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April 17, 2007

Patent Reform Principles

Numerous vested interests vie to skew statutory patent reform, many aimed at advancing parochial self-interest, all the while advertising the guise of equity. But, if equity and practicality were the goals, what principles should guide patent reform to realize the Constitutional mandate, and what are the implications of those guiding principles?

U.S. Constitution, Article 1:

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

Needless to say, there is tremendous history associated with interpreting the above phrase, which is merely a lofty sentiment that left the devil in the details. The analysis herein is light on tradition, instead oriented to achieving a practical balance that really promotes "the progress of science and useful arts."

1. Recognize the inventor & real innovation.

A patent should only be awarded to the first inventor. That principle is not controversial. But how to recognize the inventor is controversial.

The United States is the only country in the world lacking a system where the first to file a patent is recognized as the inventor. Instead, the United States continues to embrace a baroque regime of not knowing the inventor until a patent is contested. The euphemism for this is called "first-to-invent," but it's a sham, because the U.S. only recognizes certain non-U.S. prior art, according in § 102(e), and statutorily ignores prior art for a year before filing, per § 102(b), the so-called "grace period." First to invent is embodied in § 102(a):

§ 102(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent...

But you can't know the date of invention by the filing date, because an inventor can swear back before the filing date. Only when the patent is challenged by prior art near the filing date does the invention date come into play, and that may not be until the patent is litigated. Inability to ascertain the invention date adds uncertainty to any defense of asserted infringement, and cause consternation with interference proceedings, as expressed in § 102(g), where two patents applications with overlapping claims are filed contemporaneously. First-to-invent may be easily construed as a gratuitous complication. All such gratuitous complications equate to additional expense, often an expense that is far greater than an inconsiderable sum. You want a patent? - file a patent; first come, first served. What's wrong with that simple notion?

So there are two flaws with current law: (1) the date of invention remains uncertain. Cure this by adopting the world standard of first-to-file. (2) The U.S. inventor isn't necessarily the inventor.  With the right timing, you can steal someone else's idea, either in the U.S. up to a year before filing, or foreign published documents even earlier, and get a U.S. patent. Cure this by having prior art count up to the date of filing, regardless of origin; what the Brits call "absolute novelty." Strengthen the patent grant by moving away from the standard of "ordinary skill in the art" to state-of-the-art. Patents aren't deserved for anything less.

Solving the two flaws above both simplifies and guarantees recognizing the real inventor, while helping minimize costs associated with both patent prosecution and enforcement.

Then there is the "obviousness" problem. Impermissible hindsight is both subtle and pernicious. § 103(a) has proven a formula for caprice as interpreted by the courts, particularly the appeals court "moving the cheese" in recent rulings. The standard for patentability in this country is too low, but judicial caprice leading to validity uncertainty is not the way to fix it.

2. Economize patent licensing & disputes.

Patents have not been called "the sport of kings" for nothing. The barrier to an inventor enforcing a patent is cost. Even the simplest litigation runs to hundreds of thousands of dollars, and getting to trial typically costs a few million.

Large companies count upon the inability of small companies to bear the cost of litigation. The recent Sandisk v. STMicroelectronics CAFC ruling opened the barn door to litigation, a boon to patent lawyers and behemoth corporations at the expense of small business and individual inventors. Litigation preceding licensing is now de rigueur. This requires legislative correction.

Patent enforcement is always a roll of the dice, owing at least to vagary of claim construction; an intractable consequence of patents. That aside, enhancing certainty of priority date and inventorship, as described foregoing, are laudable steps.

Other measures to mitigate the expense of patent disputes are welcome. Small businesses are besieged by spurious patent suits. Congress had been meekly preparing a pilot program of throwing spare change to a limited number of court districts in an effort to streamline jurisprudence, but that is nowhere near enough. Enact legislation to economize patent disputes, whether by improving the current court system, or creating a specialized system for patent disputes.

An overriding problem with several patent sections is vagueness, too subject to judicial interpretation that drifts through time as the political wind blows. The upshot has been to render patent enforcement a speculative venture in the face of necessarily activist courts. The Supreme Court, for example, lives in a world of its own, largely ignoring precedents by the appeals court, only researching its own history for deciding cases, while the CAFC lurches about to its own rhythm. Legislation that promotes consistency and certainty by statutory specificity is sorely needed.

To date, only quicker patent killing has been touted, by community review project and such ilk. A better solution to better patents is improving examination within the patent office. As most every prosecutor knows, patent examination has become notably more persnickety in the past few years. Rigorous examination is not an issue of statutory reform, but good management, which has been sorely lacking. Still, raising the bar of patentability based upon objective evidence, and limiting subjective arbitrariness, would strengthen this country's patent regime.

3. Promote "the useful arts."

The U.S. Constitution has the goal of promoting "the progress of science and useful arts." The "useful arts" is readily construed as product innovation, and the only reason to even have patents is in the realm of commercial products - the value of a patent is the added value that it brings to those who employ, and thus profit, by it.

Thus, while providing "an exclusive right," patents are just about money changing hands. Really? What about an invention that the inventor does not want to see practiced? Isn't is within the purview of "exclusive right" to deny others practicing a patented invention; the right to exclude? Only in a vacuum, because the constitutional goal is promoting progress, the contrary of having progress retarded by not practicing inventions. Exclusive right is not the same as right to exclude. A writer has exclusive right to her writings, but no sane writer wants her writings unread. So, exclusive right has to be viewed with at least an eye to compensation: an exclusive right to profit from one's invention (or writing).

The current case law, from the Supreme Court decision of eBay appealing its infringement of MercExchange patents, formulates factors to be considered for granting injunctive relief, viewing the right of exclusivity in light of the public interest and relative hardships of the parties involved.

The traditional four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act. That test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

The effect of the eBay ruling has been to allow injunctions only when a product company is being infringed by a direct competitor. The problem with taking injunctive relief off the table is that puts an "open season" sign for infringement by non-competitors, particularly small fry - "we don't compete in the marketplace, you can't get an injunction; let's roll the dice to see if you can bear the cost to make me pay." That problem withstanding, as the constitutional goal is the promote useful arts, which may be generally interpreted as commercial adoption, and especially considering that high technology products typically are covered by dozens, if not hundreds, of patents, the prospect of shutting down sales of product, and potentially seriously damaging, if not ruining, a company, because of a single patent, does make consideration of equity entirely reasonable. Leave current case law as is: no statutory reform needed here.

Posted by Patent Hawk at April 17, 2007 1:28 AM | The Patent System