Warranting Rightful ClaimsExpressO (2011)
AbstractDamage awards for patent infringement have sky-rocketed and sparked significant debate in recent years. A part of this patent damages debate focuses on non-practicing entities, or so-called “patent trolls.” A patent troll is a patent owner that demands a royalty based on patented technology, yet does not actually make use of the technology to provide an end product or service. Patent trolls are known for their aggressive and opportunistic behavior. Their strategy is simple: create nuisance and inflict fear. Increasingly, buyers of goods using patented technology are availing themselves of the “warranty against infringement” (“WAI”) provided by the Uniform Commercial Code when sued by patent owners, notably patent trolls, for alleged patent infringement. The WAI provides a guarantee that goods bought or sold in a given transaction are free from a “rightful” third-party infringement claim when delivered. A party protected by the WAI can receive an indemnity of sorts from the other party for costs and damages associated with expensive and high-risk patent infringement suits. Under the current definition of “rightful,” the threat of litigation is sufficient to trigger protection under the WAI. As damage awards for patent actions continue to consistently fall in the million dollar-plus range, and patent trolls target hundreds of companies at one time, this low threshold for determining when a “rightful claim” has been made is opening the door for unprecedented abuse on the state level. Scholars have overlooked the significance of the WAI because of the unique blend of two areas of law: intellectual property and commercial law. This Article corrects this undervaluation. It argues that courts should adopt a new framework for determining when a “rightful claim” has been made against a buyer or seller, therefore providing it protection under the WAI. This Article also argues that the main theoretical justification for warranty law—asymmetrical information between the parties—often does not realistically occur in cases involving the WAI. Consequently, this framework will promote a realistic “symmetry” between the buyer and seller and protect companies from opportunistic patent trolls.
- Uniform Commercial Code,
- patent troll
Citation InformationKaren E. Sandrik. "Warranting Rightful Claims" ExpressO (2011)
Available at: http://works.bepress.com/karen_sandrik/1/