"In recent months, we have seen a growing number of companies engage in what some are calling the next wave in
the tech patent wars," said Judiciary Committee Chairman Patrick Leahy (D-Vt.). "Companies that previously
cross-licensed their technologies with other companies in the market are increasingly seeking to block their
Both Ramirez and Joseph Wayland, acting assistant attorney general at the Justice Department, told Leahy's
committee that they are concerned with the rash of patent litigation at the ITC, arguing that, as a general matter,
royalties disputes in cases where two companies are at an impasse should be the province of district courts, where
judges can provide injunctive relief and damages, rather than seeking an exclusion order barring imports at the
But perhaps even more alarming than the sheer number of cases is the technology that is in play, Wayland said,
stressing the degree to which the disputed devices have become essential parts of consumers' lives.
"I think what our concern is is that we see not so much the volume of matters but the type of matters that area
involved," he said. "So we're talking about transactions involving products that affect the lives of millions of
consumers and involve billions of dollars of potential damages. That's somewhat new in the sense that, you know,
blocking a particular cell phone application could cause consumer harm across millions and millions of people, so
it's the type of the practice that we're concerned about as much as the volume."
Both witnesses suggested that that form of "patent hold-up" can undermine competition within a given market,
with negative effects for consumers such as fewer choices and higher prices.
Moreover, both agreed with the guidance on damages awards offered by Richard Posner, the district court judge in
Illinois who recently threw out Apple's
request for an injunction against Motorola Mobility. Posner urged his colleagues on the bench to weigh the net
contribution of a disputed technology in the overall success of a product in determining the extent of the damages
incurred as a result of the infringement. So in a smartphone with tens of thousands of patented technologies in
use, what is the actual monetary contribution of a single component?
"Some of the reasons that we see there being so much litigation seems to be that patent damages are outsized and
larger than would be necessary to properly compensate for IP technology," Ramirez said. "So the idea would be that
if you properly align the reward with the contribution that's being made, that is likely to reduce the incentive
for parties to end up litigating in court."