Intellectual Property
Inflation Indicators
**This is the sur-reply to a series of responses to Jonathan Masur's recent article, Patent Inflation, which appeared in the December issue of YLJ. For Professor Arti Rai's response, see here. For Lisa Ouellette's response, see here.** In Patent Inflation, I argued that the asymmetry in Federal Circuit review of Patent and Trademark Office (PTO) decisions would lead over time to inflation in the boundaries defining what inventions are patentable. In short essays, Professor Arti Rai and Lisa Ouellette have offered valuable commentary, including both qualitative (Rai) and quantitative (Ouellette) evidence bearing on the question of inflation. In this brief response, I explain how their evidence is consistent with—indeed, bolsters—the theory presented in Patent Inflation. Direct Federal Circuit reversals of PTO decisions make up only a small portion of that court’s caseload. But those cases have exerted outsized influence on the development of the law, particularly across a number of the most significant patent doctrines. This is just as Patent Inflation would predict.
What Are the Sources of Patent Inflation? An Analysis of Federal Circuit Patentability Rulings
**This is the second in a series of responses to Jonathan Masur's recent article, Patent Inflation, which appeared in the December issue of YLJ. For Professor Arti Rai's response, see here. For Professor Masur's sur-reply, see here.** Professor Jonathan Masur’s recent article, Patent Inflation, argues that the expansion in the boundaries of patentability that has occurred since the creation of the Court of Appeals for the Federal Circuit is caused by cases in which the court reverses patent rejections by the U.S. Patent and Trademark Office (PTO). This Essay examines every Federal Circuit patentability ruling over five different years and shows that reversals of PTO rejections are few in number and doctrinally insignificant. Instead, patentability rulings in infringement suits—which should have no net effect under Masur’s model—likely play an important role in patent inflation because of the presumption of patent validity and the higher stakes in patent litigation. Masur also underestimates the role of the Supreme Court in redrawing patentability boundaries. Although Masur’s simple model is elegant, this Essay argues that it cannot accurately capture the complex phenomenon of patent inflation.
Who’s Afraid of the Federal Circuit?
**This is the first in a series of responses to Jonathan Masur's recent article, Patent Inflation, which appeared in the December issue of YLJ. For Lisa Ouellette's response, see here. For Professor Masur's sur-reply, see here.** Jonathan Masur’s argument regarding “Patent Inflation” rests on the assumption that PTO behavior is determined almost entirely by a desire to avoid reversal of its patent denials by the Federal Circuit. Although the U.S. Patent and Trademark Office (PTO) is certainly a weak agency over which the Federal Circuit has considerable power, Masur overestimates the extent to which high-level PTO administrators are concerned about Federal Circuit reversals and underestimates institutional influences that are likely to operate in a deflationary direction. The PTO is influenced not only by the Federal Circuit and other inflationary forces, but also by executive branch actors, industry players, and workload concerns that push in a deflationary direction.
Patent Inflation
121 Yale L.J. 470 (2011). For more than two decades, the Patent and Trademark Office (PTO) and the Federal Circuit have exercised nearly complete institutional control over the patent system. Yet in recent years their stewardship has been widely criticized, largely on the basis of two particular failings. First, the PTO grants significant numbers of invalid patents, patents that impose substantial costs on innovative firms. And second, over time the Federal Circuit has steadily loosened the rules governing patentability, allowing ever more patents over a greater range of inventions. This Article argues that both of these modern trends may be attributable in whole or in part to the asymmetric institutional relationship between the PTO and the Federal Circuit. If a patent applicant is denied a patent by the PTO, she can appeal that denial to the Federal Circuit. However, if the PTO grants the patent, no other party has the right to appeal. Accordingly, the PTO can avoid appeals and reversals, both of which are costly in monetary and reputational terms, simply by granting any patent that the Federal Circuit might plausibly allow. Because the PTO will grant nearly any plausible patent, the vast majority of rejected applications that are appealed to the Federal Circuit will concern boundary-pushing inventions that are unpatentable under current law. Occasionally, a particularly patent-friendly panel of Federal Circuit judges will elect to reverse the PTO and grant a patent that the Agency has denied. The Federal Circuit’s decision will create a new, inflationary precedent. The boundaries of patentability will expand slightly, as this new precedent exerts influence on the other circuit judges. And as the Federal Circuit’s conception of what may be patented expands, the PTO will similarly inflate its own standards in order to maintain an adequate margin for error and avoid denying a patent that the Federal Circuit is likely to grant on appeal. Patent law will thus be subject to a natural inflationary pressure.
The Inducement Standard of Patentability
120 Yale L.J. 1590 (2011). In Graham v. John Deere Co., the Supreme Court explained that patent law’s nonobviousness doctrine is meant to restrict the award of patents to only “those inventions which would not be disclosed or devised but for the inducement of a patent.” This Article argues that this inducement standard, largely ignored in practice, should serve as the doctrinal polestar. Such an approach would provide a solid economic foundation for the patentability standard and would align patent law with the many other fields of regulatory law that currently apply economic analysis in determining the scope and content of regulation. The Article also offers several refinements to the inducement standard and explains how the Patent and Trademark Office and courts could implement the inducement standard in an administrable way.
Patent Law and the Two Cultures
120 Yale L.J. 2 (2010). A half-century ago, author and physicist C.P. Snow warned of a “gulf of mutual incomprehension” between the liberal arts and sciences. Snow’s “Two Cultures” thesis is particularly relevant to patent law, a realm where law and science intersect. Drawing on Snow’s framework, this Article addresses challenges that arise when lay judges must engage, understand, and ultimately pass judgment on complex technologies. It first argues that technological subject matter imposes significant cognitive burdens on generalist judges. It then explores the “cognitive miser” model whereby laypersons adopt heuristics and defer to expertise to mitigate these burdens. Drawing from this psychological model, the Article then explores the unique role of formalism in patent doctrine. Advancing an information-cost theory of Federal Circuit jurisprudence, it argues that formalism limits and streamlines judicial engagement with technology. Formalism truncates difficult technical inquiries, thus helping to mediate the intersection of law and science. The Article then identifies a countervailing trend in recent Supreme Court patent decisions. In addition to substantively narrowing patent rights, the Court is systematically rejecting formalistic rules in favor of holistic standards. This so-called holistic turn promises to increase judicial engagement with technology. To address resulting cognitive burdens, this Article offers prescriptions for blending the economizing virtues of rules with the flexibility and contextual sensitivity of standards. It concludes by exploring the cultural differences of the Federal Circuit and the Supreme Court as well as the implications of those differences for patent doctrine.
Addressing the Green Patent Global Deadlock Through Bayh-Dole Reform
119 Yale L.J. 1727 (2010).
Property as Process: How Innovation Markets Select Innovation Regimes
119 Yale L.J. 384 (2009). It is commonly asserted that innovation markets suffer from excessive intellectual property protections, which in turn stifle output. But empirical inquiries can neither confirm nor deny this assertion. Under the agnostic assumption that we cannot assess directly whether intellectual property coverage is excessive, an alternative query is proposed: can the market assess if any “propertization outcome” is excessive and then undertake actions to correct it? This process-based approach takes the view that innovator populations make rent-seeking investments that continuously select among innovation regimes that trade off securing innovation gains (which tends to demand more property) against reducing transaction costs and associated innovation losses (which tends to demand less). If we can identify the conditions under which privately interested investments in lobbying, enforcement, and transactional arrangements are likely to yield socially interested propertization outcomes, then the underlying datum at issue—whether there is “too much” intellectual property—can be determined indirectly at some reasonable degree of approximation. This approach identifies a “property trap” effect where, under high coordination costs, the regime selection mechanism is prone to fail: litigation risk and associated transaction cost burdens drive innovators to overconsume state-provided property rights. Conversely, under low coordination costs, the regime selection mechanism is prone to succeed: adversely affected entities that rely substantially on outside sources for innovation inputs have incentives to undertake actions that weaken property-rights coverage, including constrained enforcement, forming cooperative arrangements, or even forfeiting intellectual property to the public domain. Counterintuitively, these relationships imply that large firms that rely substantially on outside sources for innovation inputs tend to have the strongest incentives and capacities to take actions that correct overpropertization outcomes. Preliminary evidence is drawn from the semiconductor, financial services, and information technology industries.
Debunking Blackstonian Copyright
118 Yale L.J. 1126 (2009). Copyright’s Paradox BY NEIL WEINSTOCK NETANEL NEW YORK, NY: OXFORD UNIVERSITY PRESS, 2008, PP.ix, 274. $34.95.
The Ideology of Authorship Revisited: Authors, Markets, and Liberal Values in Early American Copyright
118 Yale L.J. 186 (2008). The concept of the author is deemed to be central to copyright law. An important strand of copyright scholarship explores how the development of modern copyright law was intertwined with the rise of a new ideology of authorship as an individualist act of creation ex nihilo. This Article remedies two common shortcomings of this scholarship: implying that the process of embedding original authorship in copyright law was complete by the end of the eighteenth century, and presenting the relation between the ideology of authorship and copyright law as an exact correlation. These two shortcomings neglect the complexity of the interaction between authorship and copyright law and attract the criticism that much of modern copyright doctrine seems diametrically opposed to the presuppositions of original authorship. This Article focuses on copyright law and discourse in nineteenth-century America. It argues that much of the weaving of the ideology of authorship into copyright law took place during this later period and in three main contexts: originality doctrine, the emergence of the notion of copyright as ownership of an intellectual work, and the rules that allocate initial copyright ownership. The result was the modern structure of copyright-authorship discourse as a motivated distortion. Various parts of this discourse incorporate conflicting images and assumptions about authorship, which often stand in tension with the legal doctrines of copyright and their actual effects. These patterns, which still dominate copyright law today, are traceable to the history of the power struggles, economic interest motivations, and the ideological constraints that produced them.
The Access to Knowledge Mobilization and the New Politics of Intellectual Property
117 Yale L.J. 804 (2008). Intellectual property law was once an arcane subject. Today it is at the center of some of the most highly charged political contests of our time. In recent years, college students, subsistence farmers, AIDS activists, genomic scientists, and free-software programmers have mobilized to challenge the contours of intellectual property (IP) law. Very recently, some from these groups have begun to develop a shared critique under the umbrella of “access to knowledge” (A2K). Existing accounts of the political economy of the field of IP have suggested that such a mobilization was unlikely. This Article takes the emergence of the A2K mobilization as an opportunity to develop a richer and less deterministic account of the contemporary politics of IP. It draws upon “frame mobilization” literature, which illuminates the role that acts of interpretation play in instigating, promoting, and legitimating collective action. The frame- analytic perspective teaches that before a group can act it must develop an account of its interests and theorize how to advance these interests. These acts of interpretation are both socially mediated and contingent. Ideas can be a resource for those engaged in mobilization, but one that is not fully in their control. Frames thus can lay the scaffolding for a countermovement even as they pave the way for a movement’s success. Law is a key location for framing conflicts because it provides groups with symbolic resources for framing, and because groups struggle within the field of law to gain control over law’s normative and instrumental benefits. Law thus exerts a gravitational pull on framing processes. Engagement with law can influence a group’s architecture, discourse, and strategies, and can also create areas of overlapping agreement and— as importantly—a language of common disagreement between opposing groups. The Article closes by suggesting some implications of this point, which should be of interest to those who design legal institutions and who engage in social mobilization. Most intriguing, perhaps, is the role it suggests that law may play in the creation of global publics and polities.
Profits as Commercial Success
117 Yale L.J. 642 (2008). Courts often use the extent of a patented invention’s commercial success as crucial nontechnical proof of the patent’s validity. Relying on misguided economic reasoning, most courts use revenue as the primary yardstick for commercial success. This Note argues that courts instead should use profits as the proper measure of an invention’s commercial success. Current jurisprudence’s use of revenue reflects the flawed premise that firms maximize revenues rather than maximizing profits. As a result, courts will often find commercial success when the financial data suggest otherwise and vice versa. This Note finds the accounting and economic issues involved to be insubstantial, while requiring a threshold profit showing could materially further judicial economy.
Intellectual Property as Property: Delineating Entitlements in Information
This Article proposes that intellectual property’s close relationship to property stems from the role that information costs play in the delineation and enforcement of exclusion rights. As theorists have emphasized, the nonrivalness of information causes exclusive rights to be more costly in terms of forgone use than in the law of tangible property. But if intellectual property does not solve a problem of allocation, it can play a role in allowing those who find and develop information to appropriate the returns from their rival inputs. It is on the cost side that exclusion emerges as a possible shortcut: exclusive rights in information are simple, indirect, and low-cost devices for solving the problem of appropriating the returns from these rival inputs. Building on a framework that identifies exclusion and governance as complementary strategies for defining property rights, the Article derives some propositions about which factors can be expected to push toward and away from exclusion in delineating entitlements to information. The role that exclusion plays in keeping the system of entitlements over information modular—allowing information to be hidden behind metaphorical boundaries—is both its strength and its weakness. Because exclusion is both more costly and potentially more beneficial as interconnected information becomes more valuable, it is an empirical question whether we would expect more exclusion—and whether it would be desirable. The Article uses this information-cost theory to explain some of the basic differences between the more tort-like copyright regime and the more property-like patent law. The information-cost theory also has implications for suggestive sources of empirical evidence on the structure of entitlements, such as rules within business organizations. Intellectual property, like property in general, can be seen as (at best) a second-best solution to a complex coordination problem of attributing outputs to inputs. 116 Yale L.J. 1742 (2007).
Wealth Without Markets?
116 Yale L.J. 1472 (2007) The Wealth of Networks: How Social Production Transforms Markets and Freedom BY YOCHAI BENKLER NEW HAVEN: YALE UNIVERSITY PRESS, 2006. PP. 528. $40.00
Risk Aversion and Rights Accretion in Intellectual Property Law
116 Yale L.J. 882 (2007) Intellectual property’s road to hell is paved with good intentions. Because liability is difficult to predict and the consequences of infringement are dire, risk-averse intellectual property users often seek a license when none is needed. Yet because the existence (vel non) of licensing markets plays a key role in determining the breadth of rights, these seemingly sensible licensing decisions eventually feed back into doctrine, as the licensing itself becomes proof that the entitlement covers the use. Over time, then, public privilege recedes and rights expand, moving intellectual property’s ubiquitous gray areas into what used to be virgin territory—where risk aversion again creates licensing markets, which causes further accretion of entitlements, which in turn pushes the gray areas even farther afield, and so on. This “doctrinal feedback” is not a result of changes in the positive law but is instead rooted in longstanding, widely accepted doctrine and prudent behavior on the part of everyone involved. And because feedback is so ingrained in established law and practice, its various cures tend to create more problems than they solve. In the end, however, subtle changes in doctrine’s use of licensing information provide a normatively neutral solution. Read Professor Rebecca Tushnet's Response, Why the Customer Isn’t Always Right: Producer-Based Limits on Rights Accretion in Trademark. Read Professor Wendy Gordon's Response, The ‘Why’ of Markets: Fair Use and Circularity.
Copy This Essay: How Fair Use Doctrine Harms Free Speech and How Copying Serves It
114 Yale L.J. 535 (2004) Recent cases and scholarship have debated whether copyright law is consistent with the First Amendment. Much of the discussion has centered on copyright law's ability to suppress transformative, creative reuses of copyrighted works and on copyright's fair use doctrine as a mechanism to protect such transformative uses. This Essay argues that the increasing centrality of transformativeness to fair use has made it easier for copyright owners to control all instances of ordinary copying. Yet pure copying also serves valuable First Amendment purposes, both for audiences and, less obviously, for speakers, for whom copying often serves interests in self-expression, persuasion, and participation.
Patents, Paradigm Shifts, and Progress in Biomedical Science
114 Yale L.J. 661 (2004) This Note applies the concept of paradigm shifts from the history and philosophy of science to describe how patents on biomedical research tools--inputs to basic research--can help advance scientific theory. Patents on research tools frustrate scientific norms of sharing and can produce a tragedy of the anticommons that inhibits downstream experimentation. This provides an incentive for scientists to fundamentally reconceptualize natural phenomena in ways that do not depend on patented inputs for their exploration, thereby encouraging the alternative theory generation that drives profound scientific progress. The Note argues for a new patent system for biomedical research tools that better promotes both normal scientific processes of theory validation and the generation of alternative hypotheses that spark paradigm shifts.
Sharing Nicely: On Shareable Goods and the Emergence of Sharing as a Modality of Economic Production
114 Yale L.J. 273 (2004) This Essay offers a framework to explain large-scale effective practices of sharing private, excludable goods. It starts with case studies of carpooling and distributed computing as motivating problems. It then suggests a definition for shareable goods as goods that are "lumpy" and "mid-grained" in size, and explains why goods with these characteristics will have systematic overcapacity relative to the requirements of their owners. The Essay next uses comparative transaction costs analysis, focused on information characteristics in particular, combined with an analysis of diversity of motivations, to suggest when social sharing will be better than secondary markets at reallocating this overcapacity to nonowners who require the functionality. The Essay concludes with broader observations about the attractiveness of sharing as a modality of economic production as compared to markets and to hierarchies such as firms and government. These observations include a particular emphasis on sharing practices among individuals who are strangers or weakly related; sharing's relationship to technological change; and some implications for contemporary policy choices regarding wireless regulation, intellectual property, and communications network design.