Guest Book Review: IP Accidents

The book's cover wonderfully matches
the colours of the Villa Salviati gardens

This is a book review of IP Accidents: Negligence Liability in Intellectual Property, by Patrick Goold, City Law School, University of London. It is brought to you by Léon Dijkman, a previous contributor to the IPKat. Léon is currently finishing his PhD on the proportionality principle and injunctions for patent infringement in EU law. He is also a lecturer at the Erasmus School of Law in Rotterdam and an associate at HOYNG ROKH MONEGIER in Amsterdam. Here is what Léon has to say about the book:

Hot off the press at Cambridge University is Patrick Goold's thought-provoking IP Accidents: Negligence Liability in Intellectual Property. It's the perfect summer read: light enough to take with you to the beach or the hills, but with captivating content that will open new horizons even for those who read it in the comfort of home (or the office…).

Goold became a particularly original thinker in this Kat's book following his work with David Simon, where he analysed what consequences luck ought to have when awarding IP rights. IP Accidents offers another creative inquiry that goes to the heart of IP. I may not agree with all of Goold's findings, but the boldness of his ideas inspired in me an unabated enthusiasm. Here is legal scholarship at its finest and funnest: to the point, imaginative, and daring.

Should IP infringement be subject to negligence liability?

Although "IP Accidents" sounds somewhat quaint, the title refers to a vivid episode in legal history that is central to Goold's argument: the rise of a negligence liability standard for accidents, which started occurring much more frequently in the wake of the Industrial Revolution. "New transport networks and technologies, coupled with factory conditions," writes Goold, "created new opportunities for personal injury" [p. 48]. The new tort of negligence meant strict liability standards would not stand in the way of technological progress but also created incentives to take safety precautions and opened the door to compensation of innocent victims.

Goold believes the Digital Revolution similarly entails novel risks of accidents, here: accidental patent or copyright infringement (in the book and this review, references to 'IP' should be read as to these two species). According to Goold, "[w]hen society produces vast quantities of information, much of which is protected by IP rights, and consumes that information in a vast array of new ways, the risks that individuals will use the information in ways inconsistent with the IP rights is high" [p. 33]. To make matters worse, "IP law has expanded in scope allowing ever more creative material to be eligible for protection. Meanwhile, traditional safeguards designed to prevent accidents have gradually eroded over time" [ibid].

What should be done? Goold rejects four fairness-based arguments in favour of the current strict liability regime in copyright and patent law [ch. 5] and presents a detailed analysis of various alternative liability regimes [ch. 4]. He favours a simple negligence rule, under which "the user avoids all potential liability by adopting reasonable care" [p. 59]. Goold argues that such a rule is superior to strict liability because it creates incentives for both the IP holder and the user to avoid infringement [p. 72]. Simple negligence is also to be preferred over other regimes because it has comparatively low error costs and, so Goold claims, "designates the correct party as the residual bearer of the harm" [p. 73]. For Goold, that party is the IP owner, whom he believes will work harder towards "reaching a licensing deal ex ante" if it is no longer compensated in "a significant portion of accident cases" [p. 59], i.e. all cases where the infringer took reasonable care.

Some thoughts on Goold's proposal

As stated, I am quite fond of the book but, in my view, there is also room for criticism (whereby I limit myself to patent law, the area of IP law I am most familiar with). To start, Goold's reliance on the truism that "accidental infringement is a growing problem" [p. 30] is a little too easy. As he says, this sentiment "echoes within legal commentary" [ibid], but serious efforts to substantiate this claim beyond pointing at patent grant rates (which in any event are much higher in the US than in Europe) are rare. The surge in patenting is surely daunting, but it is also true that modern technology makes searching for patents and ex ante clearance efforts much easier than they were in the 19th century, as was pointed out e.g. here, at 204-05. Goold acknowledges this, but still jumps to the conclusion that "a business that wishes to use a technology like Bluetooth faces an uphill battle (and in some cases an almost impossible task) to find all of the relevant patents ex ante" [p. 40]. But there is a dedicated patent pool that grants access to Bluetooth technology for a one-time fee of USD 9,600 [here]. Does the example show IP accidents are more prevalent today, or rather that private ordering solutions will often be found to prevent them [e.g. here]? 

This is not so say I disagree with Goold; in fact I share his intuition. And there are certainly instances where Bluetooth-related patents were asserted by what appear to be non-pool members [e.g. here, here]. However, I would have really liked to see a more thorough analysis of this "growing problem" because that would deepen our understanding of its nature and scope.

Goold's diagnosis matters because his cure is so radical: adopting a simple negligence rule for liability would completely change patent law as we know it today. I like that he thinks big and he is quite right in concluding that there "is no reason why [it] must be the case" [p. 125] that accidental infringers are always subject to a strict liability rule. Still, Goold may be taking the idea too far. Firstly, I am sceptical that it is possible to adequately and fairly assess whether patent searches by infringers were "diligent" or "reasonable". The idea calls to mind suggestions made in the aftermath of the recent revision of the German Patent Act [Katpost here] that generally infringers should be required to show they made reasonable clearance efforts [e.g. here]. I fear such a rule risks turning every patent trial into a discussion, tainted by hindsight and bound to raise more questions than it answers, on the alleged diligence of the search.

Secondly, and more fundamentally, patent assertion is already rife with uncertainty, so much so that some have likened it to a lottery. If, in addition, patentees would have to take the gamble that an infringer did not take (reasonable) efforts to avoid infringement – information that will almost never be available to a patentee prior to filing suit – I fear that for many of them, the game will quickly cease being worth the candle. Goold would possibly say that's a feature of his proposal and not a bug, as it could creative incentives for patentees to provide better notice of their patents. Fair enough, but the legal test he proposes revolves around efforts made by the infringer, not the patentee, so even with maximum exertion at giving notice a patentee will have little idea of his chances going into trial. Add to that the considerable subjectivity in determining "diligence" or "reasonable" efforts and it seems clear that, as Goold himself writes, patentees will no longer be compensated in a significant portion of cases. On the basis of this book, I am not convinced that outcome would be just or efficient.

More than once I wondered if the better solution would not be to tailor infringement remedies to the specifics of the case, an idea Goold discusses but rejects [p. 103-05]. Writing a book of my own on just this subject doubtlessly biases me towards this solution but even so, Goold's arguments in this respect did not strike me as the most compelling. He argues remedial flexibility "would require a substantial change of practice", though surely no more substantial than changing the liability regime altogether? He fails to note that the legislative change he thinks would be necessary already occurred in the EU with the introduction of Directive 2004/48/EC while in U.S. patent law it has been accepted since the 2006 decision in eBay v. MercExchange. Goold's other challenge stems from fears that remedial flexibility will be "shunted" by courts that presently rarely apply "innocent infringer provisions". There is some plausibility to this [see e.g. here] but an even more radical change of the system does not seem the best way forward. It should rather be to keep looking for and documenting weaknesses of the current system so that tweaks and fixes may do the job while sweeping reforms, however exciting, remain avoidable.

Conclusion

These remarks are expressed solely in the spirit of academic debate: as stated above, I think IP Accidents is a masterful achievement. In fact, one of the hallmarks of great scholarship is precisely that it raises controversy. I expect that many more readers, whether from academia or practice, will feel the way I did when reading the book: aroused and sympathetic to Goold's cause, but with thoughts of their own on how to proceed. Ultimately, IP Accidents succeeds best at being a tinderbox for ideas, and one can do far worse with a mere 200 pages.

Published: CUP, 2022

Available as hardback and eBook

ISBN: 9781108841481

Extent: 200 pages