Patent validity across the executive branch: Ex ante foundations for policy development

Duke Law Journal

Volumn 61, Issue 6, 2012, Pages 1237-1281

  Rai, Arti K ^a  

^a DUKE UNIVERSITY   (United States)

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EID: 84864856187     PISSN: 00127086     EISSN: None     Source Type: Journal    
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References (143)

1. 1. I use the term "patent policy" advisedly. I mean to distinguish it from the determinations of science-related adjudicative facts, such as the state of the scientific art at the time the patent applicant filed for her invention, which represent an important mechanism by which patent-validity standards implement the policy goal of innovation. See Stuart Minor Benjamin & Arti K. Rai, Who's Afraid of the APA? What the Patent System Can Learn from Administrative Law, 95 GEO. L.J. 269, 276-77 (2007)
2. (Discussing the requirement that a patentable invention be scientifically "nonobvious" and noting that this requirement is premised on the view that if the invention were obvious, it could have arisen without a patent incentive). Policy is also distinct from questions of pure law, to which the patent statute provides clear answers.
3. Act of Apr. 10, 1790, ch. 7, 1 Stat. 109.
4. The most recent fully codified version of the patent statute is found at 35 U.S.C. §§ 1- 376 (2006 & Supp. IV 2010). This version does not include, however, significant amendments made in 2011
5. Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25 (codified as amended in scattered sections of 28 U.S.C.). For a discussion comparing and contrasting the Federal Circuit's jurisdiction with that of its predecessor court, the Court of Customs and Patent Appeals, see generally Jeffrey Lefstin, The Constitution of Patent Law: The Court of Customs and Patent Appeals and the Shape of the Federal Circuit's Jurisprudence, 43 LOY. L.A. L. REV. 843 (2010).
6. E.g., Symposium, The Federal Circuit as an Institution, 43 LOY. L.A. L. REV. 749 (2010)
7. Symposium, The Federal Circuit: The National Appellate Court Celebration and Introspective Symposium, 78 GEO. WASH. L. REV. 513 (2010).
8. Rochelle Cooper Dreyfuss, What the Federal Circuit Can Learn from the Supreme Court-And Vice Versa, 59 AM. U. L. REV. 787, 793 (2010)
9. ("Supreme Court involvement in Federal Circuit decisions should be regarded as highly salutary, for these two tribunals have a great deal to learn from one another."); John Golden, The Supreme Court as "Prime Percolator": A Prescription for Appellate Review of Questions in Patent Law, 56 UCLA L. REV. 657, 662 (2009)
10. (Arguing that Supreme Court review of patent decisions is important but that it should be relatively circumscribed); Peter Lee, Patent Law and the Two Cultures, 120 YALE L.J. 2, (discussing and critiquing the "holistic" approach taken by the Supreme Court in its patent jurisprudence).42-62(2010)
11. See infra notes 29-31.
12. Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (to be codified in scattered sections of 15, 28, 35, 42, and 51 U.S.C.).2011
13. Prior to the AIA, the American Inventors Protection Act of Pub. L. No. 106-113, tit. IV, 113 Stat. 1501A-552, had given the PTO some ability to conduct inter partes adjudicatory proceedings, as well as additional authority over internal managerial matters. See generally Clarisa Long, The PTO and the Market for Influence in Patent Law, 157 U. PA. L. REV. 1965, 1972-75 (2009) (discussing these developments).1999
14. Colleen V. Chien, Patently Protectionist? An Empirical Analysis of Patent Cases at the International Trade Commission, 50 WM. & MARY L. REV. 63, 73-80 (2008)
15. (Discussing various aspects of the ITC's role in the patent system); Sapna Kumar, Expert Court, Expert Agency, 44 U.C. DAVIS L. REV. 1547, 1551 (2011) ("[T]he ITC can grant broad exclusion orders to companies whose patents have been infringed by imported goods."); Sapna Kumar, The Other Patent Agency: Congressional Regulation of the ITC, 61 FLA. L. REV. 529, 533 (2009) ("[T]he ITC makes patent policy that is sometimes in tension with the purpose of the patent system."); David Schwartz, Courting Specialization: An Empirical Study of Claim Construction Comparing Patent Litigation Before Federal District Courts and the International Trade Commission, 50 WM. & MARY L. REV. 1699, 1728 ("Counterbalancing the lack ofdamages, injunctions are awarded under a more liberal standard in the ITC."). 2009
16. Daniel Crane, Technocracy and Antitrust, 86 TEX. L. REV. 1200-01 2008 Detailing the FTC's extensive involvement in the issue of reverse payments and arguing that the FTC's adjudicatory position in settlements essentially adopts a rule that should be given deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837
17. See Patent Act of 1952, 35 U.S.C. § 2(a)(1) (providing that the PTO "shall be responsible for the granting and issuing of patents").2006
18. See John F. Duffy, The Federal Circuit in the Shadow of the Solicitor General, 78 GEO. WASH. L. REV. 518, 519 (2010) ("The innovative jurisdictional structure of the new appellate court has fostered a unique relationship between the Federal Circuit and the Solicitor General's Office and has, in a subtle but meaningful way, shifted power over the development of patent law from the judicial to the executive branch of government.").
19. Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office (Myriad II), 653 F.3d 1329 (Fed. Cir. 2011).
20. Brief for the United States as Amicus Curiae in Support of Neither Party at 1, Myriad II, 653 F.3d 1329 (No. -1406).2010
21. The government's brief did not address Myriad's DNA-related process/method claims. For this reason, I focus in this Essay on the product claims. See infra Part I.B.2.
22. See infra Part I.B.2.
23. For example, analysis of the leading public database of DNA patents shows that the University of California system is the third-largest holder of DNA patents. See Robert Cook- Deegan & Christopher Heaney, Patents in Genomics and Human Genetics, 11 ANN. REV. GENOMICS & HUM. GENETICS 383, 388 fig.3 (indicating that the University of California system holds approximately 1200 patents). Not only do academic institutions such as the University of California hold DNA patents that stem from NIH funding, but NIH's intramural research program also yields many DNA patents: the same DNA-patent database shows that NIH is the fifth-largest holder of U.S. DNA patents2010
24. See, e.g., DAN L. BURK & MARK A. LEMLEY, THE PATENT CRISIS AND HOW COURTS
25. The administrative-law literature on whether (and to what extent) independent agencies should be subject to White House control is voluminous. For purposes of this Essay, I do not take a position on this literature, except to note the practical point that both scholars and policymakers consider White House coordination of executive-branch agencies less controversial than White House coordination of independent agencies. Cf. Elena Kagan, Presidential Administration, 114 HARV. L. REV. 2245, 2320 ("[M]ost statutes granting discretion to executive branch-but not independent-agency officials should be read as leaving ultimate decisionmaking authority in the hands of the President.2001
26. See infra Part I.B.2.
27. Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).
28. Bay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
29. Additionally, the ITC has played a policymaking role in the narrow arena of what constitutes a valid defense against charges of infringement in the context of imported goods. It
30. Specifically, from 1996 through June , the Court took nineteen cases. This figure is derived by taking the sixteen cases identified by Professor Duffy2011
31. I reviewed the government's briefs in these seventeen cases to determine which agencies were listed on the briefs. The PTO was on the brief in all of the cases other than Stanford. That case involved patent issues raised by the Bayh-Dole Act, 35 U.S.C. §§ 200-212 (2006 & Supp. IV ), a statute governing the patentability of federally funded research that is not administered by the PTO, but by a sister agency within the Commerce Department: the National Institute of Standards and Technology. I address relevant questions raised by the inconsistent administration of the Bayh-Dole Act in Part II.C. See infra notes 143-44 and accompanying text. In addition to the PTO, the FTC was on the brief in Illinois Tool Works v.2010
32. Bilski v. Kappos, 130 S. Ct. 3218 (2010).
33. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007).
34. Sitting en banc in Bilski, the Federal Circuit largely adopted the position urged by the government. In re Bilski, 545 F.3d 943, 964 (Fed. Cir. 2008) (en banc) ("[W]e agree with the PTO that the machine-or-transformation test is the correct test to apply in determining whether a process claim is patent-eligible under [35 U.S.C. § 101]."), aff'd sub nom. Bilski v. Kappos, 130 S. Ct. 3218 In so doing, however, it also rejected the positions previously taken by many three-judge Federal Circuit panels.2010
35. Bilski, 130 S. Ct. at 3227. In any event, the Court's 5-4 decision to adopt a highly nebulous "abstraction" standard for whether an innovation constitutes patentable subject matter in the context of a process claim was, at best, only an initial step. Many commentators have complained about the lack of guidance provided by Bilski. See, e.g., Peter S. Menell, Forty Years of Wondering in the Wilderness and No Closer to the Promised Land: Bilski's Superficial Textualism and the Missed Opportunity To Return Patent Law to Its Technology Mooring, 63 STAN. L. REV. 1289, 1305-07 (2011) (discussing the costs of the Supreme Court's "ungrounded and incoherent" decisionmaking in the Bilski case). Shortly thereafter, the Court granted certiorari in another dispute about process as patentable subject matter, Prometheus Laboratories, Inc. v. Mayo Collaborative Services, 628 F.3d 1347 (Fed. Cir. ), cert. granted,2010
36. Irving Kayton, Nonobviousness of the Novel Invention-35 U.S.C. §103, in NONOBVIOUSNESS-THE ULTIMATE CONDITION OF PATENTABILITY 2:101, 2:102 (John F.
37. Witherspoon ed., ) ("[I]n virtually every patent infringement suit the defense of obviousness under [35 U.S.C. § 103] is asserted. .").1980
38. Patent Act of 1952, 35 U.S.C. § 103(a) (2006).
39. In re Application of Bozek, 416 F.2d 1385, 1390 (C.C.P.A. ) (noting that an examiner could, in reaching a conclusion of obviousness, rely on the "common knowledge and common sense of the person of ordinary skill in the art").1969
40. See, e.g., In re Beasley, 117 F. App'x 739, 743-44 (Fed. Cir. 2004) (unpublished decision) (rejecting the PTO's reliance on the "examiner's and its own knowledge as skilled artisans" in determining nonobviousness); In re Lee, 277 F.3d 1338, 1343 (Fed. Cir. ) (rejecting the PTO's reliance on an "examiner's conclusory statements"); In re Zurko, 258 F.3d 1379, 1386 (Fed. Cir. 2001) (rejecting the Board's efforts to base its decisions on "its own understanding or experience-or on its assessment of what would be basic knowledge or common sense").2002
41. See Brief for United States as Amicus Curiae Supporting Petitioner at 17-19, KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (No. 04-1350), 2006 WL 2453601, at *26 ("The PTO should instead be allowed to bring to bear its full expertise-including its reckoning of the basic knowledge and common sense possessed by persons in particular fields of endeavor-when making the predictive judgment whether an invention would have been obvious to a person of ordinary skill in the art. The patent applicant should bear the burden of proving PTO's Board and examiners wrong.").2007
42. KSR, 550 U.S. at 421. Notably, although KSR did not itself involve the life sciences, the decision ended up having considerable influence on the life sciences. In the 1993 case In re Bell, F.2d 781 (Fed. Cir. the PTO pressed the argument that for the average scientist working in the area, knowing a general method for selecting genes through the use of nucleotide probes, as well as the complete or partial amino acid of the protein for which a gene of interest coded, would render the DNA sequence for the gene obvious9911993
43. Among other issues, the PTO recognized that broad claims to small gene fragments could raise novelty concerns, as these fragments could overlap with much of the human genetic code. See Thomas B. Kepler, Colin Crossman & Robert Cook-Deegan, Metastasizing Patent Claims on BRCA1, 95 GENOMICS (discussing the application's rejection by PTO examiner James Martinell on several grounds, including novelty). Certain claims in the Myriad patents may raise similar concerns. See Kepler et al., supra; see also infra note 100 and accompanying text.312, 313 (2010)
44. Watson had famously said that finding ESTs was a job that could be "run by monkeys." Tim Beardsley, An Express Route to the Genome?, SCI. AM., Aug. , at 30, 30 (internal quotation marks omitted).1998
45. Rebecca S. Eisenberg & Robert P. Merges, Opinion Letter as to the Patentability of Certain Inventions Associated with the Identification of Partial cDNA Sequences, 23 AIPLA Q.J. ("We believe that most of the claims set forth in the NIH patent applications probably are not patentable. Although the matter is not entirely free from doubt, we believe that it is more likely than not that the Federal Circuit would hold all of the claims invalid for lack of utility.").1, 51 (1995)
46. Harold Varmus, Government, in INTELLECTUAL PROPERTY RIGHTS AND RESEARCH TOOLS IN MOLECULAR BIOLOGY: SUMMARY OF A WORKSHOP HELD AT THE NATIONAL ACADEMY OF SCIENCES, FEBRUARY 15-16, 1996, at 66, 68 (Nat'l Research Council ed., 1997).
47. Memorandum from Jack Spiegel, Dir., Div. of Tech. Transfer & Dev., Office of Tech. Transfer, Nat'l Insts. of Health, to Q. Todd Dickinson, Comm'r of Patents & Trademarks 82-83
48. (Mar. 22, ) (on file with the Duke Law Journal) (discussing an April 2, 1997, communication in which the PTO agreed with the NIH's assessment that "ESTs only disclosed as a probe for unknown genes [do] not [have] a sufficient patentable utility").2000
49. John J. Doll, The Patenting of DNA, 280 SCIENCE 689, 689-90 (1998).
50. See Michael Heller & Rebecca Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698, 700 (1998) ("High transaction costs may be an enduring impediment to efficient bundling of intellectual property rights in biomedical research.").
51. Request for Comments on Interim Guidelines for Examination of Patent Applications Under the 35 U.S.C. 112 1 "Written Description" Requirement, 63 Fed. Reg. 32,639 (June 15, 1998
52. For the Federal Circuit's 2010 en banc articulation of what this requirement means, see Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. ) (en banc).2010
53. Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1566-67 (Fed. Cir. 1997).
54. Request for Comments on Interim Guidelines, 63 Fed. Reg. at 32,640-41 (indicating that "generic" claims would "not typically present a written description problem"). In fairness to the PTO, applying the written-description requirement in the manner that the Federal Circuit did in Regents of the University of California v. Eli Lilly & Co. was problematic in terms of the scientific state of the art and as a departure from legal precedent. See Arti K. Rai, Intellectual Property Rights in Biotechnology: Addressing New Technology, 34 WAKE FOREST L. REV. ("[P]atent law doctrines of nonobviousness and written description have, in the context of biotechnology, been applied incorrectly by the Federal Circuit. I suggest that the CAFC's mistakes stem from its inability to deal adequately with new technology.").827, 833 (1999)
55. Memorandum from Jack Spiegel to Q. Todd Dickinson
56. At the same time, however, in October , the PTO issued a patent claiming forty-four ESTs to Incyte Pharmaceuticals. U.S. Patent No. 5,817,479 (filed Aug. 7, 1996) (issued Oct. 6, 1998). Although this patent did state that the full genes from which the claimed ESTs had been drawn coded for kinases, the amount of actual information about biological function provided by that statement is small. The human genome contains about five hundred different protein kinases. G. Manning, D.B. Whyte, R. Martinez, T.1998
57. Thus, for example, in subsequent comments, Genentech heartily endorsed the PTO's shift in position with respect to both utility and written description. Letter from Sean A. Johnston, Vice President, Intellectual Prop., Genentech, Inc., to Q. Todd Dickinson, Comm'r of Patents and Trademarks 1 (Mar. 22, ) (on file with the Duke Law Journal) ("We were pleased to see that the initial version of the written description guidelines was modified significantly to reflect suggestions made by the public. Overall, we believe the latest version of the guidelines, as amplified by the training materials, accurately reflects the standards of utility and written description.").2000
58. As former Commissioner Q. Todd Dickinson has noted, the leadership provided by him and his chief patent-policy lieutenant, Stephen Kunin, "together with the influence of stakeholders inside and outside the government, facilitated the alteration in position." Interview with Q. Todd Dickinson (Jan. 3, 2012).
59. Revised Interim Guidelines, 64 Fed. Reg. at 71,440.
60. U.S. PATENT & TRADEMARK OFFICE, REVISED INTERIM UTILITY GUIDELINES TRAINING MATERIALS, available at http://www.uspto.gov/web/menu/utility.pdf.
61. Most notably, contrary to NIH's wishes, the guidelines and accompanying training materials refused to adopt a per se rule against claims of utility based on structural similarity, or homology, to gene sequences of known function. See Memorandum from Jack Spiegel to Q.
62. Francis Collins, head of the National Human Genome Research Institute, stated, "I think the Patent Office deserves credit for moving toward a stronger requirement for utility." In the Crossfire: Collins on Genomes, Patents, and Rivalry,' 287 SCIENCE 2396, (2000).
63. Utility Examination Guidelines, 66 Fed. Reg. 1092 (Jan. 5, 2001).
64. Revised Interim Guidelines for Examination of Patent Applications Under the 35 U.S.C. § 112, 1 "Written Description" Requirement; Request for Comments, 64 Fed. Reg. 71,427, 71,427 (Dec. 21, 1999).
65. NIH and other commentators expressed concern about the confusing language in the interim guidelines. See, e.g., Memorandum from Charles E. Ludlam, Vice President for Gov't Relations, Biotech. Indus. Org., to Q. Todd Dickinson, Comm'r of Patents & Trademarks 4-5 (Mar. 22, 2000). The final guidelines, issued in 2001, eliminated the confusion.
66. In re Fisher, 421 F.3d 1365 (Fed. Cir. 2005).
67. John P. Walsh, Ashish Arora & Wesley M. Cohen, Effects of Research Tool Patents and Licensing on Biomedical Innovation, in PATENTS IN THE KNOWLEDGE-BASED ECONOMY (explaining that industry respondents credited "changes in the institutional environment, particularly new U.S. Patent and Trademark Office (USPTO) guidelines" with "reduc[ing] the threat of breakdown and access restrictions").285, 286 (2003)
68. Diamond v. Chakrabarty, 447 303 (1980).
69. Parke-Davis & Co. v. H.K. Mulford Co., 189 F. 95, 103 (C.C.S.D.N.Y. 1911), rev'd in part, 196 F. 496 (2d Cir. 1912); In re Application of Bergstrom, 427 F.2d 1394, 1397 (C.C.P.A. 1970).
70. Utility Examination Guidelines, 66 Fed. Reg. 1092, 1093-94 (Jan. 5, ) ("Thus, an inventor's discovery of a gene can be the basis for a patent on the genetic composition isolated from its natural state and processed through purifying steps that separate the gene from other molecules naturally associated with it."). The PTO's discussion also invokes Chakrabarty and the lower court cases involving purified chemicals.2001
71. Myriad II, 653 F.3d 1329, 1380 (Fed. Cir. 2011) (Bryson, J., concurring in part and dissenting in part) (stating that the patentable-subject-matter comments "that the PTO issued at the time of its guidelines. [were], frankly, perfunctory"). Prior empirical work on comments provided by agencies also suggests that comments from sister agencies receive particular attention. See Stuart Minor Benjamin & Arti K. Rai, Fixing Innovation Policy: A Structural Perspective, 77 GEO. WASH. L. REV. 1, 87 (2008) (discussing various Federal Communications Commission (FCC) rulemakings and the particular attention the FCC has paid to comments from the National Telecommunications and Information Administration).2001
72. Cf. Intervet Inc. v. Merial Ltd., 617 F.3d 1282, 1293 (Fed. Cir. 2010) (Dyk, J., concurring in part and dissenting in part) (noting that the question of whether isolated genomic DNA is patentable subject matter has evaded review). The conventional wisdom was reinforced by the fact that most DNA-patent litigation involved DNA that encoded protein drugs. The defendants in those cases were commercial competitors of the patent holders. The defendants often held their own DNA patents. The prominent biotechnology-patent litigator Jorge Goldstein, who was involved in many of these cases, observes that "[n]o defendant who wanted to obtain patent protection for the same or similar protein drug-encoding DNAs would ever consider raising as a defense that isolated human DNA sequences were not patent-eligible." Jorge A. Goldstein, Isolated Human Gene Patents: Taxonomies and Controversies 7 (Nov. 19, ) (unpublished manuscript), available at http://www.law.illinois.edu/pdf/JorgeGoldstein2 GenePatentChakrabartyPubNovember2010.pdf. The history of DNA-patent litigation thus illustrates the manner in which parties' views in litigation do not necessarily represent the full range of policy stances on a particular question2010
73. Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office (Myriad I), 702 F. Supp. 2d 181, 206 (S.D.N.Y. 2010), rev'd in part, 653 F.3d 1329 (Fed. Cir. 2011).
74. Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office (Myriad I), 702 F. Supp. 2d 181 (S.D.N.Y. 2010), rev'd in part, 653 F.3d 1329 (Fed. Cir. 2011).
75. The government's brief did not address the method claims. Thus, I will not do so in this Essay. But these claims, as well as other method claims in various genetic diagnostic patents, are suspect on numerous grounds.
76. According to the plaintiffs in Myriad, however, gDNA fragments arise naturally in maternal plasma, in those suffering from cancer, and when DNA breaks. Plaintiffs-Appellees' Petition for Panel Rehearing at 4-5, Myriad II, 653 F.3d 1329 (Fed. Cir. ) (No. 2010-1406).2011
77. Tun-Jen Chiang, The Rules and Standards of Patentable Subject Matter, WIS. L. REV. 1353, 1407-10 (discussing the costs and benefits of "categorical" rules relative to "scope"-based standards).2010
78. These agencies and offices include not simply NIH, but also entities such as the White House Office of Science and Technology Policy, which was set up by Congress in the 1970s to coordinate science and technology policy across agencies.
79. In a recent paper, Professor Chris Holman analyzes 533 patents that explicitly mention a human DNA sequence in their claims. Christopher M. Holman, Will Gene Patents Impede Whole Genome Sequencing?: Deconstructing the Myth that 20% of the Human Genome Is Patented, 2 IP THEORY 1, 2-4 These 533 patents represented a subset of 4270 patents that then-doctoral candidate Kyle Jensen and Professor Fiona Murray had previously identified(2011)
80. The various data exclusivities provided to pioneer makers of biological therapies in the Biologics Price Competition and Innovation Act of 2009, Pub. L. No. 111-148, 124 Stat. , are fairly extensive but may not provide sufficient protection.119 (2010)
81. Robert Cook-Deegan, Subhashini Chandrasekharan & Misha Angrist, The Dangers of Diagnostic Monopolies, 458 NATURE 405 (2009)
82. (Concluding, after assembling eight case studies addressing the effects of patents and licensing on access to genetic tests, that "patents have not caused irreparable harm in genetic diagnostics, but neither have they proven greatly advantageous").
83. See Myriad II, 653 F.3d 1329, 1379 (Fed. Cir. ) (Bryson, J., concurring in part and dissenting in part) ("Accordingly, efforts to sequence almost any gene could infringe claim 6 even though Myriad's specification has contributed nothing to human understanding of other genes.")2011
84. ("In order to sequence an entire genome, a firm would have to license thousands of patents from many different licensors. Even if many of those patents include claims that are invalid for anticipation or obviousness, the costs involved in determining the scope of all of those patents could be prohibitive." (citation omitted)). Professor Thomas Kepler, a computational biologist, and his colleagues at Duke University have calculated that over 80 percent of the cDNA sequences contributed to GenBank before the Myriad patent application contained at least one of the short DNA sequences claimed by Myriad. Kepler et al.
85. Myriad II, 653 F.3d at 1380.
86. Notably, the report was not cited in the government's brief. In general, although the government's distinction between gDNA and cDNA neatly tracks some relevant policy considerations of which at least NIH and the HHS are clearly aware, the brief itself does not discuss those policy considerations. See Brief for the United States as Amicus Curiae in Support of Neither Party
87. By "innovation," scholars mean both the initial invention and the commercialization of the invention. A focus on the efficient promotion of innovation as a goal obviously excludes important distributional considerations as well as noninstrumental considerations such as democratic accountability. For purposes of this Essay, I adopt this admittedly narrow framework. I bracket distributional and noninstrumental considerations not because they are unimportant but because they are extremely challenging. Whether and how patent law should encompass concerns that are unrelated to innovation are questions I hope to address in future work.
88. The theoretical and empirical literature on different strategies for promoting innovation is truly voluminous. See, e.g., Benjamin & Rai
89. The possibility of capture emerges in significant part from the logic of collective action. See generally MANCUR OLSON, THE LOGIC OF COLLECTIVE ACTION: PUBLIC GOODS AND THE THEORY OF GROUPS (rev. ed. 1978) (arguing that groups with diffuse interests will have difficulty organizing to achieve collective action and optimal output). As a consequence of collective-action problems, small groups of players with concentrated interests will have an easier time organizing and influencing decisionmakers than will large, diffuse groups.
90. Many scholars have discussed the Court's tangled jurisprudence in this area. See, e.g., Jill Fisch, Retroactivity and Legal Change: An Equilibrium Approach, 110 HARV. L. REV. 1059-67 (1997)
91. Assessing the Court's retroactivity doctrine); Alison L. LaCroix, Temporal Imperialism, 158 U. PA. L. REV. 1348-67 (2010)
92. (Examining "the Court's experiments in the twentieth century with limiting the retroactive effect of its own decisions"); Kermit Roosevelt III, A Little Theory Is a Dangerous Thing: The Myth of Adjudicative Retroactivity, 31 CONN. L. REV. 1075, 1081-1109 (1999) (analyzing the historical origins of retroactivity and modern retroactivity scholarship).
93. David L. Schwartz, Retroactivity in Patent Law 14-27 (Oct. 18, 2011) (Unpublished manuscript), available at www.ssrn.com/abstract=1945554
94. For a defense of standards over bright-line rules in the context of tax-law statutes and regulations, see generally David A. Weisbach, Formalism in the Tax Law, 66 U. CHI. L. REV. 860 (1999).
95. See, e.g., Myriad II, 653 F.3d 1329, 1355 (Fed. Cir. 2011) ("If the law is to be changed, and DNA inventions excluded from the broad scope of [35 U.S.C. § 101] contrary to the settled expectation of the inventing community, the decision must come not from the courts, but from Congress."); concurring in part) (cautioning that courts should be "particularly wary of expanding the judicial exception to patentable subject matter when both settled expectations and extensive property rights are involved" and suggesting that courts should instead "defer to Congress"); In re Fisher, 42 F.3d 1365, 1378 (Fed. Cir. 2005) (stating that PTO arguments regarding scientific progress are "public policy considerations. more appropriately directed to Congress as the legislative branch of government"). See LOY. L.A. L. REV. 749 (discussing the judicial tendency to see Congress as the relevant policymaker in patent law). generally S. Jay Plager, The Federal Circuit as an Institution: On Uncertainty and Policy Levers, 43 2010
96. Standard legal doctrine holds that legislation operates prospectively. The Court has also given Congress considerable leeway in acting retroactively. See Fisch
97. In general, in keeping with their technocratic focus on efficiency as a normative goal, patent-law scholars use functional, not formal, institutional analysis. Here, I similarly focus on functional considerations.
98. William N. Eskridge, Jr., Vetogates, Chevron, Preemption, 83 NOTRE DAME L. REV. 1441, 1444-48 (identifying nine different points at which "bills can die" before they become law).2008
99. See, e.g., Gary E. Marchant, The Growing Gap Between Emerging Technologies and the Law, in THE GROWING GAP BETWEEN EMERGING TECHNOLOGIES AND LEGAL-ETHICAL OVERSIGHT: THE PACING PROBLEM 19, 23
100. Gary E. Marchant, Braden R. Allenby & Joseph R. Herkert eds., 2011) (Reviewing literature that identifies procedural obstacles and skewed legislative prioritization as reasons why legislatures fail to keep up with emerging technologies). A much-discussed example of legislation that rapidly became outdated is the Semiconductor Chip Protection Act of 1984, Pub. L. No. 98-620, tit. III, 98 Stat. 3347 (codified as amended at 17 U.S.C. §§ 901-914), which set up a sui generis regime of intellectual-property protection for chips.2006
101. The discussion in this paragraph and the preceding one is largely taken from Benjamin & Rai,
102. Gregory N. Mandel, Will America Reinvent Itself? Patent Reform in 2011, BUS. L. TODAY, 1-2 (Aug. 2011), http://apps.americanbar.org/buslaw/blt/content/2011/08/keeping current-patents.pdf
103. Discussing the divergent R and D models employed by various firms and noting that the "crosscurrents of [these] opposed powerful industry groups led to a stalemate on patent reform efforts in ").2005
104. For example, before the Supreme Court rendered the question moot by deciding eBay, a significant obstacle to the passage of patent-reform legislation was the biopharmaceutical industry's opposition to a provision that would have overturned the Federal Circuit's rule in favor of automatic permanent injunctive relief. See, e.g., Amendment in the Nature of a Substitute to H.R. 2795, the "Patent Act of 2005": Hearing on H.R. 2795 Before the Subcomm. on Courts, the Internet & Intellectual Prop. of the H. Comm. on the Judiciary, 109th Cong. (statement of Robert B. Chess, Chairman, Nektar Therapeutics) ("If you allowed courts to weigh equities and balance hardships, our patents would be weakened, and research and development would suffer."). These predictions of doom proved unfounded. Although the biopharmaceutical industry faces many challenges, post-eBay case law on remedies is not one of them.28-29 (2005)
105. But the significant procedural improvements the AIA put in place are very important, particularly to the extent that they allow the PTO to function more efficiently. Many of these improvements are discussed in Arti K. Rai, Allocating Power over Fact-Finding in the Patent System, 19 BERKELEY TECH. L.J. 907 (2004)
106. Arti K. Rai, Growing Pains in the Administrative State: The Patent Office's Troubled Quest for Managerial Control, 157 U. PA. L. REV. 1051 [hereinafter Rai, Growing Pains].2009
107. Patent Act of 1952, 35 U.S.C. § 2(a)(1) (2006).
108. See, e.g., BURK & LEMLEY
109. R. Polk Wagner, The Two Federal Circuits, 43 LOY. L.A. L. REV. 785, 789-90 (2010)
110. Exploring the Federal Circuit's dual role as a "decider" of cases and a "manager" of the jurisprudence and explaining that those two roles may "diverge").
111. Although Federal Circuit clerks generally have a technical background and the Federal Circuit has a small technical staff, this level of staffing does not approach that of the PTO. At the conclusion of FY2011, the PTO had 6785 examiners. U.S. PATENT & TRADEMARK OFFICE, PERFORMANCE AND ACCOUNTABILITY REPORT: FISCAL YEAR 2011, at 187 tbl.29 , available at http://www.uspto.gov/about/stratplan/ar/2011/USPTOFY2011PAR.pdf. Moreover, as discussed further in Part IV, it has set up an Office of the Chief Economist.(2011)
112. Myriad II, 653 F.3d 1329, 1381 (Fed. Cir. ) (Bryson, J., concurring in part and dissenting in part).2011
113. To put it mildly, this issue is contested. See, e.g., Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 TEX. L. REV. 1031, 1035 n.8 (listing numerous articles by scholars who regard patents as being different from ordinary property). The argument for equating patents with property rights is particularly weak in the information-technology industries, in which portfolios comprising large numbers of patents with unclear boundaries are the norm. See infra Part III.2005
114. U.S. CONST. amend. V ("[N]or shall private property be taken for public use, without just compensation.").
115. See, e.g., Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 ("[C]ongressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result.").1988
116. Leahy-Smith America Invents Act, Pub. L. No. 112-29, sec. 6, § 324(b), 125 Stat. 284, 307 (to be codified at 35 U.S.C. § 324(b)).(2011
117. Rachel E. Barkow, Insulating Agencies: Avoiding Capture Through Institutional Design, 89 TEX. L. REV. 15, 22-23 (2010) (Providing an overview of the key issues
118. See Supplementary Examinati138. Myriad II, 653 F.3d 1329, 1366 (Fed. Cir. ) (Moore, J., concurring in part).2011
119. Colleen V. Chien, Patent Amicus Briefs: What the Courts' Friends Can Teach Us About the Patent System, 1 U.C. IRVINE L. REV. 395, 421-22 (2011).
120. In re Fisher, 421 F.3d 1365, 1372 (Fed. Cir. ) (quoting Enzo Biochem, Inc. v. Gen- Probe Inc., 323 F.3d 956, 964 (Fed. Cir. 2002)) (internal quotation mark omitted).2005
121. Skidmore v. Swift & Co., 323 U.S. 134 (1944).
122. Myriad II, 653 F.3d 1329, 1366 (Fed. Cir. 2011) (Moore, J., concurring in part).
123. Mission, NAT'L INSTS. OF HEALTH (Mar. 3, 2011), www.nih.gov/about/mission.htm
124. Bayh-Dole Act, 35 U.S.C. §§ 200-212 (2006 & Supp. IV 2010).
125. U.S. GOV'T ACCOUNTABILITY OFFICE, GAO-99-242, TECHNOLOGY TRANSFER: REPORTING REQUIREMENTS FOR FEDERALLY SPONSORED INVENTIONS NEED REVISION 5-6 (1999).
126. JAMES BESSEN & MICHAEL J. MEURER, PATENT FAILURE: HOW JUDGES, BUREAUCRATS, AND LAWYERS PUT INNOVATION AT RISK 187-214 (discussing the vagueness and undue breadth of software patents).2008
127. Diamond v. Diehr, 450 U.S. 175 (1981).
128. In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994) (en banc).
129. See Richard H. Stern & Edward P. Heller, III, In re Alappat: The Gordian Knot Retwisted, 2 U. BALT. INTELL. PROP. L.J. 187, 187 (1994
130. Discussing the problems with allowing patents on algorithms when "the claims are 'limited' to use of the algorithm in programmed computer equipment"). Professor Stern was the author of Seagate's amicus brief, and Heller was patent counsel for Seagate Technology.
131. Not surprisingly, patent cases before the Court draw far more amicus briefs than do cases before the Federal Circuit. Chien
132. Aristocrat Techs. Austl. PTY Ltd. v. Int'l Game Tech., 521 F.3d 1328 (Fed. Cir. 2008).
133. Finisar Corp. v. DirecTV Grp., Inc., 523 F.3d 1323, 1340 (Fed. Cir. ) ("[T]he patent must disclose, at least to the satisfaction of one of ordinary skill in the art, enough of an algorithm to provide the necessary structure. .").2008
134. See Supplementary Examination Guidelines for Determining Compliance with 32 U.S.C. 112 and for Treatment of Related Issues in Patent Applications, 76 Fed. Reg. 7162, 7168 (Feb. 9, 2011) ("The structure corresponding to a. claim limitation for a computerimplemented function must include the algorithm needed to transform the general purpose computer or microprocessor disclosed in the specification.").
135. See, e.g., JOHN PODESTA, SARAH ROSEN WARTELL & JITINDER KOHLI, CTR. FOR AM. PROGRESS, A FOCUS ON COMPETITIVENESS: RESTRUCTURING POLICYMAKING FOR RESULTS 19 (2010), available at http://www.americanprogress.org/issues/2010/12/pdf/competitiveness.pdf (recommending the development of an Interagency Competitiveness Task Force, led by a new deputy at the National Economic Council, that would "oversee[] White House coordination of competitiveness initiatives, and monitor[] their implementation by agencies"). In prior work endorsed by the Information Technology and Innovation Foundation, Professor Stuart enjamin and I propose the creation of a White House Office of Innovation Policy that would coordinate innovation policy across agencies. STUART MINOR BENJAMIN & ARTI K. RAI, STRUCTURING U.S. INNOVATION POLICY: CREATING A WHITE HOUSE OFFICE OF INNOVATION POLICY (2009), http://www.itif.org/files/WhiteHouse_Innovation.pdf.
136. The existing scope of the PTO's rulemaking authority is not entirely clear. The Federal Circuit, as well as many commentators, have framed the question in terms of substance versus procedure. See, e.g., Tafas v. Doll, 559 F.3d 1345, 1354 (Fed. Cir. 2009) (analyzing "whether the Final Rules are substantive or procedural"). For an engaging argument that the substanceversus- procedure distinction is not grounded in the language of the Patent Act and that the PTO might have rulemaking authority that extends beyond the strict confines of procedure, see Sarah Tran, Administrative Law, Patents, and Distorted Rules, 80 GEO. WASH. L. REV. (forthcoming 2012) (manuscript at 8), available at See also Tafas, 559 F.3d at 1366 (Bryson, J., concurring) ("While I think it is generally fair tocharacterize that statute as authorizing the promulgation of 'procedural' regulations, however, I do not think it necessary, or particularly helpful, to consider whether those regulations would be deemed 'substantive'.. ."). Neither Professor Tran nor Judge Bryson argues, however, that the PTO has rulemaking authority over issues such as patentable subject matter, obviousness, or the like.http://ssrn.com/abstract=1920417
137. Patent Reform Act of 2007, S. 1145, 110th Cong. (2007).
138. Michael J. Burstein, Rules for Patents, 52 WM. & MARY L. REV. 1747, 1785 (2011) ("[S]ound patent policymaking depends on the ability of the decision maker to marshal relevant information.. On balance, agency rulemaking is more likely to reflect those characteristics than judicial adjudication."); John M. Golden, Patentable Subject Matter and Institutional Choice, 89 TEX. L. REV. 1041, 1096 ("The categorical, policy-laden nature of the resulting interpretive questions suggests that these questions are better left to primary resolution by a policy organ specially concerned with such questions-namely, an administrative agency."); Jonathan S. Masur, Regulating Patents, 2010 SUP. CT. REV. 275, 279 ("The time has come to consider reorienting patent law's institutional arrangements to bring them more into line with the rest of the administrative state.").
139. See Lisa Schultz Bressman, Procedure as Politics in Administrative Law, 107 COLUM. L. REV. 1749, 1799 n.275 ) (listing the statutes containing consultation requirements).(2007
140. J.R. DeShazo & Jody Freeman, Public Agencies as Lobbyists, 105 COLUM. L. REV. 2217, 2221-22 (2005).
141. Electric Consumers Protection Act of 1986, Pub. L. No. 99-495, 100 Stat. 1243 (codified as amended in scattered sections of 16 U.S.C.).
142. United States v. Mead Corp., 533 U.S. 218, 226-27 (holding that Chevron deference generally applies in proceedings that resemble formal adjudications).2001
143. M. Elizabeth Magill, Agency Choice of Policymaking Forum, 71 U. CHI. L. REV. 1383, 1384-85 (2004) (noting the widespread view that rulemaking is the preferred policymaking vehicle).