Merges: Back to the Shadows, or Onward and Upward? Current Trends in Patent Law

MergesBy Professor Robert Merges

When no less an authority than Hal Wegner of Foley and Lardner starts worrying about the current direction of the Supreme Court on patent issues, it’s time to sit up and take notice. I have heard some of these concerns in the past few years, especially in the wake of the eBay injunction case. But when Hal sent around his widely-read “top 10 cases” email recently, I could see that his outlook had taken a serious turn for the worse. Here are some quotes from the recent Wegnerian missive:

Wegner“eBay philosophically piggybacks off an anti-exclusionary right climate in the electronics/software/manufacturing industries that has had a constant, anti-patent drumbeat in the academic and business communities and in the mainstream press. The Court has listened. . . .

[A] decidedly anti-patent core nucleus from the Douglas era is reforming at the Court that - save for Justice Stevens - had disappeared in the wake of the 1980 Chakrabarty and 1981 Diehr decisions . . . .

I believe this is a fairly mainstream view, at least among some chem/biotech/pharma practitioners. And despite how much Hal knows about all things patent (things he has generously shared with me and other academics over the years), I have to disagree with his assessment. Even more, though, I am worried about the larger implications of these views. The wedge between the pharma/biotech/manufacturing and the software/electronics views of the patent world is on one level just a normal development in a vibrant and growing field. But beyond a certain point, it is not a good sign. This is especially true when it is combined with the view that the current Supreme Court is anti-patent. Taken together, this attitude reminds me of the bad old days, the days whose shadow we in this field have only recently emerged from: the days when patent lawyers huddled together, defensively, while a hostile world seemingly bent on the destruction of this area of law (and these incentives for inventors) lobbed random attacks their way.

I think this period, which the field survived (some would say, just barely), casts a long shadow over today’s developments. But in my view at least, there is much more sunlight today than in the bad old days of the Douglas-Black anti-patent jihad. We have not seen, in any of the Court’s recent opinions, discussion of patents as “monopolies,” along the lines of Justice Douglas’ concurrence in Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corporation: “Every patent is the grant of a privilege of exacting tolls from the public. The Framers plainly did not want those monopolies freely granted.” Compare this with a statement from the unanimous opinion in one of the “new wave” of Supreme Court patent cases, the Festo case from 2002:

Each time the Court has considered the doctrine [of equivalents], it has acknowledged this uncertainty [over effective claim scope] as the price of ensuring the appropriate incentives for innovation, and it has affirmed the doctrine over dissents that urged a more certain rule.

In my view, it makes no sense to equate Douglas’ fifty year old dictum in a concurrence with this recent statement from a unanimous Court opinion. To reiterate: the recent statement of binding law talks of preserving “incentives for innovation,” and not hunting down spurious monopolies.

If there is an “Exhibit A” in Hal’s alarmist argument, it is the recent eBay opinion. Indeed, eBay seems to be the driving force behind most of the anxiety over the current direction of the Supreme Court. On one level, this is perplexing; after all, an opinion extolling “traditional principles of equity – the heart of the Court’s holding in eBay – hardly seems like a radical, “anti-property” legal ruling. But I think that the concerns Hal expresses have a deeper cause: the divergence in interests, and growing split, between pharma/biotech and electronics/software industries. I will return to this theme momentarily. But first, a few words about the post eBay environment are in order.

Recent cases show that for the most part the fears of the patent bar in the immediate aftermath of eBay are not being realized. (Joe Scott Miller's running web page tally of post-eBay cases shows this. As Professor Miller’s data show, district courts have granted plenty of preliminary and permanent injunctions following eBay. Injunctions have been denied in cases weak on the merits, which of course is nothing new; and in a few cases where patents provide disproportionate leverage or are asserted by entities that do not contribute in any appreciable way to innovation: exactly the result intended in the eBay opinion, in my view. And note to Hal: since pharma/biotech firms are real innovators, they have nothing to fear from eBay.) For the most part, people in the patent world recognize this: how can one rationally complain about the continued increase in patent applications while arguing that eBay has significantly undermined the value of all patents? If that latter argument were true, application volume would be dropping, not rising. The opinions in Warner-Jenkinson and Festo, other opinions, and even the remarks about the need not to upset the apple-cart in the oral argument in KSR show a concern with balance that belies a wild-eyed anti-patent bias.

My reading of the evidence – including eBay and its aftermath – is that this is a pro-business Court. I think the Supreme Court has created, overall, a very moderate body of patent law in recent years. (Examples: taking claim construction from juries; preserving the doctrine of equivalents, first from a frontal attack, and then by preventing prosecution history estoppel from swallowing it; trying to draw a reasonable line in the on-sale bar area; etc.) It has absolutely not shown itself to be systematically “anti-patent.” What it has done is to try to keep order and balance in a fast-paced field, weighing the interests of various branches of industry and various users of the patent system. This is, by all assessments, a pro-business Court. It would be shocking if the Court had deviated from this baseline commitment in one important branch of business cases, those involving patents. In my view, it has not.

The Supreme Court’s Real Concern: The Federal Circuit

Later in his letter, Hal has this to say:

[T]he passage of a generation and an open and some would say deserved hostility of the academic community toward the Federal Circuit has transformed this Court of Appeals into just that, an intermediate appellate court where the Supreme Court now pays perhaps closer attention to its jurisprudence than any regional circuit, except possibly the Ninth Circuit.

Here Hal is onto something significant. The real target of the Supreme Court’s caselaw seems to be, not the patent system generally, but the jurisprudence of the Federal Circuit. It is crucial to keep this in mind: whatever one thinks of the Federal Circuit, or of how much its caselaw needs “correcting,” targeting that Circuit is not the same as targeting patents or patent law generally. This is a vital distinction between the “bad old days” of the Douglas/Black era and today.

The Federal Circuit may well be the “new Ninth Circuit.” Despite the Federal Circuit’s overall success in stabilizing patent law, and setting it on a more coherent course, in my opinion the legal rulings of that Circuit often cause unnecessary confusion. Vacillation and variation are well-recognized in a number of important areas: claim construction, the “written description” requirement, means-plus-function claims, inherency, and product-by-process claims, just to name a few. There may be good reasons for some of this variation. They may be structural, having to do with the difficulty of the subject matter, or the absence of competing ideas and different perspectives caused by being the only appellate court in the area. (For some original analysis of these issues, and a sure-to-be-provocative proposal, see Craig Alan Nard and John Duffy’s recent working paper calling for patent issues to be spread among two or more appellate circuits: “Rethinking Patent Law's Uniformity Principle.”) Perhaps the Federal Circuit’s problems are more idiosyncratic, having to do with the composition or workings of this particular group of judges. Whatever the cause, the Supreme Court, in stepping up the scrutiny on that Circuit, is just doing its job of supervising and tending the overall functioning of the federal court system.

So in my view it makes no sense to criticize the Supreme Court, which is trying to steer the Federal Circuit in the right direction. It is especially perplexing to hear some of the same voices complain about the Supreme Court as also complain about the variations in Federal Circuit cases. These dual complaints (“the Federal Circuit needs a lot of work” and “The Supreme Court is anti-patent”) make the patent community sound incredibly negative. It reminds me of the old WoodyAllenWoody Allen joke about the food at summer camp: “The food was awful. And the portions were small too.” The Supreme Court is the only force actively working to steer the Federal Circuit onto a reasonable course. For those of us who believe patent law is an important and worthy field of law, we ought to be grateful for the attention.

To summarize: I believe the Court looks at patent cases from a centrist, inclusive, business-oriented perspective, which is a far cry from saying they are anti-patent. Criticism of individual patents, as in the KSR oral argument, or the dissent from the dismissal of certiorari in Metabolite does not in my mind reveal an underlying anti-patent bias. It does reveal a concern with the quality of some individual patents – which is a different concern.

But of course, in this the Court is not alone. Although it is tempting to say that those who are “anti-bad patents” are really in some sense “anti-patent,” I would disagree. As this is the core of the contentious divergence between pharma and electronics mentioned earlier, I turn to that issue now.

Looking at the Bigger Picture: When Molecules and Electrons Collide

It is no secret that the pharmaceutical and biotechnology industries have very different interests than those of electronics and software. Pharma products are typically covered by one or at most a handful of patents; the “billion dollar molecule” means that in pharma, there is such a thing as “the billion dollar patent.” Not so in electronics and software. Hundreds or thousands of patents may read on individual features of a complex microprocessor, consumer electronics device, or software product.

Because the Supreme Court’s cases have in recent years tried to strike a balance between various aspects of the patent system, they have of necessity waded into this area of contention. In many ways, concerns about the Supreme Court are really only part of a larger set of concerns on the part of pharma/biotech. The people who make their livelihood from these industries appear to me to be worried that the newfound efforts at “balance” are coming directly at their expense – that whatever balance the system as a whole may be gaining is coming at the cost of certainty and stability in their core areas of concern.

I want to make two points about that. First, I do not think that this is a “zero sum game.” I think the patent system can be tweaked and adjusted so as to address the concerns of the electronic/software industries, without undermining the economic position of pharma/biotech to any appreciable extent. Second, I believe that this “us against them” mentality could have some serious negative consequences. (This mentality is on prominent display in a recent brief filed by Eli Lilly in the Microsoft v. AT&T case in the Supreme Court – a frontal assault on the patentability of software, by a large pharmaceutical firm. Fortunately, it is unlikely the Court will take much notice, since the case centers on a discrete section of the Patent Act relating to infringing exports, and has nothing whatsoever to do with Section 101 issues.) Whatever the strains of bringing disparate industries under “one big patent tent,” based on what we know now they are worth it, compared to the alternative.

On the first point: despite real friction in recent years, I believe both sets of industries can be accommodated in a reasonable patent system. The key point is for the pharma/biotech industries to recognize that the software and electronics industries are not anti-patent, they are anti-bad patent. There is a world of difference between these two. (If you don’t believe that, look in on the debates between rabid open source and “free software” advocates and those trying to defend the value of patents in the software and other industries. It is maddening for software industry people that they are attacked as club-wielding monopolists by those who attack patents from within the software industry, and then accused by pharma of being latter-day acolytes of the Douglas/Black anti-patent school!)

On the other side, those in the electronics/software industries need to put themselves in the shoes of pharma/biotech. As carefully as “patent trolls” strategize to acquire patents that aim directly at the Achilles heels of an electronic or software product, so do generic drug companies take aim at the patents of pharma/biotech. Any tool designed to “weed out” weak patents from the hands of trolls can and will be turned around and used against pharma/biotech patents, by generic drug firms only too happy to swoop in after all the hard (and expensive!) work is done and cash in on a pharmaceutical product or therapy. And unlike in the electronics/software industries, this cut-throat competitive game goes on in pharma/biotech in an industry that comes under intense public scrutiny concerning drug pricing, marketing and safety. Sometimes it seems as if the press and other observers are doing their best to turn Big Pharma into the next tobacco or asbestos industry – ironic when you realize that pharma/biotech is at heart all about saving and extending lives, not endangering them. Against this backdrop, it is easy to see why the pharma/biotech industries are concerned. Patent law is one of the last bastions against a fairly hostile onslaught. Of course they are worried about any weakening along this front.

One “solution” that might seem commonsensical is to split the patent system. Although it is tempting to do so, to “send the combatants to opposite corners of the ring,” in my mind we don’t yet know enough about how this would work to advocate it seriously. There are too many open questions: would the patent office issue two separate types of patents? How would the borderline between them be policed? Would they be enforced differently? What standards of validity and infringement would apply to each? And on and on. These issues will have to be studied very carefully before one can confidently advocate a truly split patent system. Maybe something along these lines will make sense someday. In the meantime, piecemeal, careful reform of individual patent doctrines and procedures seems a far more sensible course.

Because of this uncertainty, it seems to me divisive and dangerous for pharma/biotech to alienate potential allies. The electronics and software industries are after all huge players in the economy, and they have earned a substantial place at the bargaining table over patent issues. This new reality is being felt in the patent world, and will continue to be felt. The old days of the large east coast law firms and a few dominant (mostly east coast) companies setting patent policy are over. This is a sign of success: our economy is growing and changing, and patents continue to be important in many sectors. Public policy will and should change accordingly. That’s the way the system is supposed to work.

The downside of divisiveness is also worth considering. Do the pharma/biotech industries want to drive electronics/software companies into a political alliance with generic companies? Do pharma/biotech firms want to embrace the “patent trolls,” and risk associating themselves with entities seen as interested only in exploiting weaknesses in the system to make money than in actually pushing ahead with useful new technologies? (The lessons of the tort reform movement are relevant here: it may take too much time, but eventually those who use the legal system only to extort money from productive sectors of society will be shut down. Why would you want to ally yourself with players operating under a surefire expiration date?) These kinds of political bedfellows pose serious risks all around, in my view. Better to compromise over the details of patent reform than risk open warfare of this sort. That could be bad for everyone who believes the patent system is a fundamentally worthwhile institution.

Going Forward

To summarize: What worries me about Hal’s views is that they overemphasize the shadows currently cast over the patent system, and invite comparisons with an era that I think was very different. And to the extent Hal’s views exacerbate a split between powerful industry groups with interests in the patent system, they point us in a dangerous direction n.

I may not agree with my old friend Hal in this matter. But the point is that we do (I think) both share an important fundamental belief in the viability and continuing potential of the patent system. (That’s one of the many things he passed along to me in my early days in this field.) In my view, the Supreme Court shares this view too. We need to continue to work with the Court, and with each other, in the good faith belief that we are all engaged in a worthy common enterprise. What do you say, Hal?

Note: Robert Merges is the Wilson Sonsini Goodrich & Rosati Professor of Law and Technology and Director or the Berkeley Center for Law & Technology.

50 thoughts on “Merges: Back to the Shadows, or Onward and Upward? Current Trends in Patent Law

  1. “I think the readers of this blog can discern the difference.”

    Let’s hope so! If not, readers are liable to spend too much time erecting strawmen and stretching analogies beyond their plainly intended limit.

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  2. “Some” patent attorneys type quickly as they spew forth their dribble. “Other” patent attorneys type quickly, but spend time to reflect upon that which they wrote to ensure it is carefully crafted, well reasoned, and factually supported.

    I think the readers of this blog can discern the difference.

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  3. “The reason I know Malcolm Mooney is not a patent practitioner (or even a law student) is the sheer number of his posts and the time it must have taken to write them – time a real patent attorney (or even a law student) would simply not have.”

    What a strange thing to say. My experience is that “real” patent attorneys tend to type rather quickly, especially when they are merely responding to the assertions and questions of others.

    In any case, there is a scroll bar on the side of the window to help you skip past comments you aren’t interested in reading. Play with it for a while.

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  4. The reason I know Malcolm Mooney is not a patent practitioner (or even a law student) is the sheer number of his posts and the time it must have taken to write them – time a real patent attorney (or even a law student) would simply not have.

    Malcolm, as much as you enjoy seeing yourself in print (40% of the post here were written by you), please spare us from at least a healthy measure of your posts. Why not wait for some time to elapse until you really have something to add such as, for example, forever.

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  5. “Neither you nor I will know why Labcorp got DIG’d unless you were clerking for the Supreme Court or a justice posting incognito.”

    Perhaps in the metaphysical sense we will not “know” but the Supremes statements on the subject seemed clear and reasonable enough to me. Moreover, it was for precisely the reasons anon alluded to that I and many others were hoping (indeed, expecting) the Supremes to step away from the case.

    “I am guessing that you are a law student, so didn’t understand what I was talking about.”

    Yeah, that must be it. LOL!

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  6. “the next 101 case (now that litigants know to preserve the issue and petition for cert.) will surely overturn a whole bunch of Fed. Cir. precedent.”

    Not really. What Fed. Cir. precedent would have been overturned if the Supreme’s had gone ahead and ruled on the 101 issues in LabCorp, adopting Justice Breyer’s reasoning?

    You can’t patent laws of nature, facts, or an idea. According to the patentees’ construction of their own claim in LabCorp, the claim precluded anyone from *thinking* about a natural phenomenon (e.g., a natural-occuring correlation between molecules in the human body).

    What Federal Circuit precedent holds that such claims are valid?

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  7. anon @ 03:32 AM

    A few replies:

    1. Neither you nor I will know why Labcorp got DIG’d unless you were clerking for the Supreme Court or a justice posting incognito. The point is not that it was DIG’d, but that they made clear their views anyway, and the next 101 case (now that litigants know to preserve the issue and petition for cert.) will surely overturn a whole bunch of Fed. Cir. precedent. Exhibit 1 for why these things affect Pharma is that the respondant in Labcorp was, well, a Pharma company.

    2. As for Genentech, I am guessing that you are a law student, so didn’t understand what I was talking about. The narrow issue in Genentech was whether licensees can sue for DJ, but the patent bar was mainly watching on a wholly seperate issue: whether an accused infringer, not licensed, can sue for DJ on invalidity when the patentee sends a letter implying, but not expressly alleging, infringment. Pharma loved this tactic, see Teva Pharm. USA, Inc. v. Pfizer, Inc., 395 F. 3d 1324, 1333 (Fed. Cir. 2005). It is now dead. See Genentect fn. 11.

    More generally, I am not arguing that the cases themselves have so much impact on patent law right now. I am arguing that Prof. Merges’ view that “anti-patent” and “anti-Fed. Cir.” are different depends on what you mean by “anti-patent.” Views on patents fall on a spectrum, not a dichotomy, and the Federal Circuit is much further on the patentee side of that than the Supreme Court. Compared to the Federal Circuit, rather than the Supreme Court of the 1950s, the current Supreme Court is “anti-patent”.

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  8. Gideon

    “If you have never come accross an instance where a product by process claim is required, then you likely don’t work in the chemical and/or biotech arts or you haven’t been writing apps and claims very long.”

    Again, Gideon: product-by-process claims are never “required” to describe a composition. You are begging the question, just like Judge Newman does in her incomprehensible opinions on the subject.

    I have prosecuted in the chem/bio arts for a decade and have never come across a novel composition that couldn’t be sufficiently described with a composition claim.

    Did I know the position and exact number of every molecule in the composition, down to the atom? Nope.

    “The point of my sputting example is exactly that it is impossible to know what the distribution of atoms is on the glass. That’s the point.”

    Again: what is the point of novelty, Gideon? What is novel and non-obvious about your composition vis a vis the prior art?

    Here’s the rub Gideon: you say it’s impossible to describe your composition because you can’t determine “the distribution of atoms.” In that case, it must be impossible for the same reason for you to determine that I infringe your product-by-process claim unless I practice the method exactly as described in your specification.

    And your product-by-process claim must necessarily be limited to that exact method, down to the smallest detail, because otherwise the “distribution of atoms” (which are “impossible” to deterimine) will change and that would be a different composition from the mysterious one which you allegedly “invented.”

    So all you have is a composition claim that you can only enforce when your narrow method claim is infringed.

    So what’s the point of such a claim? It gives you nothing that you can’t get with a method claim.

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  9. Of –Vacillation and variation are well-recognized in a number of important areas: claim construction, the “written description” requirement, means-plus-function claims, inherency, and product-by-process claims, just to name a few–, I am not sure that I have seen “vacillation and variation” in the area of inherency, but I have seen a lot of confusion by legal academics in the area of “written description.” The July 2006 article by Kintisch in the journal Science illustrates that this confusion has proliferated.

    Of –taking claim construction from juries; preserving the doctrine of equivalents, first from a frontal attack, and then by preventing prosecution history estoppel from swallowing it; trying to draw a reasonable line in the on-sale bar area; etc.) It has absolutely not shown itself to be systematically “anti-patent.”– I thought the Supreme Court affirmed the Federal Circuit in Markman, and that it was attorneys, not the Federal Circuit, that launched a “frontal attack” on the doctrine of equivalents. Festo concerned infringement wherein an initially submitted claim covered the embodiment but no final, allowed claim covered the embodiment, a subset of doctrine of equivalents matters, and one that had to dance around Graver Tank. Relative to the en banc Federal Circuit decision, it was “pro-patentee” but it could also be viewed “pro-patent litigation.” The criteria created by the Supreme Court in Festo were pulled out of briefs, and had no basis in prior law. In the on-sale case in Pfaff v. Wells Electronics, the Supreme Court technically affirmed the CAFC, although it did not affirm the previous law of the CAFC, and in fact pulled criteria out of a public use case.

    Separately, when I see text such as –In the US, he would have been compensated as part of the normal societal expectations that companies should reward their top inventors well.– I think of the name Richard K. Lyon, but that probably doesn’t resonate with too many people. [Incidentally, the product-by-process case was Exxon v. Lubrizol.] However, after the death of double Nobel laureate John Bardeen, Bardeen’s papers discussing his treatment by Bell Labs after the transistor invention became publicly available and they make for interesting reading on how well some top inventors are rewarded.

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  10. Two minor points.

    #1. Nakamura’s invention pertains to the blue LED, not to a blue laser.
    [http://ipbiz.blogspot.com/2005/01/nichianakamura-settle-over-blue-led.html

    Of the “what if” point about the United States, one notes that the invention “should have” been in the US:
    [http://nesr.esci-va.com/materials/gan/maruska_story.asp
    cited in Just The Facts, Ma’am Int. Prop. Today, Jan. 2003]

    #2. The Supreme Court has recently referred to patents as monopolies.

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  11. Mooney wrote:

    “Let’s see here. You say it is the “distribution of the atoms” that makes the composition novel. Yet you refuse to describe the composition in terms of the distribution of atoms.”

    Ok, I’ll post this for any young pups out there who might be able to learn, but Mooney has now crossed the line into insult, so there’s no point in beating my head on that wall.

    The point of my sputting example is exactly that it is impossible to know what the distribution of atoms is on the glass. That’s the point.

    Get it?

    All we know is that, after many many variations, we get a good result when we do X, then Y, then I, then Z. We don’t have the technology to analyze the atomic distribution of the metals on the glass. They may align in a certain way. They may form strata. And so on.

    But there is no way to know.

    All we know is that it works the best when we make it with X, then Y, then I, then Z.

    A counter argument that I need more English skill or a need a patent attorney is not a counter argument at all.

    I know how to make it, but I can’t claim it based on its structure because its structure is not knowable.

    The only way to properly claim this is with a product by process claim.

    As a final note, the law on product by process is unsettled, or at least ambiguous, so I won’t delve into the deficiencies of having only a method claim, and not a product by process claim.

    If you have never come accross an instance where a product by process claim is required, then you likely don’t work in the chemical and/or biotech arts or you haven’t been writing apps and claims very long.

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  12. Professor Merges seems to believe that the patent system was designed to protect investment; i.e. to provide incentive for entities to risk capital and work hard when introducing new products to the marketplace. Based on this belief he advocates a stronger patent system geared towards achieving that result, i.e. strengthening such incentive, while weeding out unwarranted incentive.

    Prof. Merges belief is outright WRONG, and is belied by the basic quintessence of the patent system, which is NOVELTY.

    If Prof. Merges is right that the ultimate goal of the patent system is to protect investment, then how does he answer the following questions?

    Why should not a drug maker receive incentive for conducting extensive research and clinical trials on a compound previously known to be effective for a specific disease? Why does the prior knowledge of such pharmaceutical activity preclude any need to provide incentive for the very expensive follow-on research and clinical trials?

    Being that the initial novelty stage of the discovery of activity in a compound is miniscule in terms of investment compared to the very expensive and risky follow-on research, why does the patent system only protect the initial stage of novelty?

    Is the keyword in the patent system, novelty, or is it investment?

    When an inventor has a flash of genius and conceives a revolutionary invention, but invests nothing in terms of work and capital, why should he receive patent protection?

    The answer to all the above is obvious and widely known to every patent lawyer.

    The patent system was ONLY meant to REWARD DISCLOSURE OF NOVEL AND NONOBVIOUS INVENTIONS. Nothing else.

    There are other incentives for risking capital and hard work for non-novel products. For instance, a drug maker receives 5-10 years of exclusivity EVEN if the product he is marketing has no patent protection. That is the incentive provided for conducting clinical trials.

    But patents are only provided to reward the disclosure of novel inventions.

    It is very troubling that Prof. Merges, when examining the tenets of patent policy, seems to miss what really lies at its core.

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  13. anon @ 1:54

    Your comment seems to be not only misguided by ignore what Merges specifically argued against. These SCOTUS cases do not affect Pharma and trolls equally. eBay is the most extreme evidence of that, and we have demonstrable proof now that it has a small effect, only bearing upon trolls.

    Labcorp was DIG’ed for a reason, because the court realized the possible harm of an imprecise decision (a good sign, not a bad sign). Also, Pharma does not typically “invent” these foundational, relationship based patents, which more typically occur at the university level. Even if they did, it would only really be useful as a blockinb patent to keep competitors out of an entire new area rather than to further “protect” a specific drug patent (not something that clearly deserves patent protection).

    Genentech is a decision that has a lot of richness to it that will be difficult to evaluate for a while to come. Reasonable aprehension is gone, but who knows what replaces, or what contract based-options exist to avoid DJ jurisdiction. However, that’s all pointless for this discussion. Big pharma does not licence its drug patents out to Teva, and its licences with its distributors / suppliers / packagers / manufacturers are assuredly as air-tight as possible.

    KSR is probably the biggest threat to big Pharma, mainly in the area of repackaging block-buster drugs in new delivery mechanisms or new combinations. However, it’s hard to predict what the effect of a decision that isn’t even out yet will be. Furthermore, it’s incredulous to say it will affect trolls and Pharma equally, as the parties briefs and oral arguments were clearly aimed at knee-capping trolls, not a general weakening of patents.

    Overall your list is just innacurate and only proves Merges point. Pro-patent people don’t actually look / think enough about decisions long-term effects but just act reactionary, in ways that are self-destructive.

    P.S.

    Where are our patent law grades Merges?!

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  14. “Perhaps you should know that an ideal example of such “highly dubious patent”
    would be an IBM patent: it’s pretty common for an average IBM patent to cite just a few US patents and NO non-patent references.”

    I’m well aware. And your point about the hypocricy of big businesses whining about “trolls” is well-taken and (in my view) indisputable. That’s why I noted upthread: “trolls” are a bogeyman concept created and given life to by big business in order to frighten the rubes and congress critters to “do something.”

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  15. MM wrote:
    “…just as applicants should be aware that a patent which fails to recite any non-patent prior art is a highly dubious patent.
    If patentees holding such patents find themselves feeling increasingly “uncertain” about the value of their holdings, that’s perfectly fine with me.”

    Perhaps you should know that an ideal example of such “highly dubious patent”
    would be an IBM patent: it’s pretty common for an average IBM patent to cite just a few US patents and NO non-patent references.
    Greg Aharonian once conducted a study of IBM patents and published his conclusions.
    I, for myself, having studied quite a few IBM patents in my area, fully agree with his assesment.
    But this fact certainly does not prevent IBM from taking licensing money from all other companies out there…
    I don’t think that so-called “bad” patents are a real problem here – hypocrisy is the problem.
    Those same corporate folks who talk loudly about “bad” patents owned by evil “patent trolls” and their harmful effect on innovation, quickly turn around and assert their own junk patent portfolios against startups.

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  16. MM.
    I guess all I can say is that I don’t see how the following has anything to do with the discussion:

    If the alleged owner of a property doesn’t, in fact, own the property, or if the property in question is, in fact, worthless, then no compensation to the allaged owner is necessary.

    Were we discussing chain of title issues? Were we discussing the value of a valid, issued patent? I thought the discussion was about rendering invalid existing patents through changes in the law.

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  17. “the reason the patent system has exploded over the last couple decades is exactly because of the predictability that the FC brought to the patent system.”

    Hmmm. I’d suggest being more careful about inferring cause-and-effect from mere correlation.

    “You are the first person I have ever heard suggest that the Federal Circuit did not bring some clarity and predictability to an area of law that was near chaos.”

    Actually, I am not the first person you heard suggest that because … well, I never suggested it.

    “It has fallen off that path of late”

    I’m not sure what “of late” means but, yes, the CAFC has not been the paradigm of clarity that it might be and now, for better or worse, it’s going to get a spanking.

    I remind you that there is nothing surprising about the Supreme Court settling an issue of Federal law. That is what the Supreme Court does.

    Reply
  18. “If your concern really is for patents that shouldn’t have been issued, then advocate reexamination, which is the PTO’s recall. That’s the appropriate solution. Not changing the law.”

    How about this, once the PTO gets its act together, then YOU can advocate for changing the law back to “good old days” (whatever those were).

    “So if patents are like property deeds, should current patent holders be compensated under eminent domain when their “property deeds” are taken back by the SC?”

    If the alleged owner of a property doesn’t, in fact, own the property, or if the property in question is, in fact, worthless, then no compensation to the allaged owner is necessary.

    “Paying individuals for innovating is “bad.” Only big companies are entitled to patents.”

    Your flailing at strawmen now. I don’t subscribe to either of those ridiculous views.

    Reply
  19. MM-
    At this point I must conclude that you have no idea what you are talking about. You are the first person I have ever heard suggest that the Federal Circuit did not bring some clarity and predictability to an area of law that was near chaos. It has fallen off that path of late, but for the first 20 years or so, the FC did a fine job of exactly what it was supposed to do. It has only been since the notion of “patent trolls” has gained popularity that the decisions and dicta of both the FC and the SC have begun muddying the waters. And the reason the patent system has exploded over the last couple decades is exactly because of the predictability that the FC brought to the patent system. And that predictablity is now being shaken again.

    Reply
  20. “Cars don’t vanish into nothingness when the law changes.”

    I already said that the analogy is very limited but since you insist … your right to drive the car can, in fact, vanish into nothingness when the law changes.

    Anybody who has ever failed a smog check can tell you that.

    Reply
  21. jw

    “The Federal Circuit was created to address the EXACT situation that our current judicial system is tending towards: uncertainty in the law.”

    I think it goes without saying that the CAFC has contributed a great deal to the current climate of uncertainty. I also think that the current state of uncertainty means that granted patents are more bothersome to alleged infringers, not less.

    If the CAFC was truly concerned about eliminating uncertainty, then they could have written some unambiguous decisions about product-by-process claims and means-plus-function claims years ago when they had the chance. For example, they could have effectively killed product-by-process claims when they had the chance. And they could have required that practicioners use the word “means” and “function” when they want to invoke “means plus function” claim language. And they could have simply said that claim preambles are NEVER limiting, period.

    That would have increased certainty.

    Instead, the CAFC keeps kicking up dust. That dust is collected in jars by patentees who beat the bushes for possible infringers whose pockets are deep enough to justify filing a lawsuit.

    One thing is certain: over time, laws change. For example, an applicant who relies solely on product-by-process claims to protect her composition because she believes that she is otherwise incapable of protecting her invention may be disappointed when her patent turns into junk, but she should not be “surprised” by such a change.

    The same could be said of an applicant who relied on laborious credibility-stretching TSM arguments to obtain her claims. Such patents exist on relatively thin ice and applicants should be aware of that, just as applicants should be aware that a patent which fails to recite any non-patent prior art is a highly dubious patent.

    If patentees holding such patents find themselves feeling increasingly “uncertain” about the value of their holdings, that’s perfectly fine with me.

    Reply
  22. Patents are nothing like cars. Cars don’t vanish into nothingness when the law changes. The car I just bought will not become less safe just because a new regulation is passed, or an old one is changed.

    If your concern really is for patents that shouldn’t have been issued, then advocate reexamination, which is the PTO’s recall. That’s the appropriate solution. Not changing the law.

    So if patents are like property deeds, should current patent holders be compensated under eminent domain when their “property deeds” are taken back by the SC?

    And so this argument has led exactly where all such arguments lead. Paying individuals for innovating is “bad.” Only big companies are entitled to patents. “Bad patents” are those that make big companies pay small companies a royalty. The “public” will be better off without any patents. Nonsense.

    Reply
  23. “Your position is effectively addressing “bad” cars by changing the law so manufacturers can stop compensating the individuals who are harmed. ”

    Not at all. My position is more like increasing the stringency of regulations which govern the types of cars that roll off the assembly line.

    But recall that I brought up the “bad car” analogy only to illustrate the point that “bad” does not equate with “evil.” It just means “incorrect” or “mistaken.”

    Patents are like cars in that they can embody mistakes in their production. That is where the similarities end and (ahem) “bad” analogies begin.

    “What’s next? I’d like to quit paying rent on my office space.”

    Do some research and see if your landlord obtained the property illegally or is not the true owner. Then go to your landlord with that information and work out a deal.

    Better yet, join up with your fellow tenants and buy the place from the rightful owner.

    Property deeds are a tad more analogous to patent rights ….

    Reply
  24. “A bad patent is bad in the same way that bad automobiles are bad. They should be recalled by the manufacturer and the source of the problem should be addressed and “cured.””

    That is absolutely and completely untrue. Manufacturers recall “bad” automobiles because the law protects individuals who are injured by them. Your position is effectively addressing “bad” cars by changing the law so manufacturers can stop compensating the individuals who are harmed. THAT is the problem. If the cars are “bad”, the solution is NOT to change the law to make them “good.” And conversely, if the cars are good, you shouldn’t change the law to make them bad just because you don’t like someone else making money on them.

    The Federal Circuit was created to address the EXACT situation that our current judicial system is tending towards: uncertainty in the law. That’s the fundamental premise of Mr. Wagner’s article. That’s what he meant by “Back to the Shadows”.

    The best thing that happened when the Federal Circuit was created wasn’t the establishment of enlightening or morally appropriate proclamations. The importance was predictability and uniformity in the law. You appear to be advocating the exact chaos that the Federal Circuit was created to settle.

    And as to your statement that the public will benefit as soon as businesses get to quit paying license fees on existing patents. Well that’s so absurd that I can’t even stomach a response. What’s next? I’d like to quit paying rent on my office space. I don’t really like to pay for my house either. Or my car. Maybe the Supreme Court needs to take up those laws too.

    Reply
  25. Gideon

    “Sure, you could claim 3% Alum, 30% This, 40% that, and so on, but that claim covers the art, because the distribution of the atoms is what provides the novel character”

    Let’s see here. You say it is the “distribution of the atoms” that makes the composition novel. Yet you refuse to describe the composition in terms of the distribution of atoms. Do you know anything about the distribution of atoms in the composition? Then tell me what you know. That way, you’ll get a composition claim which covers your fixed and permanent idea of what you actually conceived, assuming that your fixed and permanent idea is novel. If not, well, boo hoo hoo: try harder to describe your composition in a way that doesn’t read on the art. Or hire a patent attorney to do it for you.

    Don’t forget: you have your method claim which is perfectly adequate to protect your invention until you acquire the English skills to describe your allegedly “new” composition in more definite terms.

    “To say that nothing needs to be claimed in product by process claim form is the same thing as saying that every composition of matter is perfectly describable. ”

    Wrong. Patent law does not require you to describe your composition “perfectly.” You do not need to describe every aspect of your composition. Patent law requires that you to describe your invention only with such definiteness that a competitor who uses a different process to manufacture the composition can determine whether he/she is infringing your composition claim when he/she makes and sells his/her own composition. It also helps the patent examiner determine whether, in fact, your composition is novel and non-obvious.

    Reply
  26. “Ok, so abstract the argument to a simple good versus evil position. ”

    That’s not what I did. A bad patent is bad in the same way that bad automobiles are bad. They should be recalled by the manufacturer and the source of the problem should be addressed and “cured.”

    “The problem identified in this article, and the problem in general, is that the judicial system is redefining “bad.” And doing so in favor of big businesses.”

    But bigger businesses are always going to weather increased stringency in laws which relate to them better than smaller businesses. That’s one of the benefits of being “big.” I just don’t see these changes being directed specifically at “big business.” It just happens that “big business” is going to weather a world of diminished patent power better than “small inventors” who have nothing BUT patents.

    I don’t see how that is “unfair” or “alarming” any more than it is “unfair” that some businesses are allowed by the government to grow very big and some are forced by circumstance to remain small.

    “today’s “good” patents are tomorrow’s “bad” patents. THAT is the problem.”

    Hardly. The public will benefit immediately when the alleged inventions claimed in those patents effectively fall into the public domain (as unenforceable or unlicensable) and businesses — small and large — don’t need to charge consumers money to cover their licensing fees.

    But go ahead and show me the data which proves that any diminishment in the number of granted patents will cause innovation in the United States to grind to an economy-crippling standstill.

    Reply
  27. If people plan on engaging in principled debate, then it is incumbent on them to define their terms with some specificity. That said, to all those who harp about “bad patents”, would one of them kindly provide a meanigful definition? The same can be said of “trolls”.

    Reply
  28. Somebody wrote:”If Japan has such a terrible patent system, why is it that Japan is taking over the auto industry here in the states? Could it be that they are focused in their core competencies that does not include fighting ridiculous patent claims such as the KSR?”

    No. It’s because the Japanese make vastly superior cars. If you’ve only owned American, then you may not know this.
    I “drove American” back in the late 80s early 90s. After 4 years of biannual trips to the Ford dealer to spend 400 bucks on yet another broken component, I bought Japanese. Great car, no issues, inexpensive.

    I’d love to have stats associated with posters. How many patents have you filed and prosecuted in Japan, start to finish?

    With regard to product by process, here’s an example.

    Let’s say you are making a glass reflector of some kind and you are sputtering atoms of various metal onto a pane of glass.

    Let’s further say that the way you sputter is to alternate metals, sputtering times, and device settings many times throughout the process.

    When you are done, the resultant glass has the ideal light blocking characteristics for an auto.

    If you are familiar with this type of science, then you’ll know that it is impossible to reverse engineer the glass to find out exactly what the atomic distribution of the metals on the glass is. Sure, you could claim 3% Alum, 30% This, 40% that, and so on, but that claim covers the art, because the distribution of the atoms is what provides the novel character, and not the absolute percentage of the components.

    Product by process is the only way to claim this so as to not read on the art and also claim what you have.

    There are 1,000 other examples.

    To say that nothing needs to be claimed in product by process claim form is the same thing as saying that every composition of matter is perfectly describable. That’s just plain wrong.

    If you want to maintain your position, I’ll post a paragraph invention disclosure and you can post your claim to it. Then we can all have fun shooting holes in it.

    Reply
  29. “But a “bad patent” is simply a patent that should not have been granted. Bad patents are real. They surely exist.”

    Ok, so abstract the argument to a simple good versus evil position. Let me try that: I’m against all things bad. I’m in favor of good things. Because they aren’t bad.

    The problem identified by this article is not bad patents. There is no need to change the law to identify whether a patent should or shouldn’t have been granted. The problem identified in this article, and the problem in general, is that the judicial system is redefining “bad.” And doing so in favor of big businesses.

    As soon as the SC hands down its KSR decision, hundreds of thousands of “good” patents that were properly granted under current patent law will be overnight rendered “bad.” That’s the problem–“bad” has become a moving target. No longer do patent practitioners have any meaningful guidance for drafting “good” patents. And today’s “good” patents are tomorrow’s “bad” patents. THAT is the problem. Uncertainty in the law does not benefit anyone, least of all those most in need of legal protection–the individuals.

    Reply
  30. “If too many patents are being granted on trivial improvements, then perhaps that issue should be addressed.”

    Perhaps???!!

    “Trying to refocus patent protection away from individuals and toward big businesses through pejorative, indefinable labels like “patent troll” and “bad patent” is a disservice to the spirit of patent law and the US Constitution.”

    Patent troll is surely a pejorative that is peddled by big business as a bogeyman that we should all be afraid of.

    But a “bad patent” is simply a patent that should not have been granted. Bad patents are real. They surely exist.

    You will never ever succeed at promoting the interests of so-called “independent” or “small” inventors if you downplay the real problem of “bad patents,” because it diminishes your credibility.

    Look at it this way: I’m not a “small” inventor or a big business man. I don’t care if the laws or court rulings make it just as easy for a small inventor to get a crap patent as it is for a big business to get a crap patent.

    I don’t want anyone to have a monopoly on obvious products or methods. If that means that some “small” inventor has to work harder to find investors to fund his patent application process, so be it.

    Those are “the breaks.” That’s not a Constitutional issue because, as you will recall from law school, the relatively impoverished are not a suspect class.

    Reply
  31. Prof. Merges argues that “anti-patent” and “anti-Federal Circuit” are not the same thing. That is true if “anti-patent” means going all the way back to time when “the only patent that is valid is one which th[e] Court has not been able to get its hands on.” But there is no doubt that the Federal Circuit, by force of history, is a very pro-patentee court; and the Supremes appear much less so. Let us take a brief look:

    Ebay — automatic injunctions gone.
    Labcorp — pretty clear what they thought of patents on laws of nature, even if there was no holding.
    Genentech — the patentee’s favorite strategic tool: the letter just threatening enough to trigger willful infringment but not DJ jurisdiction, is gone.
    KSR — anyone want to bet where the super patentee-friendly TSM test is going?

    All of these, except Ebay, affect trolls and pharma pretty much equally.

    Whether we call the Supreme Court “anti-patent” or just “not quite as pro-patent as the CAFC,” the shift of power from the Fed. Cir. to the SCOTUS is of understandable concern to the patentee side of the “v.” (i.e. Pharma, universities, and trolls).

    Reply
  32. “The business of America is business, remember?”

    Yes, I remember. I also remember that the banana of America is a banana, and the street sign of America is a street sign. But I don’t think any of those things are relevant. What is relevant is that the US Constitution protects the rights of individuals, not businesses, through patent law.

    If too many patents are being granted on trivial improvements, then perhaps that issue should be addressed. Trying to refocus patent protection away from individuals and toward big businesses through pejorative, indefinable labels like “patent troll” and “bad patent” is a disservice to the spirit of patent law and the US Constitution. I don’t think anyone seriously suggested that the only true innovation being achieved in our country is by big businesses with billion dollar research budgets. If you want to reduce the number of insignificant improvement patents, perhaps we should start there.

    Every big business was once an individual or small business struggling to compete with another big business. It’s hard enough for the small company to compete in this country without our judicial system biased in favor of companies with unlimited PR budgets and lobbyists on staff.

    Reply
  33. I think there is a clear trend in favour of giant corporations, and that this is not a good thing. IMHO, whoever invents an invention should enjoy the same rights, but the four factor test acts against those who can’t raise capital to work their inventions.

    Of course, the source of this miasma is that the statute contradicts itself. The ‘principles of equity’ and the ‘right to exclude’ cannot co-exist.

    As for ‘patent trolls’, I see this as self-serving epithet coined by big business.

    In answer to the original question, no the SC is not completely anti-patent, but it could be seen as anti-inventor. By this I mean independent inventors. Employee inventions are another matter entirely.

    To those who haven’t come across me before, I should add that I am not an inventor, but merely a patent agent who has worked for a number of independent inventors.

    Reply
  34. “pro-business Court” ???

    Oh, yeah, Pro-BIG-business, that would be right..

    I just don’t see how EBay decision can be a positive thing for all those small high-tech startups developing critical parts of tomorrow’s techniology, given the multi-component nature of all modern high-tech consumer products.
    Has anybody counted the number of patents involved in, say, making a modern cell phone ?
    I mean the very VALID patents, not even junk ones (E.g. patents on voice-compression, GSM, CDMA etc.) ?
    How can a small startup with one crucial but small patented component of a final high-tech product survive if EBay decision gives all the large incumbent manufacturers a green light to infringe, at the same time protectring them from newcomers ?
    So NO, this SCOTUS is NOT “pro-business”,
    and is certainly not “pro-innovation”

    Reply
  35. I question the comparison between the CAFC and the CA9. Although the Supreme Court has reversed the CAFC in a series of recent cases, it has also denied cert in numerous others.

    Many of the Supreme Court’s recent decisions–e.g. eBay, Medimmune, Illinois Tool Works–have nothing to do with substantive patent law. eBay and Illinois Tool Works merely struck down what the Supremes perceived as the CAFC crafting special rules for patent cases instead of following general rules set forth by the Supreme Court.

    KSR is the only real foray into substantive patent law that the Supreme Court has made in the last 4-5 years (I’m thinking of Festo, unless I’ve overlooked something). It’s left relatively untouched all of the other issues Prof. Merges identifies (claim construction, written description, mpf claims, etc.). It remains to be seen what the Supreme Court will say in KSR, but the general message from the other cases seems to be that the CAFC should realign its focus somewhat and be mindful that it is not the “supreme court of patents,” but rather just another intermediate appellate court with comparatively less guidance from the Supremes than the other courts of appeals have.

    Reply
  36. tsm

    “I agree that the problem is not patents, but bad patents. It’s a lighthouse problem, and I think all “sides” in the debate should focus on reaching consensus on ways to keep bad patents of all stripes out of the marketplace.”

    Word.

    Reply
  37. I don’t understand how one can justify the recent Supreme Court jurisprudence on the basis that the current formulation of Justices is a “pro-business Court” like that’s a good thing.

    Too many patents being granted on teeny tiny innovations and/or too many overly broad patents is bad for businesses — large and small — who need to wade through an ever-widening swamp of patents in order to do business.

    The business of America is business, remember?

    Perhaps the Supremes consider the habitual patent filing-and-lawsuit business to be somewhat distasteful, sort of like the chase-the-ambulance-and-sue business.

    Reply
  38. Derek

    “A cake – the list of ingredients does not describe the final product.”

    I don’t want to get off topic again. Your assertion was that “there are things whose composition can ONLY legitimately be described by the method of production.”

    Whether a “list of ingredients” suffices to describes your cake does not prove your assertion. Far from it. I can surely describe your cake without listing its ingredients. By the way — what’s novel about your cake?

    I can also describe how to make a cake with a method claim. That’s called a “recipe.”

    So, once again — and this will ALWAYS be the case — “product-by-process” claims are never necessary to protect one’s invention.

    Reply
  39. I agree with Hal. I don’t understand how one can justify the recent Supreme Court jurisprudence on the basis that the current formulation of Justices is a “pro-business Court” like that’s a good thing. Last I checked, the US Constitution afforded patent protection to individuals, not businesses. Encouraging jurisprudence that seeks to offer greater protection to large businesses over individuals or even small companies is just wrong, in my opinion.
    And I’m sorry that I didn’t actually read this entire article today. I had to stop because it’s so long and my small clients can’t afford pro-business lawyers with enough time on their hands to thoroughly debate such matters.

    Reply
  40. “There are things whose composition can only legitimately be described by the method of production.”

    Really? Name one.

    A cake – the list of ingredients does not describe the final product.
    Think of the Exxon case (sorry, can’t remember the cite) where a composition (list of ingredients) claim that both parties agreed covered the accused product was construed by the CAFC not to because some of the ingredients reacted in use.

    Reply
  41. Gideon

    “There are things whose composition can only legitimately be described by the method of production.”

    Really? Name one.

    Reply
  42. Hmmm . . . my gripe is slightly more narrow. I think Merges’ post is a good one, but one glaring generalization caught my eye:

    “ironic when you realize that pharma/biotech is at heart all about saving and extending lives, not endangering them.”

    Well, yes and no. You’re talking about an industry that cured erectile dysfunction, with no fewer than three billion-dollar drugs, yet shows an unseemly lack of interest in, e.g., malaria, dengue fever, and (to a lesser extent) AIDS.

    I think it’s fair to say that, at heart, the pharma industry is about making money. Just like electronics and software. They have helped some people live longer and better, but that’s a mixed bag in and of itself. So let’s not get too carried away in thinking that pharma needs a better deal or more consideration than other industries, or that there’s some reason that it ought not be allowed to fend for itself.

    I agree that the problem is not patents, but bad patents. It’s a lighthouse problem, and I think all “sides” in the debate should focus on reaching consensus on ways to keep bad patents of all stripes out of the marketplace.

    Reply
  43. I think Japan is doing fine with the patent system it has. As an EE, I think our patent system is a joke and it’s about time the SC right the wrong done by the CAFC. To me, there is something wrong when practitioners in a field look at the patents being issued and question the validity of the system.

    The software industry innovated greatly without the so-called software patents. Now, we just have to hope the SC saves it in time.

    If Japan has such a terrible patent system, why is it that Japan is taking over the auto industry here in the states? Could it be that they are focused in their core competencies that does not include fighting ridiculous patent claims such as the KSR?

    Reply
  44. Start with this . . .

    “. . . settling product-by-process case law (the practice should simply be banned as it encourages incompetence)”

    Should be settled, not banned. There are things whose composition can only legitimately be described by the method of production.

    On to Japan . . .

    IMO Japan’s “patent system” is a joke. If you file in Japan regularly, you know this. I’m not even talking about enforcement of your patent against a Japanese corp. I’m talking about getting a patent issued. You can have a patent claim allowed around the world and the JPO will still reject it over 5 Japanese documents. If you eventually get a claim allowed, it’s narrower than the paper it’s printed on. Next, try enforcing your pioneer patent against a major Japanese company. They are quite practicle about this. They don’t see the logic in shutting down major business opportunies for companies that use Japanese labor and bring profits home to Japan. Very practical. My experience only here.

    And finally, the SC.

    The SC is, in large part, reflecting the sentiment that we’ve seen all accross the country away from individualism and private ownership and toward corporate control and socialism/collective ownership. The trend is unmistakable.

    You’ve got Ebay – forced licensing to protect corporations.

    You’ve got New London – forced taking of land from private to give to private for the alleged benefit of the public.

    You’ve got Roberts noting that “that was obvious to me” when reviewing a patent in a prior case. Maybe that will be the new standard – “Is it obvious to Chief Justice Roberts?”

    “With regard to the rejections under 35 USC 103(a), Applicants resectfully note that Justice Roberts would not have found the claimed invention obvious.”

    The case on 103 is going to result in the narrowing of the range of patentable inventions. Not simply a reworking of the language. The sphere of patentable material will be shrunk.

    Next, George is proposing that we have a new health insurance system – free for those without, and if your firm/company pays more than X for insurance – that is, you have really good insurance – then you pay tax on the amount over X as if it were income.

    Yet more movement toward collectivism.

    The trend is very clear. Patents are just caught up in it.

    The difference between an innovator and a troll is only time.

    Reply
  45. this attitude reminds me of the bad old days, the days whose shadow we in this field have only recently emerged from: the days when patent lawyers huddled together, defensively, while a hostile world seemingly bent on the destruction of this area of law (and these incentives for inventors) lobbed random attacks their way.

    I think patent law is alive and well and will stay that way for a long time.

    I do sincerely hope that whatever changes are in the works lead to the early retirement of patent prosecutors who remain employed only because they are experts at hard-selling the “benefits” of filing patent applications to clients whose “inventions” amount to a bit less than half-baked “ideas” about “something that wasn’t disclosed in that other guy’s patent.”

    To be honest, I don’t see that happening any time soon either.

    That said, I really enjoyed reading this post. The CAFC needs a good spanking for its miserable failure at settling product-by-process case law (the practice should simply be banned as it encourages incompetence) and means-plus-function case law (either ban it or require prosecutors to invoke it beyond a reasonable doubt). I look forward to clients and their lawyers encouraging more Supreme Court appeals in this era where the Supremes appear eager to listen. And I look forward to reading more cases like Chef America — cases that recognize the value of professional patent drafting rather than the ability of litigators to kick up dust and recite platitudes about “preserving the validity of patents” after everyone involved in creating the patent has dropped the ball.

    Reply
  46. I think the perception that the Supreme Court is anti-patent is a misinterpretation of what is really going on. First, the Court appears to be annoyed at every decision coming from the Federal Circuit. The Court has affirmed but two cases it has reviewed from the CAFC since Markman. Maybe this stems from the CAFC’s own internal divisiveness on issues such as the doctrine of equivalents, or because the Court has decided its own institutional integrity requires it to “lay down the law” for the CAFC. After all, for a long time the CAFC was the final word in patent law, but those days are over. Second, the Bush administration has been pushing its own agenda with the Court: between 1982 and 2000 the Solicitor General filed an advisory brief with the Court in only two instances. Since 2000, the SJ has filed 8 (or 9) such briefs, and the Court has ultimately ruled with the SJ in 7 instances (and one of the others was the LabCorp case, where the SJ advised the Court not to grant cert). While the Court professes (and Professor Menges perceives) that it is more pro-patent than Justice Douglas (and how could it not be?), it is steadily undoing whatever consistency and predictability the CAFC has brought to US patent law during the last quarter century – and that’s not good for any of us, no matter what the Court may say.

    Reply
  47. Stepback wrote

    “Japan has a patent system –or at least it claims to have one. Close inspection shows that it is a feudal system built for the benefit of the major war lords, their corporations. The idea of a lone wolf inventor coming up with anything significant and getting compensated for it is anthema to their system. Look what happened to the inventor of the blue laser”.

    Complete hogwash (assuming “their system” refers to “their patent system”).

    It is because of Japan’s patent syatem that Nakamura was able to go to court and get money for his invention. If he had invented the blue-light laser in the US, he would have been *entitled* to ZERO, since in the US, patent law leaves compensation to inventors purely to their employers. Japan’s patent system is thus uniquely inventor friendly – and companies here in Japan, including foreign companies, are very concerned about it being so friendly.

    What caused Nakamura to leave Japan was not the patent system – which made him very wealthy – but the Japanese business culture that ignored the clearly (and uniquely) worded patent law and didn’t compensate him for his efforts, and didn’t help him in so many other ways.

    In the US, he would have been compensated as part of the normal societal expectations that companies should reward their top inventors well. In Japan, this hasn’t happened – which is why the patent law has a section saying inventors must be compensated by their employees. The problem was everybody kept ignoring the law, and people were shocked when recently a) inventors actually started asserting their rights, and b) the courts enforced those rights, and very generously too.

    Regards, Luke

    Reply
  48. Japan has a patent system –or at least it claims to have one. Close inspection shows that it is a feudal system built for the benefit of the major war lords, their corporations. The idea of a lone wolf inventor coming up with anything significant and getting compensated for it is anthema to their system. Look what happened to the inventor of the blue laser.

    That is the direction America is now pursuing thanks to the Harm-my-nation movement.

    Hal is right. We need to be scared. Very scared.

    Reply
  49. The heart of Merges argument is that software & electronics, on one hand, and biotech, on the other hand, have vastly different initial R&D costs. These costs serve as a huge hurdle in biotech that the patent compensates (and it provides a reasonable basis for Patent Term Extension in light of FDA approval times). In software, one can create a new product in a “garage lab” with a lot of sweat but substantially less equity than needed for a new drug.

    In addition, the time-to-release for software/electronics is quick, with users and businesses dealing with alpha and beta bugs typically within months to a year of conception. In biotech, the FDA process is years upon years.

    I would propose a solution closer to Australia’s “innovation patents.” Rather than using subject matter as a basis for balkanizing patent term, burdens of proof, etc., just have two systems available for all subject matters:

    (1) an innovation patent that lasts for a shorter term (say 5-7 years), goes through only basic examination, but has no “presumption of validity” attached.

    (2) a normal patent under the current system.

    This would permit any industry to protect fast-in-time inventions in a highly competitive, short term environment, with the respective trade of a shorter term and no presumption of validity but quick protection for fast moving technologies, while maintaining the current process for long term inventions. It also deals with the big difference in economic incentives for inventions with much different sunk R&D costs.

    Reply

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