[Ip-health] ​Problems in the USMCA provisions on damages for infringement of a patent

James Love james.love at keionline.org
Thu Feb 14 11:36:59 PST 2019


I had to summarize, for an office, in one page, how the USMCA provisions on
damages for the infringement of a patent are problematic.   So I wrote this
up.

Jamie


Problem in the USMCA provisions on damages for infringement of a patent

In the WTO TRIPS Agreement, the core standard for damages in patent cases
is as follows:

Article 45 Damages

1. The judicial authorities shall have the authority to order the infringer
to pay the right holder damages adequate to compensate for the injury the
right holder has suffered because of an infringement of that person’s
intellectual property right by an infringer who knowingly, or with
reasonable grounds to know, engaged in infringing activity.

The USMCA core standard for patent damages is as follows:

Article 20.82: Civil and Administrative Procedures and Remedies

3. Each Party shall provide/89/ that, in civil judicial proceedings, its
judicial authorities have the authority at least to order the infringer to
pay the right holder damages adequate to compensate for the injury the
right holder has suffered because of an infringement of that person’s
intellectual property right by an infringer who knowingly, or with
reasonable grounds to know, engaged in infringing activity.

4. In determining the amount of damages under paragraph 3, each Party’s
judicial authorities shall have the authority to consider, among other
things, any legitimate measure of value the right holder submits, which may
include lost profits, the value of the infringed goods or services measured
by the market price, or the suggested retail price.

89 A Party may also provide that the right holder may not be entitled to
any of the remedies set out in paragraphs 3, 5, and 7 if there is a finding
of non-use of a trademark. For greater certainty, there is no obligation
for a Party to provide for the possibility of any of the remedies in
paragraphs 3, 5, 6, and 7 to be ordered in parallel.

Note that footnote 89 in the USMCA provides an exception for trademarks,
but not for patents or copyrights.   The core standard in US law for
damages for patent infringement is 35 USC § 284
<https://www.govinfo.gov/app/details/USCODE-2009-title35/USCODE-2009-title35-partIII-chap29-sec284>,
which reads, in part:

§284. Damages

Upon finding for the claimant the court shall award the claimant damages
adequate to compensate for the infringement, but in no event less than a
reasonable royalty for the use made of the invention by the infringer,
together with interest and costs as fixed by the court. . .

The “suggested retail price” of a good as a measure of value is
inconsistent with this statute. Even more important, perhaps, are the
several exceptions to §284 which are not mentioned in the USMCA language:


   1.

   The Biologics Price Competition and Innovation Act of 2009, for cases
   when biologics manufacturer fails to make timely and constructive
   disclosures of patent landscapes to biosimilar competitors; and
   2.

   The provisions in Ҥ287. Limitation on damages and other remedies
   <https://www.govinfo.gov/app/details/USCODE-2011-title35/USCODE-2011-title35-partIII-chap29-sec287>”,
   including the elimination of damages “in respect to a medical
   practitioner's performance of a medical activity that constitutes an
   infringement.”


The USMCA would block new exceptions or limits on damages.

The USMCA standard also creates significant risks for the federal
government if it uses 28 USC § 1498
<https://www.govinfo.gov/app/details/USCODE-2011-title28/USCODE-2011-title28-partIV-chap91-sec1498>
for non-voluntary use of a patent. Section 1498 is our current compulsory
licensing authority, and one that several persons have proposed be used in
cases concerning drugs with excessive prices. The USMCA language would be
used to argue that the “suggested retail price” of a drug would be the
liability for infringement of a patent, when the non-voluntary use was
designed to remedy an excessive price.


-- 
James Love.  Knowledge Ecology International
http://www.keionline.org <http://www.keionline.org/donate.html>
twitter.com/jamie_love


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