Intellectual Property Law

How Not to Invent a Patent Crisis

By Peter Zura

The proposed statutory changes would implement the same flexible approach urged by one side of the KSR debate. We think that flexibility can be carried too far and that the flexibility approach on offer relies on two false premises about how the system actually works. 

The first false premise is that beefing up the patent examiner?s resources would help her find the key prior art. Of course, our examining corps should have good access to Internet databases and ample time and training to peruse them. But no realistically available amount of time and training will help an examiner at his desk obtain the laboratory notebook of an individual researcher at some company or university or an obscure student thesis on the bookshelf of a foreign library, which is where the key prior art is often found.

The second false premise is that discretionary decision making, whether in court or the Patent Office, can be immune from political and other pressure. Asking a decision maker to use her legal or technical expertise as the primary basis for deciding what she thinks the state of the art was at a particular time in history gives her greater discretion than asking an ordinary jury whether a particular document or sample product existed at a particular time and what that document actually contains. By increasing the discretion of government bureaucrats, flexibility increases uncertainty and gives a built-in advantage to large companies with hefty lobbying and litigation budgets.

Remove the presumption of patent validity. [D]ialing down the present presumption of validity to something like the ordinary standard for civil cases would decrease the bad, in terrorem, effect [of aggressive patent litigation]. When litigation is needed, the carefully crafted Federal Rules of Civil Procedure govern the procedures for joinder, compulsory counterclaims, and against relitigating issues and claims decided in previous litigation, which are collectively designed to avoid abusive and repetitive process. The Federal Rules also provide streamlined procedures such as summary judgment, which avoids long trials where there is no genuine issue of material fact.

Institute symmetric fee shifting. Symmetric fee shifting would allow alleged infringers to collect attorney fees from a patentee who brings an infringement case after having been warned, for example, about a particular item of invalidating prior art. This practice of fee shifting when a patentee makes baseless arguments in defense of the patent?s validity would match the present rules in Sections 284 and 285 of the statute that allow patentees to get fees and (potentially) treble damages from infringers who should have known about their own infringement and have thus mounted baseless arguments in their defense. Such symmetry in fee shifting would encourage parties to exchange information and resolve disputes before undertaking expensive litigation

Equity in remedies. We think that the best way to implement eBay is to take this equitable approach seriously and apply it in the traditional (and sensible) fashion. Crucially, the equitable approach is a safety valve for those situations in which someone who is otherwise a good candidate for getting an injunction?such as a patentee whose patent has been infringed?should not get one because of some glaring injustice. The equitable approach is flexible but not boundlessly so, in contrast to currently proposed reforms that elevate discretion to new heights. Moreover this safety valve is probably all we would need.

The approach we propose will decrease slightly the average value of all patents because patentees will now have to fight harder on the issue of validity when they assert their patents in court. But this is not necessarily bad. The costs of arguing to the Patent Office to get patent rights in the first instance will be less than in a system under which the examiners have largely unfettered discretion to reject applications.

Most important, the approach we propose directly addresses the fears of those held hostage under the current system by the threat of litigation costs surrounding patents that are merely presumed to be valid. Under a decreased presumption of validity, such a terrorizing effect largely evaporates. With fee shifting, meritless suits against infringers will be discouraged, and the full traditional but limited use of equitable discretion will provide all the safety valves we need for good-faith infringers and those facing true patent trolls.
These approaches should be given time to work. The prudent course for the country is to embrace a strong patent system based on predictability and facts, which will benefit all players, large and small, in their contributions to American innovation and economic growth.

Full post as published by Two-Seventy-One Patent Blog on November 18, 2009 (boomark / email).