While it might not be as cold this New Year’s as it was last year, that doesn’t mean you can’t settle in to read by the fire. And what better to read about than patents?
Here’s what I’ll be taking a look at over New Year’s.
Time and the Patent Office
First, Professors Michael Frakes and Melissa Wasserman have a new paper out. Titled “Irrational Ignorance at the Patent Office”, it’s a sequel of sorts to Prof. Mark Lemley’s 2001 paper, “Rational Ignorance at the Patent Office”. Lemley’s paper argued that there is a balance between ex ante spending on validating patents during examination and ex post spending on invalidating patents in litigation. Ideally, the Office would issue no invalid patents, but there’s a cost associated with examination. Lemley, working from the evidence available at the time and a series of estimates, concluded that increasing the cost of examination didn’t make sense.
Frakes and Wasserman, working from the increased data available now and modeling new features of the patent system like inter partes reviews (IPRs), have created an updated empirical estimate. That estimate suggests that there is likely room to significantly increase patent examination time allocation and fees in order to improve overall performance of the patent system. Their test case assumes a doubling of examination time (and thus roughly a doubling of patent fees, though patent fees are a relatively small component of the cost of obtaining a patent compared to the cost of a patent attorney). Given this doubling of fees, they predict a cost savings on the order of $250 million per year—almost as much as CCIA estimates has been saved by the creation of the entire IPR procedure.
The Patent Office is long overdue for an update to its examiner time allocations; I hope they take the work of Professors Frakes and Wasserman into account.
Injunctions and Innovation
With the distraction of Qualcomm’s injunctions in the news, I was pleased to run across a paper looking at the impacts of the eBay decision on innovative activity in the United States. Written by Professor Filippo Mezzanotti of the Kellogg School of Management at Northwestern and titled “Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D,” Mezzanotti’s paper attempts to examine the impact on innovation from the eBay decision’s rule against automatic injunctions. By looking at firms with differing exposures to patent litigation and comparing their innovative activities before and after the decision, Prof. Mezzanotti shows that the eBay decision had a positive impact on innovative activity.
Foreign jurisdictions that grant injunctions easily or as a matter of course would do well to consider the evidence Prof. Mezzanotti puts forth.
Patents in History
While people tend to think of major inventions—radio, the semiconductor, a vaccine—when they think of patents, the reality is that most patents cover small advances on existing technologies. They’re follow-on inventions, not breakthroughs. That doesn’t stop people from pretending that those patents are extremely important, of course.
What’s interesting is that that basic dynamic goes back to the Founding. In a letter to Thomas Jefferson, Ferdinando Fairfax wrote:
“As I know, and have every year occasion to observe, how many unimportant Patents are obtained, and how many empty pretenders are employ’d in puffing their merits, I am cautious of deciding in favor even of those that I wish to adopt and best understand. “
While the invention Fairfax was describing was one he felt worthwhile, the fact that he felt the need to express his skepticism of the merits of many of the patents being issued is worth remembering.