The Compensatory Patent System: replacing injunctions with economic compensation

Abstract

This article introduces the idea of a novel patent system, the Compensatory Patent System (CPS), which replaces injunctions with economic compensation by granting patentees royalty-only payments. Under the CPS, the traditional right to exclude is replaced with a right to remuneration, with royalty rates administratively predetermined, published in advance and periodically updated, potentially informed by sector-specific classifications, such as the Cooperative Patent Classification (CPC) system. In the CPS, royalty payments are triggered by findings of patent infringement through streamlined administrative proceedings, ideally conducted by the patent office or an equivalent administrative body, with any adversely affected party retaining the right to judicial appeal within a defined timeframe. The CPS also expands the availability of administrative post-grant revocation proceedings, either by removing strict time limits for initiating invalidation challenges or by allowing such challenges to be brought in connection with infringement-related actions. To ensure consistency, infringement determinations would likewise be centralized at the same patent office or equivalent administrative body that handles post-grant revocation proceedings. The CPS aims to promote both broader access to patented inventions, thereby facilitating wider dissemination of technology, and greater utilization of patents as active tools for innovation and licensing, particularly in firms or industries where patents are often underutilized. This paper provides an overview of the CPS, presenting a patent system designed to balance attractiveness for patentees, fairness to all parties and societal benefit, while assessing its potential advantages and limitations in promoting innovation across diverse industries.