Contribution theory, Anchoring, Concept of coherence, Patent damages, Behavioral economics
Sturm College of Law
Under tort law’s theory of contribution, when one party is sued, it can implead other parties that may be jointly and severally liable and ask that they pay their fair share of any judgment. Although contribution theory has spread to numerous wide-ranging areas of the law, patent law is not among them. Thus, when a manufacturer is sued for patent infringement, it cannot seek contribution from the component supplier that included the patented technology in its component. This omission from patent law has generated surprisingly little commentary. In the few instances where an accused infringer has sought a right of contribution, the district courts have concluded that contribution is somehow preempted by 35 U.S.C. 271(c), which governs contributory infringement. This article explains how these decisions have incorrectly conflated the two doctrines. Contribution determines how to apportion damages between different liable parties while contributory infringement helps identify which parties are liable. Once the courts appreciate this distinction, they can and should adopt contribution in patent law. Contribution is typically thought of as a mechanism that equitably spreads liability among different responsible parties. However, because of the availability of indemnification agreements, contribution performs a more limited version of that role in patent law. However, this article identifies a much less expected benefit unique to patent law. Contribution should lower royalty awards in component patent cases, an area where awards have been shown to be excessive. Relying on the behavioral economics concepts of “anchoring” and “coherence,” this article compares how juries act under the current system with how they would behave under a patent system applying contribution theory. The article suggests that applying contribution will lead to lower royalty awards that are based on the value of the individual components and not the larger multi-component products.
Bernard Chao, The Case for Contribution in Patent Law, 80 U. CIN. L. REV. 97 (2011).
Originally published as Bernard Chao, The Case for Contribution in Patent Law, 80 U. CIN. L. REV. 97 (2011). Copyright is held by the author. User is responsible for all copyright compliance.