Poisoning the next apple? The America invents act and individual inventors

Stanford Law Review

Volumn 65, Issue 3, 2013, Pages 517-563

  Abrams, David S ^a   Polk Wagner, R ^a  

^a UNIVERSITY OF PENNSYLVANIA LAW SCHOOL   (United States)

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EID: 84875632856     PISSN: 00389765     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (177)

1. Thomas A. Meyer, INNOVATE!: HOW GREAT COMPANIES GET STARTED IN TERRIBLE TIMES 30-31, 36, 38 (2010).
2. Explaining that Edison's first invention resulted from moonlighting after twelve-hour workdays as a telegraph operator for Western Union.
3. Ashlee Vance, GEEK SILICON VALLEY: THE INSIDE GUIDE TO PALO ALTO, STANFORD, MENLO PARK, MOUNTAIN VIEW, SANTA CLARA, SUNNYVALE, SAN JOSE, SAN FRANCISCO 23-26 (2007).
4. Describing the beginnings of the computer giant Hewlett-Packard in a garage in Palo Alto.
5. Jan Goldberg, CAREERS FOR HOMEBODIES & OTHER INDEPENDENT SOULS 17 (2d ed. 2007).
6. 'Wozniak and Jobs designed what would be the Apple I in Jobs's bedroom, and they built the prototype in Jobs's garage.'.
7. Mark A. Lemley, The Myth of the Sole Inventor, 110 MICH. L. REV. 709, 710-711 (2012).
8. 'The canonical story of the lone genius inventor is largely a myth.... Invention appears in significant part to be a social, not an individual, phenomenon.'.
9. Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) (amending scattered sections of 35 U.S.C.).
10. The 1952 Patent Act was the last major reform of the patent system.
11. Jason Rantanen & Lee Petherbridge, Commentary, Toward a System of Invention Registration: The Leahy-Smith America Invents Act, 110 MICH. L. REV. FIRST IMPRESSIONS 24, 24 (2011), http://www.michiganlawreview.org/assets/fi/110/rantanenpetherbridge.pdf.
12. 'The recently enacted Leahy-Smith America Invents Act... represents the most significant legislative event affecting patent law and practice in more than half a century.'. President Obama made reform of the patent law one of the centerpieces of his 2011 economic policy agenda. See Remarks on the Federal Budget, 2011 DAILY COMP. PRES. DOC. 542, at 2 (Aug. 2, 2011) (video of address available at http://www.whitehouse.gov/videos/2011/August/080211_DebtCompromise.mp4).
13. 'Through patent reform, we can cut the red tape that stops too many inventors and entrepreneurs from quickly turning new ideas into thriving businesses, which holds our whole economy back.'. Thus, the structure of the U.S. patent system, usually the province of technocrats, academics, and high-tech lawyers, leapt to the top of the national discussion. Of course, for many observers, it had already been there: The financial press last summer was transfixed by a series of blockbuster deals involving patents.
14. Quentin Hardy, Google Buys Motorola for Patent Parts, FORBES (Aug. 15, 2011), http://www.forbes.com/sites/quentinhardy/2011/08/15/google-buys-motorola-for-patentparts.
15. Chris V. Nicholson, Apple and Microsoft Beat Google for Nortel Patents, N.Y. TIMES DEALBOOK (July 1, 2011), http://dealbook.nytimes.com/2011/07/01/apple-and-microsoftbeat-google-for-nortel-patents.
16. Even National Public Radio's popular This American Life program joined the fray, with an hour-long program in July 2011 on 'patent trolls.' See When Patents Attack!, THIS AM. LIFE (Chicago Public Media radio broadcast, July 22, 2011), available at http://www.thisamericanlife.org/radio-archives/episode/441/when-patentsattack.
17. Rantanen & Petherbridge, supra note 6, at 24 (noting the 'AIA's imposition of a first-to-file-or-first-to-publicly-disclose system, which replaces an over 200-year-old firstto-invent tradition').
18. Different provisions of the new law became effective at different times, ranging from the date of enactment of the AIA on September 16, 2011, until March 16, 2013. The relevant provisions here-the new priority rules-are effective for patent applications filed on or after March 16, 2013. See Leahy-Smith America Invents Act § 3(n)(1) (codified at 35 U.S.C. § 100 note (2011)).
19. Infra notes 46-56 and accompanying text.
20. In 1998, the Philippines switched to a first-to-file system, leaving the United States as the last country with a first-to-invent system.
21. Gerald J. Mossinghoff & Vivian S. Kuo, World Patent System Circa 20XX, A.D., 38 IDEA 529, 548 & n.38 (1998).
22. Canada's switch in 1989 is regarded as the last major industrialized nation to switch before the U.S.'s recent shift-a fact which we exploit for our study.
23. Mark A. Lemley & Colleen V. Chien, Are the U.S. Patent Priority Rules Really Necessary?, 54 HASTINGS L.J. 1299, 1313+1331 & n.99 (2003).
24. Noting that a FTF system encourages an inventor 'to file her patent application as early as possible' and describing the costs of patent litigation under the FTI system). Switching to FTF also harmonized the U.S. patent system with that of the rest of the world, arguably as required by international treaty obligations.
25. As we make clear in our discussion of our study, the data we used allowed us to compare patenting behavior of individual inventors-those inventors filing patent applications on their own behalf-versus other types of patent applicants (such as corporations, governments, educational institutions, and nonprofit organizations). Thus, although our discussion applies most directly to individual inventors, there will plainly be implications from our findings for small entities seeking patents, such as small companies or (small) nonprofits. Thus, we use the term 'small inventors' to include these smaller patenting entities as well as individual inventors.
26. Lemley & Chien, supra note 11, at 1301-05 (discussing the politics of the firstto-invent versus first-to-file rules.
27. Gerald J. Mossinghoff, The U.S. First-to-Invent System Has Provided No Advantage to Small Entities, 84 J. PAT. & TRADEMARK OFF. SOC'Y 425, 426 (2002).
28. Noting the controversy surrounding proposals to switch to first-to-file).
29. Michael F. Martin, The End of the First-to-Invent Rule: A Concise History of Its Origin, 49 IDEA 435, 439 n.16 (2009).
30. Explaining that after Canada's change, the United States was the only country with a FTI system.
31. An Act to Amend the Patent Act and to Provide for Certain Matters in Relation Thereto, R.S.C. 1985 (3d Supp.), c. 33 (Can.) (amending Canadian Patent Act, R.S.C. 1985, c. P-4); see also Gregory C. Ludlow, Intellectual Property (1987-93), Part I-Summary of Government Activity, 25 OTTAWA L. REV. 89, 103 (1993) (noting the change).
32. For more information on the impact of the Canadian law change.
33. Robin Coster, FROM FIRST-TO-INVENT TO FIRST-TO-FILE: THE CANADIAN EXPERIENCE (2002), available at http://www.torys.com/Publications/Documents/Publication%20PDFs/ARTech-19T.pdf.
34. Philip C. Mendes da Costa, NAFTA-The Canadian Response or Why Does the Canadian Patent Act Keep Changing?, 22 AIPLA Q.J. 65 (1994).
35. Blake R. Wiggs, Canada's First-to-File Experience-Should the U.S. Make the Move?, 73 J. PAT. & TRADEMARK OFF. SOC'Y 493 (1991).
36. Shih-tse Lo & Dhanoos Sutthiphisal, Does It Matter Who Has the Right to Patent: First-to-Invent or First-to-File? Lessons from Canada (Nat'l Bureau of Econ. Research, Working Paper No. 14926, 2009), available at http://www.nber.org/papers/w14926.
37. Jeffrey M. Wooldridge, INTRODUCTORY ECONOMETRICS: A MODERN APPROACH 450-454 (4th ed. 2009).
38. Discussing the use and implementation of the differencein-difference approach in analyzing policy.
39. Although Canada has a much smaller population than the United States, and a correspondingly smaller economy, the two economies are very 'highly integrated'-for reasons that include geographic proximity of the Canadian population and expansive free trade agreements between the countries, such as the North American Free Trade Agreement (NAFTA).
40. Ian F. Fergusson, CONG. RESEARCH SERV., RL33087, UNITED STATESCANADA TRADE AND ECONOMIC RELATIONSHIP: PROSPECTS AND CHALLENGES 1 (2006).
41. The United States and Canada also have similar economic sectoral components, and cross-border trade to the other is a major component of each country's economy. See id. at 1, 3-8. But see id. at 1-6 (noting that the U.S. and Canadian economies, although similar in many respects, diverge in others). Although productivity in Canada is lower than in the United States- perhaps as a result of lower capital intensity.
42. Someshwar Rao, et al., Measuring the Canada-U.S. Productivity Gap: Industry Dimensions, INT'L PRODUCTIVITY MONITOR, Fall 2004, at 3, 13-14.
43. Discussing the 'productivity gap' and noting the contribution of capital intensity-in our view, the very close economic similarities (indeed, integration) between the countries make the Canadian-U.S. comparison especially apt.
44. Infra note 143 and accompanying text.
45. The most important difference is that the AIA includes a so-called 'first-topublish' exception. See Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 3(b)(1), 125 Stat. 284, 286 (2011) (to be codified at 35 U.S.C. § 102(b)(2)). This means that inventors have a one-year grace period from publication of an invention before they must submit their patent application.
46. Alan Devlin, The Misunderstood Function of Disclosure in Patent Law, 23 HARV. J.L. & TECH. 401, 407-410 (2010).
47. Leahy-Smith America Invents Act § 26 (requiring a U.S. Patent and Trademark Office study to determine the effect of the AIA 'with respect to patent rights, innovation in the United States, competitiveness of United States markets, access by small businesses to capital for investment, and such other issues').
48. The ensuing competition to obtain a patent is called a 'patent race.'.
49. Drew Fudenberg, et al., Preemption, Leapfrogging and Competition in Patent Races, 22 EUR. ECON. REV. 3, 3 (1983).
50. Mark F. Grady & Jay I. Alexander, Patent Law and Rent Dissipation, 78 VA. L. REV. 305, 312 (1992).
51. Grady & Alexander, supra note 23, at 313.
52. Imagine being part of a research team that works for years (and spends millions of dollars) to solve a particular technological problem. Unbeknownst to the investors or researchers, a similar research team was concurrently working on the same problem (and also spending millions of dollars). Assuming near contemporaneous development of the solution, the patent priority rules would then determine the winner and loser of this race, with the loser having not only lost the investment, but also perhaps being precluded from further closely related research. One issue that is not well known empirically is how much the priority rules matter for the general welfare of society. Priority rules which discourage wasteful duplication of effort would be beneficial. But it may be the case that the reward of a patent for priority of invention induces more rapid and sophisticated research and that the benefits outweigh the costs of duplicative effort.
53. Infra notes 30-35 and accompanying text.
54. Infra notes 42-45 and accompanying text.
55. Edmund W. Kitch, The Nature and Function of the Patent System, 20 J.L. & ECON. 265 (1977).
56. Michael Abramowicz & John F. Duffy, Ending the Patenting Monopoly, 157 U. PA. L. REV. 1541, 1606 (2009).
57. 35 U.S.C. § 102, 102(g)(2) (2011).
58. Note that there were two possible procedural postures of priority contests. In the first-known as an 'interference'-the USPTO conducted a proceeding under 35 U.S.C. § 102(g) to determine which of those who filed applications claiming the same subject matter would receive the patent grant. In the second, during postgrant litigation, a court will de termine whether the provisions of § 102(g) have been violated, and thus whether the patent is invalid because of a prior inventor. See 35 U.S.C. § 282; PATENT & TRADEMARK OFFICE, U.S. DEP'T OF COMMERCE, MANUAL OF PATENT EXAMINING PROCEDURE, at ch. 2300 (8th ed., 9th rev. 2012) (describing interference proceedings).
59. Brown v. Barbacid, 276 F.3d 1327, 1337 (Fed. Cir. 2002); Eaton v. Evans, 204 F.3d 1094, 1097 (Fed. Cir. 2000); Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1577-78 (Fed. Cir. 1996).
60. Charles P. Curphey & Norris M. Eades, Canadian Patent Practice-How Different Is It?, 57 J. PAT. OFF. SOC'Y 4, 15-16 & n.45 (1975).
61. Quoting Christiani & Nielsen v. Rice, [1930] S.C.R. 443, 456 (Can.)) (internal quotation marks omitted) ('The holding here, therefore, is that by the date of discovery of the invention is meant the date at which the inventor can prove he has first formulated, either in writing or verbally, a description which affords the means of making that which is invented.').
62. For the American presumption in favor of the first filer under the FTI system, see 37 C.F.R. § 41.207(a)(2) (2012) (requiring that any party seeking to prove an earlier date of invention bear the burden of proof), and Price v. Symsek, 988 F.2d 1187, 1192 & n.2, 1193-94 (Fed. Cir. 1993). For the Canadian presumption, see COSTER, supra note 16, at 7-8.
63. Robert A. Wilkes, The Canadian Viewpoint: A New Perspective Bridging the First-to-Invent and First-to-File Worlds, 18 AIPLA Q.J. 18, 20 (1990).
64. Explaining that the American interference procedure was more complex than the Canadian conflict because the latter 'is handled on the basis of a written record only; there are no provisions for motions, discovery, and the like, and there is no hearing (either before the Commissioner or the Patent Appeal Board) in the entire process within the Patent Office'.
65. Eaton, 204 F.3d at 1097.
66. Brown, 276 F.3d at 1332; Estee Lauder Inc. v. L'Oreal S.A., 129 F.3d 588, 594 (Fed. Cir. 1997).
67. Griffith v. Kanamaru, 816 F.2d 624, 626 (Fed. Cir. 1987).
68. Donald S. Chisum, CHISUM ON PATENTS: A TREATISE ON THE LAW OF PATENTABILITY, VALIDITY AND INFRINGEMENT § 10.07[4][d], [f] (2012).
69. Peeler v. Miller, 535 F.2d 647, 654-55 (C.C.P.A. 1976).
70. 37 C.F.R. § 41.207(a)(2) (2012).
71. Brown, 276 F.3d at 1335.
72. Patent Act, R.S.C. 1985, c. P-4 § 28.2(1).
73. Wiggs, supra note 16, at 496-497.
74. Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 3(b)(1), 125 Stat. 284, 285-87, 293 (2011) (amending 35 U.S.C. § 102) (removing rules establishing a first-toinvent system and replacing them with a first-to-file system).
75. The effective filing date refers to either the filing date of the application in question or the filing date of an earlier application from which the current application can claim the benefit of that earlier date.
76. In a sense this creates something of a 'first to publish' system by making first disclosure an important defense against a first filer. Jim Longacre, 35 USC § 102 and the First to File System, LEXISNEXIS EMERGING ISSUES ANALYSIS, Oct. 2011, available at 2011 Emerging Issues 5978.
77. Leahy-Smith America Invents Act § 3(b)(1) (to be codified at 35 U.S.C. § 102(b)(2)).
78. John E. Schneider, Leahy-Smith America Invents Act-Patent Reform 2011 Is Finally Here, LEXISNEXIS EMERGING ISSUES ANALYSIS, Sept. 2011, available at 2011 Emerging Issues 5929.
79. Leahy-Smith America Invents Act § 3(i) (to be codified at 35 U.S.C. § 135(a)) ('An applicant for patent may file a petition to institute a derivation proceeding in the Office. The petition shall set forth with particularity the basis for finding that an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner's application and, without authorization, the earlier application claiming such invention was filed.').
80. Derivation Proceedings, SUGHRUE MION, PLLC, at 1, http://www.sughrue.com/files/uploads/documents/fadi_article_derivation.pdf (last visited Feb. 24, 2013).
81. Edward Fan & Karen Townsend, United States Converts to First-to-File Patent System, TORYS LLP 1-2 (Sept. 22, 2011), http://www.torys.com/Publications/Documents/Publication%20PDFs/IP2011-4.pdf
82. Explaining that the current fee for prioritized review for large-entity applicants is set at dollar4800.
83. Tariff of Fees-Patents, CAN. INTELL. PROP. OFF., http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr00142.html (last modified Jan. 2, 2013).
84. How Your Patent Application Is Processed, CAN. INTELL. PROP. OFF., http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr03002.html (last modified Apr. 4, 2011).
85. David Black, Size Matters Under the America Invents Act, PAT. REFORUM (Jan. 20, 2012), http://americainventsact.com/size-matters-under-the-america-invents-act.
86. Explaining that 'for many years' small entities benefited from a fee reduction of 50% and that the AIA increases the fee reduction for microentities to 75%, Tariff of Fees, supra note 54 (describing the two-track fee structure for small and large entities for reexamination requests).
87. Eric E. Bensen, America Invents Act, LEXISNEXIS EMERGING ISSUES ANALYSIS, Sept. 2011, available at 2011 Emerging Issues 5900.
88. Longacre, supra note 48.
89. Donald S. Chisum, America Invents Act of 2011: Analysis and Cross-References (Dec. 5, 2011), http://www.chisum.com/wp-content/uploads/AIAOverview.pdf.
90. Donald S. Chisum, Priority Among Competing Patent Applicants Under the American Invents Act (Dec. 5, 2011), http://ssrn.com/abstract=1969592.
91. Supra notes 23-29 and accompanying text (discussing policy implications of FTI versus FTF).
92. Robert W. Pritchard, The Future Is Now-The Case for Patent Harmonization, 20 N.C. J. INT'L L. & COM. REG. 291, 300 (1995).
93. Donald S. Chisum, Introduction to Symposium, The Harmonization of International Patent Law, 26 J. MARSHALL L. REV. 437, 447-448 (1993).
94. Lemley & Chien, supra note 11, at 1304-1305.
95. Gerald J. Mossinghoff, The First-to-Invent Rule in the U.S. Patent System Has Provided No Advantage to Small Entities, 87 J. PAT. & TRADEMARK OFF. SOC'Y 514, 515 (2005).
96. Updating earlier work.
97. Dana Rohrabacher & Paul Crilly, The Case for a Strong Patent System, 8 HARV. J.L. & TECH. 263, 267 (1995).
98. 'Independent inventors, who are often the backbone of new companies, will be especially vulnerable against large multinational corporations who can afford to mount continuing legal challenges.'.
99. The most recent statistics available from the American Intellectual Property Law Association suggests that on average filing a patent application of low complexity costs about dollar7000, and that filing a patent of relative complexity costs between dollar9000 and dollar12,000. See AM. INTELLECTUAL PROP. LAW ASS'N, REPORT OF THE ECONOMIC SURVEY 25 (2009).
100. Stuart J.H. Graham et al., High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey, 24 BERKELEY TECH. L.J. 1255, 1309-1314 (2009).
101. Discussing the sensitivity of startups to the costs of patenting and enforcement.
102. 35 U.S.C. § 102(g) (2011).
103. Lemley & Chien, supra note 11, at 1309 (reporting that junior parties won forty- three percent of the time based on a sample population of 100 cases).
104. Mossinghoff, supra note 60, at 517-518.
105. 35 U.S.C. § 102(a).
106. U.S. PATENT & TRADEMARK OFFICE, ALL TECHNOLOGIES REPORT: JANUARY 1, 1986-DECEMBER 31, 2010, at A2-21 (2011).
107. Mark D. Janis, Patent Abolitionism, 17 BERKELEY TECH. L.J. 899, 910-911 (2002).
108. Michael J. Meurer, Inventors, Entrepreneurs, and Intellectual Property Law, 45 HOUS. L. REV. 1201, 1202-1203 (2008).
109. Joseph A. Schumpeter, CAPITALISM, SOCIALISM AND DEMOCRACY 131-134 (3d ed. 1950).
110. Discussing the stationary state that would result without entrepreneurs.
111. Eric Von Hippel, THE SOURCES OF INNOVATION 3-10 & tbl.1-1 (1988).
112. Zoltan J. Acs & David B. Audretsch, INNOVATION AND SMALL FIRMS 1-8, 147-154 (1990).
113. CHI RESEARCH, INC., SMALL SERIAL INNOVATORS: THE SMALL FIRM CONTRIBUTION TO TECHNICAL CHANGE (2003).
114. Adam B. Jaffe et al., Knowledge Spillovers and Patent Citations: Evidence from a Survey of Inventors, 90 AM. ECON. REV. 215, 218 (2000).
115. Supra note 18 and accompanying text.
116. Joshua D. Angrist & Jörn-Steffen Pischke, MOSTLY HARMLESS ECONOMETRICS: AN EMPIRICIST'S COMPANION 227-243 (2009).
117. A good control group must be similar to the treatment group in the absence of the treatment. In this case, given the similarity of the economies and innovation in the two countries, we believe the United States satisfies the requirements of a good control.
118. An Act to Amend the Patent Act and to Provide for Certain Matters in Relation Thereto, R.S.C. 1985 (3d Supp.), c. 33 (Can.).
119. Roger T. Hughes & John H. Woodley, HUGHES AND WOODLEY ON PATENTS 595 (1984)
120. Describing the Canadian first-to-invent system.
121. An Act to Amend the Patent Act and to Provide for Certain Matters in Relation Thereto § 6.
122. Specifically, he argued that interference proceedings, which were complex and lengthy, favored larger entities. See Mossinghoff, supra note 60, at 520. Mark Lemley and Colleen Chien confirmed in their study that large entities initiated interference proceedings more than small entities and reached a similar conclusion. See Lemley & Chien, supra note 11, at 1323.
123. Mossinghoff, supra note 60, at 517.
124. Mossinghoff, supra note 13, at 430.
125. Lemley & Chien, supra note 11, at 1309.
126. Peter A. Jackman, Adoption of a First-to-File Patent System: A Proposal, 26 U. BALT. L. REV. 67, 84 (1997).
127. Lemley & Chien, supra note 11, at 1315.
128. Both interference proceedings and litigation (the two venues by which a priority contest can be resolved) are extremely expensive and thus involve only a very small fraction of all patents; therefore, when a priority contest does actually occur, the stakes must be substantial.
129. Lo & Sutthiphisal, supra note 16, at 4-5.
130. Although Lo and Sutthiphisal used Canadian patenting in the United States as their measure in order to avoid picking up effects related to the maintenance fees, their result seems equally explained by the rise in costs of Canadian patenting as a result of the new fees. That is, larger entities can expect to see a shift in patenting in their direction when the costs of patenting rise, and since many Canadian inventors file both in the United States and Canada, increases in the costs of patenting in Canada will likely have a similar effect on the costs of patenting-to Canadian companies-in the United States.
131. Canadian data are available in bulk form from CIPO. See IP Data Products, CAN. INTELL. PROP. OFF., http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr01933.html (last modified Dec. 14, 2012). The U.S. data are available in bulk form from the USPTO. See Electronic Data Products, U.S. PAT. & TRADEMARK OFF., http://www.uspto.gov/products/catalog/index.jsp (last modified Jan. 2, 2013).
132. For both datasets, the application date is the actual filing date of the patent application.
133. Some specifications use shorter time periods in order to focus even more precisely on the 1989 law change.
134. Estimated Population of Canada, 1605 to Present, STAT. CANADA, http://www.statcan.gc.ca/pub/98-187-x/4151287-eng.htm (last modified July 6, 2009); 1990 Census, U.S. CENSUS BUREAU, http://www.census.gov/main/www/cen1990.html (last modified Oct. 15, 2012).
135. Note that these are total patents granted in each country, regardless of country of origin of patentee or inventor. One important reason for the higher per capita grant rate in Canada is that a much greater proportion of Canadian patents are granted to non-Canadians.
136. GDP data are available at the International Monetary Fund website. World Economic Outlook Databases, INT'L MONETARY FUND, http://www.imf.org/external/ns/cs.aspx?id=28 (last visited Feb. 24, 2013).
137. All assignment data for both countries are as of the patent issue date.
138. Ideally we would compare similarly defined small entities or individuals across the two datasets. Unfortunately, the CIPO does not include such classifications with the data.
139. For consistency with the Canadian data, this second definition is used in the results presented in this Article.
140. A list of these companies and the corresponding number of patent applications is available from the authors.
141. These include 'Co.,' 'Company,' 'Co. KG,' 'Co-Conn,' 'Co. Inc.,' and 'Sons Inc.'.
142. Grollier is a chemist who has directed R&D for L'Oreal since 1994. Jean-Francois Grollier: Executive Profile, BLOOMBERG BUSINESSWEEK, http://investing.businessweek.com/research/stocks/people/person.asp?personId=8155200 (last visited Feb. 24, 2013).
143. Green holds patents on medical technologies.
144. David T. Green, GOOGLE PATS., http://patents.google.com (search for "David T. Green").
145. Berfield holds vacuum cleaner-related patents.
146. Robert C. Berfield, GOOGLE PATS., http://patents.google.com (search for "Robert C. Berfield").
147. Pedain holds chemical coatings patents.
148. Josef Pedain, GOOGLE PATS., http://patents.google.com (search for "Josef Pedain").
149. As discussed in more detail in Part III.D.3 below, we believe we can rule out any disproportionate impact on individual inventors related to the drop in the rate of patenting. For example, we control for potential differences in patenting rate due to variation in representation of individuals by technology class. We do so by running regressions including terms for technology class interacted with a post-law change dummy variable and find that the impact of the law change on individual share is still significantly negative. If the entire reason for the drop in Canadian patents was explained by some classes being negatively impacted by the law change, and these were just the classes that had the highest individual inventor representation, then there should be no overall effect of the post dummy. In fact, we find it to be statistically significant and a large negative value.
150. Ideally we would like to examine relative application rates of individuals and larger entities, in addition to grant rates, but application data are not available in Canada prior to the law change.
151. Reported standard errors are heteroskedasticity-consistent (White Standard Errors).
152. Since this is a difference-in-difference specification and the independent variables of interest are binary, it is unlikely that probit will yield substantially different results.
153. There are alternative explanations as well, which we discuss further in the next Subpart.
154. This is of course not the only way to define patent quality.
155. For a description of the Flesch-Kincaid index.
156. J. Peter Kincaid, et al., DERIVATION OF NEW READABILITY FORMULAS (AUTOMATED READABILITY INDEX, FOG COUNT AND FLESCH READING EASE FORMULA) FOR NAVY ENLISTED PERSONNEL 18-19, 38-39 (1975).
157. Modifying the Flesch Reading Ease formula to create a new measure of readability that relates the complexity of the writing to grade level). For the Fog index.
158. Robert Gunning, THE TECHNIQUE OF CLEAR WRITING 31-35 (rev. ed. 1968).
159. The advantage of these measures is that they are standard, require only limited programming to utilize, and are well understood. The disadvantage is that patent claim language does not adhere to standard conventions of grammar and sentence structure, meaning these metrics are at best useful for identifying changes in claim language patterns rather than measures of claim complexity directly.
160. We use the same difference-in-difference technique as employed above to examine the impact on individual inventor share.
161. We believe that this pattern in the U.S. data may be a response by inventors to changes in U.S. patent law wrought by the creation of the U.S. Court of Appeals for the Federal Circuit in 1982. The consensus is that the Federal Circuit greatly increased the likelihood that patents would be upheld as valid, enabling patentees to seek broader-here, shorter-claims.
162. R. Polk Wagner & Lee Petherbridge, Is the Federal Circuit Succeeding? An Empirical Assessment of Judicial Performance, 152 U. PA L. REV. 1105, 1116-1117 (2004).
163. As we note in the text, this is an avenue for future research.
164. An Act to Amend the Patent Act and to Provide for Certain Matters in Relation Thereto, R.S.C. 1985 (3d Supp.), c. 33, § 16 (Can.); Ludlow, supra note 15, at 104.
165. David S. Abrams, Did TRIPS Spur Innovation? An Analysis of Patent Duration and Incentives to Innovate, 157 U. PA. L. REV. 1613, 1614+1642 (2009).
166. An Act to Amend the Patent Act and to Provide for Certain Matters in Relation Thereto, R.S.C. 1985 (3d Supp.), c. 33, § 16 (Can.).
167. The annual fee schedule for Canadian patent applications, which has apparently remained unchanged since 1989, is as follows: Years 2, 3, 4 dollar100 Years 5, 6, 7, 8, 9 dollar200 Years 10, 11, 12, 13, 14 dollar250 Years 15, 16, 17, 18, 19 dollar450 Note that small entities (including individual inventors) pay fifty percent of the listed fees. See Tariff of Fees-Patents, supra note 54.
168. Compare supra note 134 and accompanying text (detailing maintenance fees), with AM. INTELLECTUAL PROP. LAW ASS'N, supra note 62, at 25 (detailing typical charges for intellectual property-related legal services).
169. There are other reasons to doubt the effect of patent fees on patent filings generally. For one thing, a national patent office has a monopoly on the ability to grant patent rights. For another, the substitutes for patent protection-secrecy or unprotected disclosure-are seriously imperfect substitutes for the rights granted by a patent.
170. Supra note 81 and accompanying text.
171. A regression of individual inventor share on pendency yields a coefficient of-0.0001145 with a standard error of 0.0000245. This means that for an extra 1000 days of pendency in a patent class, the share of individual inventors will be about 1.1 percentage points lower.
172. The regression of change in individual inventor share in Canada on change in pendency yields a coefficient of -0.0000244 with a standard error of 0.0000181, which is statistically insignificant.
173. Lemley & Chien, supra note 11, at 1320-1323.
174. Mossinghoff, supra note 13, at 428.
175. The regression reported includes IPC technology class controls. Other specifications, including year dummies, time trends, or no controls yield similar results.
176. Supra Part III.B. In Table 6, the coefficient for the base specification is -0.0149. That represents a 1.49 percentage point reduction in the share granted to individuals in Canada relative to the share the law change. Because the pre-law change rate was about 10.8%, that in turn suggests about a 14% drop in relative share. (The ratio of 1.49% to 10.8% is about 14%.).
177. Remarks on the Federal Budget, supra note 6.