS Agreement—have led countries to adopt similar standards for patent rights and remedies. Those standards are now found in not only developed countries, but also emerging, developing and least developed countries.

The author is also mindful of emerging patent developments in Asia and how those developments will become even more important in the near future. The last chapter before the conclusion focuses specifically on developments in newly industrialized countries such as South Korea and Taiwan and the so-called BRICS countries such as China and India. Although existing comparative literature has already explored patent law in those countries, the book’s emphasis on patent remedies has made it a unique contribution. As emerging and large developing countries assume greater leadership in the international patent system, a better and deeper understanding of patent remedies in these countries can only become more important.

In addition to thick descriptions, careful comparisons and well-reasoned analyses, what makes the book stand out is how Tom successfully integrates comparative analysis with economic theory. Drawing on research he has conducted over the years on patent rights and remedies, the book’s second chapter presents “an idealized economic model of how courts should go about calculating and awarding monetary compensation for the infringement of IP rights.” This model provides readers with the much-needed baseline against which patent laws and practices are to be compared. To a large extent, this book is as much about law and economics as it is about comparative law. Given the limited number of works on the comparative law and economics of intellectual property, this volume is a highly welcome addition to existing literature.

Overall, I wish Tom had done a couple of things differently in his book. First, although the volume compares extensively a wide variety of patent remedies in different countries, it provides only limited coverage of those remedies that are significantly different from others. The challenge Tom faces in this project is nothing new in the field of comparative law. If he compares too much, he will not have enough room to contrast. And if he contrasts too much, his readers will have lost sight of his original comparisons. Indeed, locating the tertium comparationis, or figuring out what to compare, remains one of the most critical challenges confronting any comparatist. In lay terms, that challenge boils down to the question of whether one should compare apples with oranges.

Consider, for example, the discussion of patent remedies in China. Although the author manages to discuss private criminal prosecutions and patent counterfeiting—measures that do not have direct counterparts in other countries—the chapter omits entirely the remedial award of a public apology—a legal remedy that is rare in Europe and the United States and that is also hard to quantify in economic terms. The book also only briefly mentions the existence of administrative remedies, even though administrative enforcement continues to provide patent holders with some of the most efficient and effective remedies outside major Chinese cities and the coastal areas—remedies that would have provided good fodder for comparative law-and-economic analysis.

To be fair, the book focuses primarily on judicial remedies, such as injunctions, damages (including lost profits and reasonable royalties), awards of attorney’s fees and court costs, and declaratory judgments. The author therefore may have been reluctant to distract readers with an extensive discussion of administrative remedies, which do not have direct counterparts in Europe, the United States and other parts of the world. Nevertheless, from the standpoint of patent protection, if parallel enforcement is a key strength of the Chinese patent system and that strength is not adequately explored, the system will have appeared much weaker than it actually is.

Second, the book seems to have focused so much on intellectual property law—and, more broadly, the legal system—that it at times has failed to delve more deeply into analyzing “real-world complicating factors” (factors acknowledged in the book’s preface). Indeed, without contextualizing the hard choices law- and policymakers made in developing competing patent systems, the book may have made it more difficult for readers to fully assess the merits of those systems (a goal the author seeks to achieve).

Consider, for instance, the discussion of statutory or pre-established damages, which are increasingly important in view of the heavy international push by multinational rights holders and their supportive governments. That push is evident in the adoption of the Anti-Counterfeiting Trade Agreement and the negotiation of the intellectual property chapters in free trade and economic partnership agreements, the Trans-Pacific Partnership Agreement and the recently-announced Trans-Atlantic Trade and Investment Partnership Agreement.

While the book provides a useful analysis of the pros and cons of having pre-established damages, readers may overlook that a big part of the resistance to those damages might have come from outside the intellectual property field. In the recent effort to reform digital copyright law in Hong Kong, for example, the local bar has been very vocal against transplanting statutory damages from the United States. Its resistance, however, has not much to do with copyright law—or, more broadly, intellectual property law. Instead, the bar members were primarily concerned about the potential creation of a slippery slope that would eventually spill over into tort actions and other areas of the law.

To his credit, Tom did account for some complicating factors that are not related to intellectual property law, especially when those factors can be quickly mentioned without much explanation. A case in point is his suggestion that the lower damages awards in continental Europe could be attributed to the different size of the relevant national markets, the fragmentary nature of national patent systems in Europe and the challenges of obtaining cross-border injunctions in the region. The chapter on patent remedies in Japan also alludes to the deep-seated cultural differences that may have complicated the operation of the Japanese patent system and the practice of patent litigation within the country.

Taken together, my criticisms here reflect more of my personal preference for a more holistic approach to comparative law and a greater emphasis on sociolegal perspectives. They speak less to the book’s inadequacies. With more than 400 pages, the volume has already provided us with a lot of information and insights to digest. Moreover, as with any comparative law project, the author has to pick and choose an approach that best reflects his intended focus, research interests and theoretical preferences.

In writing this pioneering book, Tom has not only opened a much-needed scholarly dialogue on comparative patent remedies, but has also showed us how to compare and contrast the different national patent systems from around the world. The volume reinforces his firm belief that “the major patent systems can learn from one another [and] that each also would benefit from a dose of economic reasoning, empirical analysis, and experimentation in trying to adjust their patent remedy practices to the needs of a global, technologically interdependent, economy.” The book is highly recommended to anybody interested in learning more about comparative intellectual property law.

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