Loyola Law Journal – Panel #2: Shortcomings in the Patent System

By Jason Rantanen

Timothy Holbrook, Michael Meurer and Ted Sichelman, and Oscar Liivak, moderated by Atanu Das.

Holbrook – The Written Description Gap: How do we balance access with protections to inventors.  Going to discuss an unintended gap – this gap may be good or bad, depending on your view of exclusive rights in this space.

Scholarship focuses on concept of possession in patent law, driven in part by a real-property centric approach.  For patent law, we measure possession through the patent document.  Extending this idea of possession to the subject of prior art.  Possession isn't just relevant between two inventors, but also with respect to whether the public already possesses something.

This is tied up in the idea of prior art, including the enablement requirement for prior art.  Even in the obviousness context, there's a possession context in play.  Sort of a form of constructive possession when dealing with obviousness.  So there are some synergies between obviousness and enablement that can be drawn.

When we're analyzing written description, we tend to be a bit myopic.  We're analyzing that particular written description context.  We're not thinking about what happens downstream.  In other words, there are some patents that might not satisfy the written description requirement but which might still anticipate or render obvious a downstream invention.  This creates gaps of subject matter that is unclaimable.

Written description: did the inventor demonstrate possession of the claimed invention at the time of filing based on the disclosure in the specification? Look back to Lockwood: written description doesn't include obvious variants of what is disclosed in the specification.  Originally the idea of policing new matter, but Ariad extended this to original claims itself.

Why? Perhaps because we might want to encourage more robust disclosures; perhaps it relates to the DOE.  But seems to be inconsistent with the idea that obviousness is an extension of possession.  Also arguably inconsistent with other doctrines where we treat obviousness as a form of possession.  Why, if something is obvious, is the applicant not entitled to it as long as it's enabled?

Returning to the subject: the rule, however, is that obvious variants don't satisfy written description.  What happens when the patent is treated as prior art?  There becomes certain subject matter that no one can claim in a patent. In other words, there become certain embodiments that fall into the public domain. [temporarily leaving aside the question of whether this can be covered through the DOE]

Maybe this is good; maybe this is a proper functioning of the patent system. These are variations that other folks can use immediately; it's a free for all.  This may be a good thing.

Maybe this is an issue of patent claim drafting.  If this was truly an obvious variant, then the patent attorney should have drafted better claims.  They may be the least cost avoider

But perhaps it's bad.  Patent drafters aren't omniscient; don't put all the work on their shoulders.  Does it create an incentive failure at certain points?  Would this knock out downstream innovation? 

Michael Meurer – Transparent Patents: Proposing four easy (in his view) patent reforms that relate to patent transparency. 

The idea of notice involves:

Public disclosure of:
-scope of rights

This lets innovators:
-Ex ante license

General point of view: patent system in the United States operates as a tax on innovation outside the area of pharma.

Transparency: referring to the government collection and publication of property information.  Search incentives to consider:
-numbers of property rights. 
-penalties – indirect infringement, willfulness
-private disclosure and publicity. These influence the decision of the patent holder to publicize the presence of these rights. 

1) Publish all patent applications immediately: current rule is 18 months after application unless applicant requests no publication and promise not to apply to foreign patents.  Then, publication at grant.
    -what's the argument against shifting publication?  That it encourages inventors [particularly small inventors] to shift from patent to secrecy.  Turns out, however, that the vast majority of small inventors did not invoke the 'keep the application secret' option despite being able to do so.

2) Severely limit changes to claim language in pending patents: claim language currently involves during prosecution and over the life of the patent family.  A few years ago, the PTO attempted to limit continuation practice.  In the eyes of the court, they did not have the power to do this. 

His view is that adequate reward is compatible with restrictions on changes in claims.  Claim language can already be revised during reissue proceedings.  There are limitations on reissue proceedings, but that's not a bad thing.  Also, in his view a more expensive prosecution is desirable.  Ideally it should go up through fees; another way to make examination more expensive is to push responsibilities back onto the prosecutors. 

3) Have a richer and more transparent prosecution history: Need to generate more of a prosecution history.  Need examiners to induce applicants to say more.  Applicants don't want to do this, of course, but it's socially beneficial for them to us to force them to do this. Could ask patent applicants to do a lot more to parse claim language, etc.  What does this do?  It creates a roadmap; but that's the whole point.  That's the way that an effective property system is supposed to work. 

4) Mandatory disclosure of ownership: Ownership information including the real party in interest.  Currently, trying to figure out who is the owner of a patent is extremely difficult.  Basic transparency needs would serve the innovating public.  Recordation is not required, although there is an incentive but they're not strong incentives. 

Is the status quo adequate? Statement from IV: its experience is that the assignment information is adequate; it has had no problem buying 70,000 patent assets.  He believes this statement.  The problem is, there's heterogeneity among patent owners.  There are sets of patent owners that do not want to be found.  To take a different perspective on IV, through the eyes of Robin Feldman: IV's roughly 8000 patents and 3000 applications are assigned to an assortment of 1,276 shell companies. 

What's the difference between these groups?  Some patent holders want to push their technology on the market; other patent holders want to hide their property rights so that they can later be asserted. So just because there are companies out there that make their ownership information easily available, and are quite transparent, doesn't mean that there are other companies whose ownership of patents is intentionally hidden. 

Ted Sichelman: A Theory of Scienter in Patent Law.  His goal in this paper is to think about whether this importation of scienter standards makes sense in terms of optimizing innovation incentives.  Today he's going to be focusing on the indirect infringement portion of the paper.  Walked through history of indirect infringement.  On the scienter front, the court required specific intent to further the acts of direct infringement. Did not hold that knowledge of the patent was required. 

Scienter requirement in the 20th century: does the seller have to know that that the component was especially adapted for use in the infringing product or that its use in that product infringed?  In other words, is knowledge of the patent required or not?

In contributory infringement, the Supreme Court held that knowledge of the patent was required.  [Aro].  Ted disagrees with the Court's decision in Aro.  Ted also disagrees what the Court did in Global-Tech.

Bottom line: Should knowledge of the patent (or willful blindness) be required for contributory infringement or inducement?

His argument is that we should turn back to this historical test that did not require knowledge of the patent or infringement.  Why?
-better aligns incentives for process patents
-eliminates the benefit of avoiding reading patents (since you can't avoid inducement by doing so)
-eliminates wasteful reliance on opinion of counsel letters.

Best argument in favor of a knowledge of the patent requirement for indirect infringement is the high search costs argument.  His response: most patents aren't litigated or don't relate to that particular technological industry, and thus aren't important.  So these can be crossed off.  Also, when considering search costs, we need to think also about search costs on the other side.  He also thinks that we shouldn't even consider search costs and notice in the patent system; rather, patents are mechanisms to foreclose competition because this incentivizes innovation.  Innovation requires huge reward; otherwise people won't do it.

Oscar Livak:  IP and its PR Problem: He worries about patent law's public relations problem.  Patent law has already had issues, but they seem extremely bad these days.

The inducement narrative: exclusion is tragic but inherent goal
Alternative narrative ;access for all is the goal.

Going to start by questioning Aarrow's famous quote. If you give something away for free to everyone, there's not going to be any incentive to create it in the first place.  The tragic solution is that we must give exclusive rights.  Basic patent narrative is that we give inventors exclusive right to induce them to create the ideas.

The trouble with inducement is that the cost/benefit calculation is intractable; we can't prove it one away or the other.  So exclusion can't be justified on this ground; and there are criticisms of the system: it interferes with the free market and prevents full access.

This narrative of inducing is actually quite coarse; there is ex ante and ex post licensing.  The broad story of inducing innovation can't really distinguish between ex ante and ex post licensing. 

Perhaps we could focus on the ex ante story: the purpose of the patent system is to put patent holder in the exclusive position to supply the invention to others.  This is more tractable, involves an obligation to supply the invention, does not create an inherent lack of access for users, and no support for patent assertion [ex post licensing].

What then do you mean by "exclusive rights."  Thinks that remedies reform could create that system. 

Question: The practical reality is that patent prosecution is already very expensive, and it's going to push companies out of patenting. 

Meurer's response: Provided examples of companies, particularly in the software industries, where patents aren't necessary.  In biotech, there is a lot of money around in terms of support.  For the really innovative small inventors, we have incentives that aren't patent based or funding sources that are necessary to prosecute their patents even if patents become more expensive.  If he's wrong, and these changes start to knock out more inventive activity by small inventors, the response would be to provide R&D tax credits directed to small inventors: direct and selected tax support is a better way to sustain the small inventors. 

David Adelman: Tweak on trade secrecy versus patents.  Most people don't actually exercise the "no publication" of application ability.  In most capacities, that's probably true, but there may be a subset of groups for whom trade secrets are important.  So the better approach might be to shift the default; to produce an opt-out rather than opt-in.

Also, on continuation practice: it can be viewed as very nefarious or it could be viewed as a way to simplify the enforcement process. 

On making process more transparent: is there a concern that this will result in less engagement between the applicant and the PTO than there currently is?

Meurer's response: The last comment is similar to broader concerns that as you open negotiations they become less effective.  But patent prosecution is already ex parte. He sees the benefits from learning at an early date what are the contours of the patent that you're asserting to me.

16 thoughts on “Loyola Law Journal – Panel #2: Shortcomings in the Patent System

  1. 16

    In other words, Fish, you missed the boat and badly.

    Think about it (hint: PATENT asserted).

    Pretty much can guarantee you that this has nothing to do with RCEs.

  2. 15

    Meurer “sees the benefits from learning at an early date what are the contours of the patent that you’re asserting to me.” In other words, RCE’s need to be examined much quicker.

  3. 14

    And you use “condenscending” as if it were a bad word, but how else am I to talk to the little circle when you constantly give me the high road and you take the low road? ‘Down’ is simply the appropriate direction to use.

  4. 13

    If you think you made a point with your post, you will need to remove your shiny hat to show everyone.

    No overreach on my part, MaxDrei, as we both know that the US patent system does in fact make the distinction between tech and the useful arts.

    Quite in fact, you display a bit of touchiness by deciding to comment on this particular post. You just said a little more (about yourself) than you may have bargained for.

  5. 12

    EG suggests that economists have no business involving themselves in patent law. MM retorts that many US patents are in the field of business (rather than in the natural sciences). This inspires anon, ever over-reaching, to remind MM in his typical condescending way not to forget that US patent law has no technology requirement.

    Embarrassing or what? I suspect that somebody was very cruel to anon, when he was but a child.

  6. 11

    As long as they are connected to the useful arts – no problem.

    (you are aware of the current controlling law as to patents not having a technology requirement in the US, right?)

  7. 10

    what are their respective backgrounds?: economics, nothing relating to science or technology.

    Friendly reminder: a substantial portion of patents have little or nothing to do with science or technology and everything to do with business and advertising.

  8. 9

    At times I wonder why we have that doctrine in reissues, given intervening rights.

    It’s not because of priority dates or intervening rights, it’s because there’s no “error” if you filed a narrowing amendment.

  9. 7


    Consider the source. Meurer and his compatriot, Jim Bessen, have been bashing the U.S. patent system constantly. And what are their respective backgrounds?: economics, nothing relating to science or technology. As far I’m concerned whatever either of these two folks say about patent has no credibility with me at all.

  10. 5

    Livak, I agree that scienter was never a requirement in patent law and should not have been engrafted into inducement and contributory infringement. One infringes or one does not. Whether one acts with a guilty mind is irrelevant. That is a matter solely for enhancement of damages.

    Also, I think the last person to practice a method step that makes the product of a patented process directly infringes under 271(g)/(a). No inducement is or should be required for liability.

  11. 4

    Muerer: limit amendments?

    What the f? Any new limitation has to be supported. Any subtraction of limitations also has to avoid the prior art.

    Regarding recapture, that is a problem in broadening reissues but not a problem in continuations. At times I wonder why we have that doctrine in reissues, given intervening rights.

  12. 3

    Regarding possession, if I claim a gasoline engine, describe the engine, but don’t describe how to make gasoline or where to get it, is my patent invalid? Of course not. And, just why is that?

    I think at times that we take the written description requirement just a little bit too far.

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