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An "Out-Of-Control" Patent Office Or "Out-Of-Control" Professors?

With cases such as NTP v. RIM on the BlackBerry, eBay v. MercExchange on a possible injunction against eBay, and Metabolite v. Lab Corp. on the patenting of "laws of nature," there has been a lot of criticism about the U.S. patent system. The Wall Street Journal has been especially harsh in its discussion of the patent system, including comments from Professors Jaffe and Lerner, such as the following:

Then, a decade later [ca. 1991], Congress turned the USPTO into a "profit center." The office has been pushed to return "excess" revenue to the U.S. Treasury. This shift led to pressures to grant more patents, difficulties in attracting and retaining skilled examiners, and a torrent of low-quality patent grants. These include such absurdities as patents on wristwatches (paw-watches?) for dogs, a method of swinging on a swing ("invented" by a five-year-old), and peanut butter and jelly sandwiches. But they also include the patents on broad ideas related to mobile email -- virtually devoid of any details of implementation -- that have imposed a $612 million tax on the maker and users of BlackBerries.

The idea that there has been a torrent of low-quality grants arises from certain legal academic publications suggesting that the patent grant rate might be as high as 97%, a number that was suggested by eBay to the US Supreme Court in its brief in eBay v. MercExchange. If this were an area of science, rather than one of law, I would expect that Bob Park would be referring to the 97% number as voodoo science. The bad math and bad law underlying the 97% number are detailed in 4 Chi-KJ Intell. Prop. 108, available on the internet at jip.kentlaw.edu.

As to the general issues of an "out-of-control" patent office-->

The editorial "Patently Absurd" (A14, March 1, 2006) depicts an out-of-control Patent Office approving almost 90% of submitted applications and a powerless court system constrained by a "clear and convincing evidence" standard. In reality, patent grant rates have been steadily declining since 1999, when the rate was 70.8%; the rate was 62.5% in 2004. Efforts to fashion adjusted patent grant rates, initiated by Quillen and Webster and later relied upon by Jaffe and Lerner, have been shown to be flawed on both numerical and legal bases. If there were indeed a tide of questionable patents, the court system would readily invalidate them over prior work, under any evidentiary standard. Studies by Lunney have shown that invalidation of patent claims by the court system has declined over the last twenty years. In situations wherein there is published prior work, either dead-on to the later work or rendering the later work obvious, the procedure of re-examination is available to invalidate claims on a preponderance of evidence standard. The patents asserted against RIM, Microsoft, and eBay have been placed in the re-examination process. The patent system is about disclosure of inventions that meet the requirements of patent law, which disclosure increases the public knowledge base. It is up to businessmen to innovate, with attention to the disclosed knowledge. People who disregard public disclosures may suffer, but ignoring the work of others should be made perilous so that society can operate efficiently.

Of the Metabolite case, on the matter of "patenting" a law of nature, one notes some background information. First, the patent in question was allowed through the Bayh-Dole Act, and is the work of three university professors, two at Colorado (still alive and represented by a different university professor, from the Stanford Law School, who otherwise advocates patent reform) and one at Columbia (now deceased). It does indeed rely on a correlation, first identified by the professors and not accepted by the scientific community initially, rather than a law of nature. There was no evidence at trial that anyone else had discovered the correlation previously, and the current issue is on the indefiniteness of the claim. Second, the present two corporate litigants were previously in a posture of licensee and sublicensee, so this litigation has the appearance of a business deal gone bad.

One can debate whether this sort of patent claim is of the type that fosters innovation. However, it is becoming increasingly clear that the business community does not want to hear about its role in the problems: the failure to conduct negotiations that, if implemented, would decrease the involvement of the court system in the market and the failure to treat the patent system seriously (the RIM case being a notable example of something that could have turned out differently, but for some bad decisions on the front end).

Although one can certainly point to many sound byte examples of bad patents (which largely have been eliminated through re-exam), it is a sad day when the Wall Street Journal and the eBay brief rely on false figures of patent approval rates to advance their arguments.

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