Peter Lee: Accession and Patent Remedies

We often refer to patents as "property," so can traditional property remedies teach us something about appropriate remedies in patent infringement cases? This is what Professor Peter Lee (UC Davis) argues in his forthcoming article, The Accession Insight and Patent Infringement Remedies, which I had the opportunity to hear him discuss last month at Fordham Law. (Full disclosure: I edited Lee's Patent Law and the Two Cultures and am already a fan of his writing style.)

Lee considers the doctrine of accession, which governs the "mistaken improvement" of property. In a canonical accession case, Wetherbee v. Green (Mich. 1871), Wetherbee chopped down $25 worth of trees under a faulty license and made $700 worth of barrel hoops. The Michigan Supreme Court held that as long as Wetherbee was acting in good faith, title to the wood would transfer and he would only need to compensate the true owners for their $25 loss, rather than giving them the $700 barrel hoops.

So what happens, Lee asks, if Wetherbee's fictitious great-great-granddaughter patents a revolutionary new battery and begins commercializing it, only to be sued for infringing a patent covering an older battery design? What if she is unable to negotiate a reasonable licensing agreement?

Lee argues that when this situation arises in the patent context—where one party "substantially improves" a patent—courts should similarly deny injunctive relief. Rather than obtaining only a "blocking patent" and having to negotiate a license (which may fail due to transaction costs and strategic behavior), an improver acting in good faith (which probably includes many alleged infringers) would simply have to pay reasonable royalties.

As Lee notes, this "accession insight" is not really new: courts are already considering the relative value of the improvement to the underlying patent when determining whether an injunction is appropriate under eBay, even if they don't call it accession. (The international TRIPS agreement also says that an improver may only receive a compulsory license if the improving patent "involve[s] an important technical advance of considerable economic significance.") Other scholars have already explored the accession–patent analogy, and Professor Christopher Newman (George Mason Law) has even done so in the context of patent remedies, although Lee "offer[s] a more optimistic account of applying accession" than Newman.

Lee's contribution is not the general outcome he is arguing for, nor the basic idea of using the accession analogy, but rather the specific use of accession as a persuasive tool for his argument. Section VI.A seems to provide the motivation for the project: Lee notes that his proposal "captures much of the insight of the reverse doctrine of equivalents"—a useful but effectively "moribund" doctrine—and that his proposal "makes mitigating liability based on transformative infringement more palatable for courts." In essence, he argues that if we allow title to transfer for physical property, where traditional property rights are strongest, then surely we can relax the property rule for an analogous situation involving intellectual property.