Discretion in Patent Damages

John M. Golden (University of Texas School of Law)

Abstract: Delegation of decision-making discretion has long been a strategy for responding to concerns about information costs and contingency in human institutions and organizations. Such concerns tend to be particularly high in the context of intellectual property, whose focus, promoting creativity and innovation, naturally entails problems of uncertainty and incommensurability. In the United States, current disputes over patent damages provide a striking example of these issues. Courts struggle to assess how much compensation is appropriate for violating a patentee’s “right to exclude,” particularly when the patent in question covers only a facially small portion of an overall product or process. In addressing key questions relating to such assessments, including the admissibility and sufficiency of evidence as well as the extent of any enhanced damages, trial judges wield great discretion. More generally, by providing only relatively bare statutory instructions on monetary remedies, Congress has effectively given the judiciary as a whole great discretion in administering these awards. With reference to principles of legal design likely to be useful in situations characterized by uncertainty, context specificity, and information scarcity, this Article contends that, at least if the purposes of patent law’s main monetary remedies have been rightly understood, generous allotments of discretion to the judiciary as a whole and to district court judges in particular make substantial sense. On the other hand, appellate courts and, in some instances, Congress itself can do more to guide and, at least on the margins, confine these exercises of discretion, and this Article suggests ways in which such guidance and confinement might proceed.

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