The case for tailoring patent awards based on time-to-market

UCLA Law Review

Volumn 61, Issue 3, 2014, Pages 672-759

  Roin, Benjamin N ^a  

^a HARVARD LAW SCHOOL   (United States)

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[No Author keywords available]

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EID: 84891325760     PISSN: 00415650     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (426)

1. See Diamond v. Chakrabarty, 447 U. S. 303, 309 (1980) (noting that "anything under the sun that is made by man" is eligible for patent protection).
2. See A PATENT SYSTEM FOR THE 21ST CENTURY 35 (Stephen A. Merrill et al. eds., 2004);
3. FED. TRADE COMM'N TO PROMOTE INNOVATION: THE PROPER BALANCE OF COMPETITION AND PATENT LAW AND POLICY ch. 3 (2003)
4. [hereinafter FTC];
5. Ashish Arora et al., R&D and the Patent Premium, 26 INT'L J. INDUS. ORG. 1153, 1170 (2008);
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11. See S. TEMP. NAT'L ECON. COMM., 76TH CONG., INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER 157 (Comm. Print 1940);
12. C. Michael White, Why a Seventeen Year Patent?, 38 J. PAT. OFF. SOCY 839, 842-45 (1956).
13. See Clarisa Long, Our Uniform Patent System, FED. LAW., Feb. 2008, at 44, 47-48.
14. See Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 VA. L. REV. 1575, 1577 (2003).
15. See 35 U. S. C. §§ 101-103, 112 (2006).
16. See 35 U. S. C. § 271 (a) (2006).
17. See, e.g., Suzanne Scotchmer, Standingon the Shoulders of Giants: Cumulative Research and the Patent Law, 5 J. ECON. PERSP. 29 (1991).
18. See WILLIAM J. BAUMOL, THE FREE-MARKET INNOVATION MACHINE: ANALYZING THE GROWTH MIRACLE OF CAPITALISM 11-12 (2002);
19. ELHANAN HELPMAN, THE MYSTERY OF ECONOMIC GROWTH 42-46 (2004);
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22. See SUZANNE SCOTCHMER, INNOVATION AND INCENTIVES 127-57 (2004) (reviewing the literature on cumulative innovation).
23. See Peter S. Menell & Suzanne Scotchmer, Intellectual Property Law, in 2 HANDBOOK OF LAW AND ECONOMICS 1473, 1476 (A. Mitchell Polinsky & Steven Shavell eds., 2007) ("[T]he availability of intellectual property for innovation creates incentives for investment as well as potential impediments to diffusion and cumulative innovation. The net effects [on innovation] are quite complex to sort out from both theoretical and empirical perspectives.");
24. Petra Moser, Patents and Innovation: Evidence From Economic History, 27 J. ECON. PERSP. 23, 40 (2013) ("Overall, the weight of the existing historical evidence suggests that patent policies, which grant strong intellectual property rights to early generations ofinventors, may discourage innovation. ").
25. See Bronwyn H. Hall & Dietmar Harhoff, Recent Research on the Economics of Patents, 4 ANN. REV. ECON. 541, 547 (2012).
26. Mariko Sakakibara & Lee Branstetter, Do Stronger Patents Induce More Innovation?Evidence From the 198S'Japanese Patent Law Reforms, 32 RANDJ. ECON. 77 (2001);
27. Josh Lerner, Patent Protection and Innovation Over ISO Years (Natl Bureau of Econ. Research, Working Paper No. 8977, 2002).
28. See John M. Golden, Principles for Patent Remedies, 88 TEX. L. REV. 505, 546-50 (2010).
29. See Robert P. Merges, As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform, 14 BERKELEYTECH. L. J. 577, 584-88 (1999).
30. See F. Scott Kieff & Henry E. Smith, How Not to Invent a Patent Crisis, in REACTING TO THE SPENDING SPREE: POLICY CHANGES WE CAN AFFORD 55, 59-62 (Terry L. Anderson & Richard Sousa eds., 2009) (noting that the history of patent reform in the United States follows a circular pattern, in which the government first strengthens the patent system to promote innovation and economic growth but later weakens it to prevent abuses of the patent system).
31. See, e.g., ADAM B. JAFFE & JOSH LERNER, INNOVATION AND ITS DISCONTENTS: HOW OUR BROKEN PATENT SYSTEM IS ENDANGERING INNOVATION AND PROGRESS, AND WHAT TO DO ABOUT IT 1-2 (2004) (arguing that the current patent crisis stems from the U. S. Congress's decision in 1982 to shore up the patent system by creating a specialized appellate court to hear all patent cases); id. at 95 (noting "the cyclical nature of historical patent controversies" and that "[fjar too often, fixes to patent law have created as many problems as they have solved").
32. Pub. L. No. 112-29, 125 Stat. 284.
33. L. Gordon Crovitz, Google, Motorola and the Patent Wars, WALL ST. J., Aug. 22, 2011, http://orilme.wsi.com/article/ SB10001424053111903639404576518493092643006.html;
34. see also BRIAN KAHIN, COMPUTER & COMMCNS INDUS. ASS'N, AGENDA FOR REFORM: PATENT REFORM FOR A DIGITAL ECONOMY (2006);
35. Colleen V. Chien, Reforming Software Patents, 50 HOUS. L. REV. 325, 350-90 (2012);
36. Iain M. Cockburn & Megan J. MacGarvie, Entry and Patenting, in the Software Industry, 57 MGMT. SCI. 915, 916 (2011);
37. Eloïse Gratton, Should Patent Protection Be Considered for Computer Software-Related Innovations?, 7 COMPUTER L. REV. & TECH. J. 223, 250 (2003);
38. Peter S. Menell, The Challenges of Reforming Intellectual Property Protection for Computer Software, 94 COLUM. L. REV. 2644, 2645-47 (1994);
39. Mark Aaron Paley, A Model Software Petite Patent Act, 12 SANTA CLARA COMPUTER & HIGH TECH. L. J. 301, 306 (1996);
40. Mark H. Webbink, A New Paradigm for Intellectual Property Rights in Software, 2005 DUKE L. & TECH. REV. 12, ¶ 28;
41. James Bessen, A Generation of Software Patents 20-21 (Bos. Univ. Sch. of Law, Working Paper No. 11-31, 2011);
42. Eric Goldman, Fixing Software Patents (Santa Clara Univ. Sch. of Law, Legal Studies Research Papers Series No. 01-13, 2013);
43. David A. Wheeler, Eliminate Software Patents (Aug. 2, 2011) (unpublished manuscript), available at http://www.dwheeler.com/essays/software-patents.html (containing links to numerous articles that are critical of software patents written by academics, venture capitalists, entrepreneurs, and industry executives).
44. See Jay P. Kesan & Andres A. Gallo, The Political Economy of the Patent System, 87 N. C. L. REV. 1341 (2009);
45. Joe Matal, A Guide to the Legislative History of the America Invents Act: Part I of II, 21 FED. CIR. BJ. 435 (2012).
46. See INT'L DEV. RESEARCH CTR., MAKING CHOICES ABOUT HYDROGEN: TRANSPORT ISSUESFOR DEVELOPING COUNTRIES 38 (Lynn K. Mytelka & Grant Boyle eds., 2008);
47. Douglas J. Cumming & Jeffrey G. Macintosh, The Determinants of R&D Expenditures: A Study of the Canadian Biotechnology Industry, 17 REV. INDUS. ORG. 357, 364, 366-68 (2000);
48. Gaynor Harrnell, The Innovation of Agrochemicals: Regulation and Patent Protection, 25 RES. POL'Y 379, 387 (1996);
49. David E. Schimmelpfennig et al., The Impact of Seed Industry Concentration on Innovation: A Study of US Biotech Market Leaders, 30 AGRIC. ECON. 157, 166 (2004) (finding that patents significandy increase R&D spending related to genetically modified soybeans, while acknowledging that it is possible that patents inhibit R&D spending on other crops-like corn and cotton-for which odier barriers to imitation make patents less important).
50. See APATENT SYSTEM FOR THE 21ST CENTURY, supra note 2, at 4-5;
51. See Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698 (1998);
52. Clarisa Long, Patents and Cumulative Innovation, 2 WASH. U. J. L. & POLY 229, 237 (2000);
53. Arti Kaur Rai, Regulating Scientific Research: Intellectual Property Rights and the Norms of Science, 94 NW. U. L. REV. 77, 120-35 (1999).
54. See A PATENT SYSTEM FOR THE 21ST CENTURY, supra note 2, at 72;
55. See Ariad Pharm., Inc. V. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) (en banc) (using the written description requirement to limit the scope of upstream biotechnology patents claiming drug compounds);
56. In re Fisher, 421 F.3d 1365 (Fed. Cir. 2005) (using the utility requirement to invalidate patents on genetic material filed before researchers know any of the biological functions of the claimed genes).
57. See Benjamin N. Roin, Unpatentable Drugs and the Standards of Patentability, 87 TEX. L. REV. 503, 515-56 (2009).
58. Eric Budish et al., Do Fixed Patent Terms Distort Innovation? Evidence From Cancer Clinical Trials (Mar. 20, 2013) (unpublished manuscript), available at http://economics. mit.edu/files/8651 (finding that because pharmaceutical companies file their patents early in R&D and the twenty-year patent term starts running on the filing date, the fixed patent term distorts R&D investments away from treatments for early-stage cancer and cancer prevention (which require lengthy clinical trials that erode a substantial portion of the firm's patent life) in favor of treatments for late-stage cancer (which allow for shorter trials and thus a longer effective patent life));
59. cf. Jocelyn Kaiser, NIH's Secondhand Shop for Tried-and-Tested Drugs, 332 SCIENCE 1492 (2011) (noting that the "NIH may also propose modifying patent laws to give companies financial incentives" for developing off-patent drugs for new uses, although this would be a "tremendous undertaking", and "for now, the agency is looking for leeway in existing laws" (internal quotation marks omitted)).
60. See Charles Duhigg & Steve Lohr, The Patent, Used as a Sword, N. Y. TIMES, Oct. 7, 2012, http://www.nytimes.com/2012/10/08/technology/patent-wars- among-tech-giants-can-stiflecompetition.html (noting that "lobbyists from high-tech corporations and the pharmaceutical industry... push[ed] conflicting proposals", which lawmakers and lobbyists said "paralyzed Congress's ability to make real changes", and that the America Invents Act ultimately "achieved mostly administrative fixes").
61. See JAMES BESSEN & MICHAEL J. MEURER, PATENT FAILURE: HOW JUDGES, BUREAUCRATS, AND LAWYERS PUT INNOVATORS AT RISK (2008);
62. DAN L. BURK & MARK A. LEMLEY, THE PATENT CRISIS AND HOW THE COURTS CAN SOLVE IT 97 (2009);
63. STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW 154 (2004);
64. Michael Abramowicz, Orphan Business Models: Toward a New Form of Intellectual Property, 124 HARV. L. REV. 1362, 1406-07 (2011);
65. Michael J. Burstein, Rules for Patents, 52 WM. & MARY L. REV. 1747, 1761-62 (2011);
66. Daniel R. Cahoy, An Incrementalist Approach to Patent Reform Policy, 9 N. Y. U. J. LEGIS. & PUB. POLY 587, 635-36 (2006);
67. Michael W. Carroll, One for All: The Problem of Uniformity Cost in Intellectual Property Law, 55 AM. U. L. REV. 845, 847-49 (2006);
68. Eric E. Johnson, Calibrating Patent Lifetimes, 22 SANTA CLARA COMPUTER & HIGH TECH. L. J. 269 (2006);
69. Amir H. Khoury, Differential Patent Terms and the Commercial Capacity of Innovation, 18 TEX. INTELL. PROP. LJ. 373 (2010);
70. Jonathan S. Masur, Regulating Patents, 2010 SUP. CT. REV. 275, 321-26;
71. Peter S. Menell, A Method for Reforming the Patent System, 13 MICH. TELECOMM. & TECH. L. REV. 487, 495, 508 (2007);
72. Peter S. Menell & Michael J. Meurer, Notice Failure and Notice Externalities, 5 J. LEGAL ANALYSIS 1, 50 (2013);
73. Craig Allen Nard & John F. Duffy, Rethinking Patent Law's Uniformity Principle, 101 NW. U. L. REV. 1619, 1636-37 (2007) (recognizing that "some scholars have argued for technological diversity", although the authors themselves do not adopt that position);
74. Joshua D. Sarnoff, The Patent System and Climate Change, 16 VA. J. L. & TECH. 301 (2011);
75. F. M. Scherer, Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation, 62 AM. ECON. REV. 422, 427 (1972);
76. William Fisher III, The Disaggregation of Intellectual Property: How the Laws of Intellectual Property Have Grown- And Grown Apart, HARV. L. BULL., Summer 2004, at 24, 29-31;
77. Frank Partnoy, Finance and Patent Length 12-17, 29 (U. San Diego Law & Econ. Research Paper No. 19, 2001), available at http://papers.ssrn. Com/abstract=285144;
78. Richard A. Posner, Why There Are Too Many Patents in America, ATLANTIC, July 12, 2012, http://www.meatlantic.com/business/print/2012/07/why-there-are- too-many-patents-in-america/259725.
79. See Arti K. Rai, Building a Better Innovation System: Combining Facially Neutral Patent Standards With Therapeutics Regulation, 45 HOUS. L. REV. 1037, 1056-57 (2008).
80. Several scholars have proposed tailoring the patent term. See, e.g., S. TEMP. NAT'L ECON. COMM., supra note 3, at 157.
81. James Gleick, Patently Absurd, N. Y. TIMES, Mar. 12, 2000, at SM 44;
82. DEFEND INNOVATION, https://defendinnovanon.org/proposal/shorten-patent- term (last visited Dec. 23, 2013).
83. See Peter S. Menell, Tailoring Legal Protection for Computer Software, 39 STAN. L. REV. 1329, 1365 (1987);
84. Pamela Samuelson et al., A Manifesto Concerning the Legal'Protection of Computer Programs, 94 COLUM. L. REV. 2308, 2408 (1994).
85. See, e.g., Jeff Bezos, Bezos and O'Reilly Spearhead Call for Patent Reform: An Open Letter from Jeff Bezos on the Subject of Patents, O'REILLY (Mar. 9, 2000), http://oreilly.com/news/amazon-patents.html ("[B]usiness method and software patents should have a much shorter lifespan than the current 17 years-I would propose 3 to 5 years." (emphasis omitted)).
86. APATENTSYSTEM FOR THE 21ST CENTURY, supra note2, at 84.
87. JAE HUN PARK, PATENTS AND INDUSTRY STANDARDS 162-63 (2010);
88. Richard A. Epstein, The Disintegration of Intellectual Property? A Classical Liberal Response to a Premature Obituary, 62 STAN. L. REV. 455 (2010);
89. Qin Shi, Patent System Meets New Sciences: Is the Law Responsive to Changing Technologies and Industries?, 61 N. Y. U. ANN. SURV. AM. L. 317, 346-47 (2005);
90. R. Polk Wagner, (Mostly) Against Exceptionalism, in PERSPECTIVES ON PROPERTIES OF THE HUMAN GENOME PROJECT 367, 368 (F. Scott Kieffed., 2003);
91. William D. Nordhaus, The Optimum Life of a Patent: Reply, 62 AM. ECON. REV. 428, 430 (1972) ("[A] fixed patent life is not optimal in theory, although it may be unavoidable in practice.").
92. Yochai Benkler, The Idea of Access to Knowledge and the Information Commons: Long-Term Trends and Basic Elements, in ACCESS TO KNOWLEDGE IN THE AGE OF INTELLECTUAL PROPERTY 217, 234 (Gaelle Krikorian & Amy Kapczynski eds., 2010) (expressing hope that the IT industries will join forces with the access-to-medicines movement in the push for broad patent reform, but noting that "the risk of this kind of opportunistic alliance formation is that the partnership dissolves as some, especially those who are powerful and interest driven, obtain what they need and leave").
93. See A PATENT SYSTEM FOR THE 21ST CENTURY, supra note 2, at 84.
94. See, e.g., WILLIAM D. NORDHAUS, INVENTION, GROWTH, AND WELFARE 76-88 (1969);
95. David S. Abrams, Did TRIPS Spur Innovation? An Analysis of Patent Duration and Incentives to Innovate, 157 U. PA. L. REV. 1613, 1615 (2009);
96. Ian Ayres & Gideon Parchomovsky, Tradable Patent Rights, 60 STAN. L. REV. 863, 892 (2007);
97. Nancy T. Gallini, Patent Policy and Costly Imitation, 23 RAND J. ECON. 52 (1992);
98. Richard Gilbert & Carl Shapiro, Optimal Patent Length and Breadth, 21 RAND J. ECON. 106, 111 (1990);
99. Louis Kaplow, The Patent-Antitrust Intersection: A Reappraisal, 97 HARV. L. REV. 1813 (1984);
100. Ted O'Donoghue et al., Patent Breadth, Patent Life, and the Pace of Technological Progress, 7 J. ECON. & MGMT. STRATEGY 1, 2-5 (1998);
101. John F. Duffy, A Minimum Optimal Patent Term 5-7 (Jan. 9, 2003) (unpublished manuscript), available at http://ssrn. Com/abstract=354282.
102. See, e.g., APATENTSYSTEMF0RTHE21STCENTURY, supra note 2, at 83-85;
103. U. S. CONST, art. I, § 8, cl. 8.
104. See SUBCOMM. ON PATENTS, TRADEMARKS, & COPYRIGHTS OFTHE S. COMM. ON THE JUDICIARY, 85TH CONG., AN ECONOMIC REVIEW OF THE PATENT SYSTEM 21 (Comm. Print 1958).
105. See Kenneth J. Arrow, Economic Welfare and the Allocation of Resource for Invention, in THE RATE AND DIRECTION OFINVENTIVE ACTIVITY: ECONOMIC AND SOCIAL FACTORS 609, 615 (1962).
106. See NAJIB HARABI, INNOVATION VERSUS IMITATION: EMPIRICAL EVIDENCE FROM SWISS FIRMS 12(1991), available at http://mpra. ub.uni-muenchen. de/26214.
107. See STEVEN P. SCHNAARS, MANAGING IMITATION STRATEGIES: HOW LATER ENTRANTS SEIZE MARKETS FROM PIONEERS 1 (1994) ("Imitation is not only more abundant than innovation, it is actually a much more prevalent road to business growth and profits.");
108. Michele Kremen Bolton, Imitation Versus Innovation: Lessons to Be Learned From the Japanese, 21 ORGANIZATIONAL DYNAMICS 32 (1993).
109. See Marjorie Adams, Prod. Dev. & Mgmt. Ass'n, PDMA Foundation New Product Development Report of Initial Findings: Summary of Responses From 2004 CPAS, at 2, 27 (Sept. 2004) (Powerpoint Presentation), available at http://www.blackswanhome.con/uploads/documents/product/2004-CPAS%20Initial %20Findings.pdf.
110. Gezinus J. Hidding et al., The IT Platform Principle-The First Shall Not Be First, WALL ST. J., Jan. 25, 2010, at R.4.
111. See, e.g., Abbie Griffin, PDMA Research on New Product Development Practices: Updating Trends and Benchmarking Best Practices, 14 J. PRODUCTINNOVATION MGMT. 429, 447-48 (1997);
112. Henrique Rocha & Mauricio Delamaro, Project/Product Development Process Critical Success Factors: A Literature Compilation, 2 RES. LOGISTICS & PRODUCTION 273, 275 (2012);
113. See ORACLE, ACCELERATE PRODUCT INNOVATION AND MAXIMIZE PROFITABILITY": AGILE PRODUCT LIFECYCLE MANAGEMENT (2011), http://www.orade.com/us/products/applications/agile/agile-productlifecycle-mgmt- 070032.pdf
114. Carmen Nobel, Clay Christensen's Milkshake Marketing, HARV. BUS. SCH. WORKING KNOWLEDGE, Feb. 14, 2011, at 1.
115. U. S. C. § 271 (a) (2006).
116. Edwin Mansfield, Patents and Innovation: An Empirical Study, 32 MGMT. SCI. 173, 174 (1986).
117. See William T. Robinson & Sungwook Min, Is the First to Market the First to Fail? Empirical Evidence for Industrial Goods Businesses, 39 J. MARKETING RES. 120, 126 (2002).
118. See Marvin Lieberman, First Mover Advantage, in PALGRAVE ENCYCLOPEDIA OF STRATEGIC MANAGEMENT (Mie Augier & David J. Teece eds., forthcoming 2015).
119. See Marvin B. Lieberman & David B. Montgomery, First-Mover (Dis) Advantages: Retrospective and Link With the Resource-Based View, 19 STRATEGIC MGMT. J. 1111, 1117-21 (1998);
120. See Marvin B. Lieberman & David B. Montgomery, First-Mover Advantages, 9 STRATEGIC MGMT. J. 41, 42-43, 46-47 (1988).
121. See Richard A. Easterlin, The Worldwide Standard of Living Since 1800, 14 J. ECON. PERSP. 7, 12 (2000).
122. See Paul M. Romer, Endogenous Technological Change, 98 J. POL. ECON. S71, S74-S75 (1990).
123. See Paul M. Romer, Two Strategies for Economic Development: Using Ideas and Producing Ideas, in PROCEEDINGS OF THE WORLD BANK: ANNUAL CONFERENCE ON DEVELOPMENT ECONOMICS 1992, at 63, 64 (Lawrence H. Summers & Shekhar Shah eds., 1993).
124. see PHILIPPE AGHION & PETER HOWTLT, ENDOGENOUS GROWTH THEORY 11 (1998);
125. W. BRIAN ARTHUR, THE NATURE OF TECHNOLOGY: WHAT IT IS AND HOW IT EVOLVES 10 (2009);
126. RICHARD R. NELSON, THE SOURCES OF ECONOMIC GROWTH 31 (1996).;
127. see AT' L SCI. FOUND. (NSF), NATIONAL PATTERNS OF R&D RESOURCES: 2008 DATA UPDATE (2010).
128. See CONG. BUDGET OFFICE, R&D AND PRODUCTIVITY GROWTH: A BACKGROUND PAPER 23-28 (2005)
129. [hereinafter CBO];
130. ZVI GRUICHES, R&D, EDUCATION, AND PRODUCTIVITY: A RETROSPECTIVE 70 (2000);
131. Bronwyn H. Hall et al., Measuring the Returns to R&D, in 2 HANDBOOK OFTHE ECONOMICS OF INNOVATION, supra note 12, at 1033, 1065-73 (surveying the economic literature).
132. John M. Golden, Innovation Dynamics, Patents, and Dynamic-Elasticity Tests for the Promotion of Progress, 24 HARV. J. L. & TECH. 47, 61-63 (2010);
133. Zvi Griliches, The Search for R&D Spillovers, 94 SCANDINAVIAN J. ECON. S29, S43 (1992);
134. Charles I. Jones & John C. Williams, Measuring the Social Return to R&D, 113 Q. J. ECON. 1119, 1134 (1998);
135. R. Polk Wagner, Information Wants to Be Free: Intellectual Property and the Mythologies of Control, 103 COLUM. L. REV. 995, 1009 (2003).
136. Roberts v. Sears, Roebuck & Co., 723 F.2d 1324, 1345 (7th Cir. 1983) (en banc) (Posner, J., concurring in part and dissenting in part);
137. see also Michael Abramowicz & John F. Duffy, The Inducement Standard of Patentability, 120 YALE L. J. 1590, 1590 (2011).
138. See JEAN TIROLE, THE THEORY OF INDUSTRIAL ORGANIZATION 399 (1988).
139. But see Edmund W. Kitch, The Nature and Function of the Patent System, 20 J. L. & ECON. 265, 276-77 (1977) (arguing that patents reduce wasteful R&D spending from patent races because they are granted early in R&D and therefore end the race sooner).
140. See Nicholas Bloom et al., Identifying Technology Spillovers and Product Market Rivalry, 81 ECONOMETRICA 1347, 1348-49 (2013);
141. Paul A. David & Bronwyn H. Hall, Heart of Darkness: Modeling Public-Private Funding Interactions Inside the R&D Black Box, 29 RES. POLY 1165, 1167-68 (2000);
142. Charles I. Jones & John C. Williams, Too Much of a Good Thing? The Economics of Investment in R&D, 5 J. ECON. GROWTH 65, 66 (2000).
143. See, e.g., WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 315-16, 327 (2003);
144. John F. Duffy, Rethinking the Prospect Theory of Patents, 71 U. CHI. L. REV. 439, 509-10 (2004);
145. Einer Elhauge, Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory, 123 HARV. L. REV. 397, 439-41 (2009).
146. See, e.g., Julie E. Cohen & Mark A. Lemley, Patent Scope and Innovation in the Software Industry, 89 CALIF. L. REV. 1, 11-14, 33-37 (2001).
147. See SUBCOMM. ON PATENTS, TRADEMARKS, & COPYRIGHTS OF THE S. COMM. ON THE JUDICIARY, supra note 59, at 10-13.
148. See Nancy T. Gallini, The Economics of Patents: Lessons From Recent U. S. Patent Reform, 16 J. ECON. PERSP. 131, 136 (2002).
149. see also James Bessen & Eric Maskin, Sequential Innovation, Patents, and Imitation, 40 RAND J. ECON. 611 (2009);
150. Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 TEX. L. REV. 989 (1997);
151. Robert P. Merges & Richard R. Nelson, On the Complex Economics of Patent Scope, 90 COLUM. L. REV. 839 (1990).
152. See Stephen J. Nickell, Competition and Corporate Performance, 4 J. POL. ECON. 724 (1996).
153. See Philippe Aghion et al., Patent Rights, Product Market Reforms, and Innovation (Feb. 19, 2013) (unpublished manuscript), available at http://scholar.harvard.edu/flles/aghion/fnes/patent-rights.pdf.
154. For a discussion of the rules controlling firms' ability to draft broad patent claims covering laterarising improvements in their inventions, see Christopher A. Cotropia, "After-Arising" Technologies and Tailoring Patent Scope, 61 N. Y. U. ANN. SURV. AM. L. 151 (2005)
155. and Charles W. Adams, Blocking Patents and the Scope of Claims (unpublished manuscript), http://www.stanford.edu/dept/law/ipssc/pdf/adams- charles.pdf.
156. See Robert P. Merges, A Brief Note on Blocking Patents and Reverse Equivalents: Biotechnology as an Example, 73 J. PAT. & TRADEMARK OFF. SOCY 878, 878-80 (1991).
157. See Philippe Aghion et al., Competition, Imitation and Growth With Step-by-Step Innovation, 68 REV. ECON. STUD. 467, 468 (2001).
158. See Henry E. Smith, Intellectual Property as Property: Delineating Entitlements in Information, 116 YALE L. J. 1742, 1780 (2007);
159. See Ronald J. Mann, Do Patents Facilitate Financing in the Software Industry?, 83 TEX. L. REV. 961, 1006-09 (2005).
160. See Jerry R. Green & Suzanne Scotchmer, On the Division of Profit in Sequential Innovation, 26 RAND J. ECON. 20, 21 (1995) (describing the importance of ex ante licensing because of the holdup problem);
161. See Iain M. Cockburn, Is the Market for Technology Working? Obstacles to Licensing Inventions, and Ways to Reduce Them 6-7 (June 8, 2007) (unpublished manuscript), available at https://faculty.fuqua.duke.edu/~charlesw/s591/Bocconi- Duke/Bocconi/S2-2008-02-11-MFT/Cockbum-Is-the-Market-for-Trechnology-Working. pdf (reporting from a survey that IP deals usually require more attention from top management, more costly due diligence, and more challenging negotiations than non-IP deals, with 50 percent of attempted licensing deals failing to reach an agreement);
162. see also Ashish Arora & Alfonso Gambardella, Ideas for Rent: An Overview of Markets for Technology, 19 INDUS. & CORP. CHANGE 775, 787-91 (2010) (noting that industry executives report that there are significant transaction costs in IP licensing stemming from uncertainty over the scope of patent rights, the value of the technology, and the transaction process).
163. See Nancy Gallini & Suzanne Scotchmer, Intellectual Property: When Is It the Best Incentive System?, in 2 INNOVATION POLICY AND THE ECONOMY 51, 67 (Adam B. Jaffe et al. eds., 2002).
164. See F. Scott Kieff, Coordination, Property, and Intellectual Property: An Unconventional Approach to Anticompetitive Effects and Downstream Access, 56 EMORY LJ. 327, 333-35 (2006).
165. See Wesley M. Cohen et al., R&D Spillovers, Patents and the Incentives to Innovate in Japan and the United States, 31 RES. POLY 1349, 1362-64 (2002);
166. Lisa Larrimore Ouellette, Do Patents Disclose Useful Information?, 25 HARV. J. L. & TECH. 545, 556-57 (2012).
167. Roberto Mazzoleni & Richard R. Nelson, Economic Theories About the Benefits and Costs of Patents, 32 J. ECON. ISSUES 1031, 1038-40 (1998).
168. But Michael J. Burstein, Exchanging Information Without Intellectual Property, 91 TEX. L. REV. 227, 261-62 (2012) (arguing that patents are often unnecessary for transactions over information).
169. See Heidi L. Williams, Intellectual Property Rights and Innovation: Evidence From the Human Genome, 121 J. POL. ECON. 1, 24-25 (2013);
170. Fiona Murray et al., Of Mice and Academics: Examining the Effect of Openness on Innovation 28-29 (Natl Bureau of Econ. Research, Working Paper No. 14819, 2009).
171. See, e.g., A PATENT SYSTEM FOR THE 21ST CENTURY, supra note 2, at 6 (recommending that courts "reinvigorate the non-obviousness standard" to resolve the patent system's current troubles);
172. See F. M. SCHERER, INDUSTRIAL MARKET STRUCTURE AND ECONOMIC PERFORMANCE 384-90 (1970);
173. See 35 U. S. C. §§ 101-103, 112 (2006).
174. In re Fisher, 421 F.3d 1365, 1373 (Fed. Cir. 2005).
175. See generally Sean B. Seymore, Rethinking Novelty in Patent Law, 60 DUKE L. J. 919 (2011) (discussing the novelty requirement and the difficulty of applying the requirement in the context of complex fields).
176. Diamond v. Chakrabarty, 447 U. S. 303, 309 (1980) (citations omitted) (internal quotation marks omitted);
177. see also Mayo Collaborative Servs. V. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012).
178. Graham v. John Deere Co., 383 U. S. 1, 11 (1966).
179. See KSR Intl Co. V. Teleflex Inc., 550 U. S. 398, 417-18 (2007).
180. Harries v. Air King Prods. Co., 183 F.2d 158, 162 (2d Cir. 1950).
181. See Rebecca S. Eisenberg, Wisdom of the Ages or Dead-Hand Control? Patentable Subject Matter for Diagnostic Methods After In re Bilski, 3 CASE W. RES. J. L. TECH. & INTERNET 1, 41-43 (2012);
182. Mark A. Lemley et al., Life After Bilski, 63 STAN. L. REV. 1315, 1329, 1339-41 (2011);
183. Allen K. Yu, Within Subject Matter Eligibility-A Diseaseanda Cure, 84 S. CAL. L. REV. 387, 445-6 (2011).
184. Lois Matelan, The Continuing Controversy Over Business Method Patents, 90 J. PAT. & TRADEMARK OFF. SOC'Y 125, 134 (2008).
185. Margo A. Bagley, Internet Business Model Patents: Obvious by Analogy, 7 MICH. TELECOMM. & TECH. L. REV. 253, 254-55, 271-76 (2001);
186. Christina Bohannan & Herbert Hovenkamp, IP and Antitrust: Reformation and Harm, 51 B. C. L. REV. 905, 947-48 (2010);
187. Alan Devlin & Neel Sukhatme, Self-Realizing Inventions and the Utilitarian Foundation of Patent Law, 51 WM. & MARYL. REV. 897, 944-45 (2009);
188. John F. Duffy, Inventing Invention: A Case Study of Legal Innovation, 86 TEX. L. REV. 1, 12-13, 13 n. 37 (2007);
189. Jeanne C. Fromer, The Layers of Obviousness in Patent Law, 22 HARV. J. L. & TECH. 75, 86-87 (2008);
190. Glynn S. Lunney, Jr., E-Obviousness, 7 MICH. TELECOMM. & TECH. L. REV. 363, 420 (2001);
191. Michael J. Meurer, Business Method Patents and Patent Floods, 8 WASH. U. J. L. & POLY 309, 337 & nn. 145-47 (2002);
192. Carl Shapiro, Patent System Reform: Economic Analysis and Critique, 19 BERKELEYTECH. L. J. 1017, 1018-19, 1019 n. 3 (2004).
193. See Amazon. Com, Inc. V. Bamesandnoble.com, Inc., 73 F. Supp. 2d 1228, 1232-37 (W. D. Wash. 1999).
194. Mark Littlewood, Joel Spolsky at Business of Software-Simplicity L a Way of Avoiding Looking Like You Lack Value, BLN (Nov. 23, 2011), http://thebln. Com/2011/11/joel-spolsky-at-business-ofsoftware-2009-sirnplidty-is-a-way-of- avoiding-looking-like-you-lack-value.
195. See Joseph A. Di Masi et al., The Price of Innovation: New Estimates of Drug Development Costs, 22 J. HEALTH ECON. 151, 180-83 (2003).
196. See 35 U. S. C. § 271 (a) (2006).
197. Ariad Pharm., Inc. V. Eli Lilly & Co., 598 F.3d 1336, 1342, 1351 (Fed. Cir. 2010) (en banc).
198. Magsil Corp. V. Hitachi Global Storage Techs., Inc., 687 F.3d 1377, 1381 (Fed. Cir. 2012).
199. Cf. Tom Windram, How to Realize the Benefits of the R&D Tax Credit, MANUFACTURING. NET 0uly 15, 2008, 12:08 PM), http://www.manufacturing.net/ Articles-How-To-Realize-The-Benefits-Of-The-R-D-Tax-Credit.aspx?menuid=242 (discussing some of the intricacies involved in monitoring R&D costs at the project level).
200. Stephen M. Maurer & Suzanne Scotchmer, Procuring Knowledge, in 15 ADVANCES IN THE STUDY OF ENTREPRENEURSHIP, INNOVATION AND ECONOMIC GROWTH 1, 5 (Gary D. Libecap ed., 2004).
201. Benjamin N. Roin, Intellectual Property Versus Prizes: Refraining the Debate, 81 U. CHI. L. REV. (forthcoming 2014) (explaining why the government might want to maintain the patent system to inform the reward for innovation, even when it has good information about the social value of inventions).
202. See MARK S. HOLMES, PATENT LICENSING § 4: 6 (2012) (discussing the challenges of determining new revenues from an invention's sales).
203. See Douglas W. Allen, Transaction Costs, in 1 ENCYCLOPEDIA OF LAW AND ECONOMICS: THE HISTORY AND METHODOLOGY OF LAW AND ECONOMICS 893, 906-07 (Boudewijn Bouckaert&Gerrit De Geesteds., 2000).
204. See Graeme B. Dinwoodie & Rochelle C. Dreyfuss, Diversifying Without Discriminating: Complying With the Mandates of the TRIPS Agreement, 13 MICH. TELECOMM. & TECH. L. REV. 445, 453 (2007) (arguing that TRIPS allows (or should allow) for more technology-specific laws than is commonly assumed).
205. Cf. Walter G. Park, Patent Systems in APEC: Role in Nontariff Trade Barriers and Strategic Trade Policies, in THE ECONOMIC IMPLICATIONS OF LIBERALIZING APEC TARIFF AND NONTARIFF BARRIERS TO TRADE 6-1, 6-2 (1998) (noting that the strategic use of patent laws by domestic firms often creates substantial trade barriers for foreign firms).
206. Not only do foreign firms typically hold fewer U. S. patents than their domestic counterparts, see Gaètan De Rassenfosse et al., The Worldwide Count of Priority Patents: A New Indicator of Inventive Activity, 42 RES. POLY 720, 720(2012), they are less likely to enforce their U. S. patents in litigation and less likely to win when they do file suit.
207. See Kimberly A. Moore, Xenophobia in American Courts, 97 NW. U. L. REV. 1497, 1504 (2003).
208. CONG. REC. S11845 (daily ed. Sept. 30, 1996) (statement of Sen. Orrin G. Hatch) (quoting a letter by the Section of Intellectual Property Law of the American Bar Association written in opposition to a bill (which passed) limiting the enforceability of surgical-method patents).
209. See, e.g., Anna B. Laakmann, An Explicit Policy Lever for Patent Scope, 19 MICH. TELECOMM. & TECH. L. REV. 43, 45 (2012) ("[T]he theoretical literature does not conclusively identify the specific contexts in which [stronger or weaker patent rights] does or should prevail Indeed, academic patent scholarship reflects a 'stalemate of empirical intuitions."').
210. A PATENT SYSTEM FOR THE 21ST CENTURY, supra note 2, at 84-85.
211. Mark A. Lemley, A Cautious Defense of Intellectual Oligopoly With Fringe Competition, 5 REV. L. & ECON. 1025, 1031 (2009) (footnote omitted).
212. See James A. Walker & John B. Murphy, Implementing the North American Industry Classification System at BLS, MONTHLYLAB. REV., Dec. 2001, at 15, 18.
213. See U. S. Patent & Trademark Office, Cooperative Patent Classification (CPC): General Introduction Into CPC 14 (July 10, 2012) (Powerpoint Presentation), available at http://www. cooperativepatentdassification.org/publications/UsptoUserDayGeneralIntro.pdf.
214. see also Michael W. Carroll, One Size Does Not Fit Alt A Framework for Tailoring Intellectual Property Rights, 70 OHIO ST. L. J. 1361, 1424-32 (2009) (adding several other concerns to the list of relevant to tailoring judgments, including administrability and political economy concerns).
215. See e.g., APATENT SYSTEM FOR THE 21ST CENTURY, supra note2, at 84-85.
216. See Jan B. F. Van Erp et al., Brain-Computer Interfaces for Non-medical Applications: How to Move Forward, 45 COMPUTER-IEEE COMPUTER SOCY 26, 28 tbl.1 (2012).
217. The legislative history of 35 U. S. C. § 287 (c) - which bars the enforcement of surgical-method patents against surgeons and hospitals-highlights the difficulty of drafting technology-specific rules narrowly enough to avoid opposition from powerful industry groups.
218. See Gerald J. Mossinghoff, Remedies Under Patents on Medical and Surgical Procedures, 78 J. PAT. & TRADEMARK OFF. SOCY 789, 789-90, 794-95 (1996) (describing both the pharmaceutical industry's opposition to a ban on surgical-method patents because they feared the ban would affect method-of-use patents on drugs, and the eventual compromise bill that prohibits enforcing surgical-method patents against physicians and hospitals but not generic drug manufacturers).
219. Semiconductor Chip Protection Act (SCPA) of 1984, 17 U. S. C. §§ 901-914 (2012).
220. See 3 PAUL GOLDSTEIN, GOLDSTEIN ON COPYRIGHT § 17. 26 (3d ed. 2013).
221. See, e.g., Pamela Samuelson & Suzanne Scotchmer, The Law and Economics of Reverse Engineering, 111 YALE LJ. 1575, 1596 (2002) (concluding that the basic structure of IP protection afforded under the SCPA "is fundamentally sound as applied to... [the semicondutor] industry").
222. Leon Radomslty, Sixteen Years After the Passage of the U. S. Semiconductor Chip Protection Act: Is International Protection Working?, 15 BERKELEYTECH. L. J. 1049, 1087 (2000).
223. Pinar Cankurtaran et al., Consequences of New Product Development Speed: A Meta-Analysis, 30 J. PRODUCT INNOVATION MGMT. 465, 465 (2013).
224. See Preston G. Smith, Accelerated Product Development: Techniques and Traps, in THE PDMA HANDBOOK OF NEWPRODUCTDEVELOPMENT 173 (Kenneth B. Hahn ed., 2d ed. 2005).
225. KIRK DOUGLASS, PIVOT INT'L, WHAT DOES PRODUCT DEVELOPMENT REALLY COST?: HOW INTERNAL RATE OF RETURN FOR A NEW PRODUCT IMPROVES SUBSTANTIALLY WITH A DECREASE IN TIME TO MARKET 4, http://www.pivotint.com/Pivot-what-doesproduct- development-realry-cost.pdf.
226. See Abbie Griffin, Product Development Cycle Time for Business-to-Business Products, 31 INDUS. MARKETING MGMT. 291, 291 (2002) ("For the last 15 or more years, firms have worried about, and tried to shorten, the time it takes them to get new products to market." (footnote omitted));
227. See ACCENTURE, INNOVATION IN CONSUMER PRODUCTS: HOW TO ACHIEVE HIGH PERFORMANCE THROUGH NEW PRODUCT INNOVATION 13(2008), http://www.accentuure.com/ SiteCollectionDocuments/PDF/ConsumerProductsGroupPoV-103008-fnl.pdf (reporting that "more than 70 percent of companies say that 'on time to market' is of great importance for new product success" and that along with R&D project costs, it was ranked highest in importance for "[k]ey success factors in new product introductions");
228. HADAS HARAN, TIME TO MARKET RESEARCH: HIGHLIGHTS AND KEY FINDINGS 8(2011), available at http://www.osstransformation. Com/DocDownload.aspx? assetid=28B8 (reporting findings from a survey that 70 percent of firms in the telecommunications industry say time-to-market is "very important" for remaining competitive in the field).
229. R. G. Cooper, Your NPD Portfolio May Be Harmful to YourBusiness's Health, VISIONS, Apr. 2005, at 22.
230. CAPGEMINI, SPEEDING TIME TO MARKET, INCREASING TIME IN MARKET & MAINTAINING MARKET VELOCITY: BEST PRACTICES IN DRIVING TOP-LINE GROWTH THROUGH INNOVATION & COLLABORATION 1(2007), http://ww.capgermni.com/sites/default/ files/resource/pdf/tl-Speeding-Time-to-Market-Inaeasmg-Tirne-in-Market-Mai ntaining-Market-Velocity.pdf.
231. MICHAEL E. MCGRATH, NEXT GENERATION PRODUCT DEVELOPMENT: HOW TO INCREASE PRODUCTIVITY, CUT COSTS, AND REDUCE CYCLE TIMES 5 (2004) (emphasis added).
232. See ROBERT G. COOPER & SCOTT J. EDGETT, PRODUCT INNOVATION AND TECHNOLOGY STRATEGY 128 (2009) (The major challenge is that the fast-follower must be exactly that... fast!");
233. CONSTANTINOS C. MARKIDES & PAUL A. GEROSKI, FAST SECOND: HOW SMART COMPANIES BYPASS RADICAL INNOVATION TO ENTER AND DOMINATE NEW MARKETS 15, 119-38 (2005).
234. See ROBERT G. COOPER & SCOTT J. EDGETT, NEW PRODUCT DEVELOPMENT: LEAN, RAPID, AND PROFITABLE 12-13 (2005);
235. E. L. CUSSLER & G. D. MOGGRIDGE, CHEMICAL PRODUCT DESIGN 142 (2d ed. 2011) ("Delaying is in itself a commercial risk; a competitor may reach the market first and even if their product is inferior, they are then likely to gain most of the market share.... We may risk losing less money by proceeding
236. James A. Debardelaben et al., Incorporating Cost Modeling in Embedded-System Design, 14 IEEE DESIGN & TEST OF COMPUTERS 24, 25-26 (1997);
237. Fred Langerak et al., Balancing Development Costs and Sales to Optimize the Development Time of Product Line Additions, 27 J. PRODUCT INNOVATION MGMT. 336, 339 (2010);
238. Vincent A. Mabert et al., Collapsing New Product Development Times: Six Case Studies, 9 J. PRODUCT INNOVATION MGMT. 200, 203 (1992) ("It is abundandy clear to us that the threat of significant market share gains by competitors was a key stimulus in improving the new product development cycles at all of the companies.").
239. Larry A. Mallak, The Elusive Measure of R&D Productivity and Performance, in THE TECHNOLOGYMANAGEMENT HANDBOOK 3-37 (Richard C. Dorf ed., 1999) (describing the costs and benefits of using time-to-market as a metric for measuring R&D performance).
240. See Gideon Parchomovsky & Alex Stein, The Distortionary Effect of Evidence on Primary Behavior, 124 HARV. L. REV. 518 (2010).
241. See FREDRICK P. BROOKS, JR., THE MYTHICAL MAN-MONTH: ESSAYS ON SOFTWARE ENGINEERING 21-26 (1995);
242. Erran Carmel & Barbara J. Bird, Small Is Beautiful: A Study of Packaged Software Development Teams, 8 J. HIGH TECH. MGMT. RES. 129, 132 (1997).
243. Tips & Facts-Organizing R&D for Success, SENSORS RES., http://www.sensors-research. Com/articles/tips.htm (last visited Dec. 23, 2013) (emphases omitted).
244. See, e.g., ARNO VAN WINGERDE, TESTING OF ROTOR BLADES OF WIND TURBINES, http://www.ontario-sea.org/Storage/26/1788-Testing-of-Rotor-Blades-of-Wind- Turbines.pdf;
245. See Kim Benz, Comment to You Cannot Dictate Invention (Jan. 2013), http://www.linkedin. Com/groups/You-cannot-dictate-invention-Yet-2182. S.198306852?qid=9fe61f79-64b7-40ef-9cl6-0661e4c07a37&trk= group-items-see-more-0-b-td ('You cannot put a time on an invention but you can put times on developing and bringing together the Needs and the Hows.");
246. Felix H., Comment to You Cannot Dictate Invention (Jan. 2013), supra ("Managing a true R&D project is nothing like managing a regular development project, the primary difficulty is that no one knows if there is a solution to the problem at hand, let alone a timeline for delivering it.").
247. See Wyeth v. Levine, 555 U. S. 555, 566-67 (2009) (discussing the Food and Drug Administration's (FDA's) premarket approval requirements for new drugs).
248. See Riegel v. Medtronic, Inc., 552 U. S. 312, 315-20 (2008) (discussing the FDA's premarket approval requirements for medical devices).
249. Federal Aviation Act of 1958 § 603 (a), 49 U. S. C. § 44704 (2006).
250. John C. Coates IV, Reforming the Taxation and Regulation of Mutual Funds: A Comparative Legal and Economic Analysis, 1 J. LEGAL ANALYSIS 591, 632-34 (2009).
251. See Robert G. Cooper, Perspective: The Innovation Dilemma: How to Innovate When the Market Is Mature, 28 J. PRODUCT INNOVATION MGMT. 2, 3 (2011).
252. RUDOLF RECHSTEINER, WIND POWER IN CONTEXT-A CLEAN REVOLUTION IN THE ENERGY SECTOR 9 (2008).
253. See Harald Bauer et al., Getting Mo (o) re out of Semiconductor R&D, MCKINSEY ON SEMICONDUCTORS, Autumn 2011, at 60, 60 exh.l (noting that the average R&D time for semiconductors ranges from eleven to twenty-six months, depending on whether the product is a design revision or an entirely new chip design);
254. Sachin R Kamat, Time to Market, IEEE CONSUMER ELECTRONICS MAG., Oct. 2012, at 40, 42 (reporting that average R&D times for standard mobile-phone software programs is four to six months, but if the new program is based on an entirely new technology, average R&D times are several times longer).
255. See HEWLETT-PACKARD, FINANCE AMERICA CAPITALIZES ON A DIGITAL PUBLISHING SOLUTION FROM HP TO KEEP ITS PRODUCTS FIRST IN BROKERS' MINDS (2004), available at http://h10088.wwwl.hp. Com/gap/download/FINANCE-AMERICA.pdf (noting that it is possible to create new financial products for mortgages "in about a week");
256. Press Release, Octavian, Octavian to Launch Its Innovative Financial Products Account Opener (TM) for Financial Services Companies (Jan. 22, 2008), available at http://vww.reuters.com/article/2008/01/22/idUS141388+22-Jan- 2008+PRN20080122.
257. See Andy Ferris, Deloitte Consulting, Product Development Issues: Speed to Market (Nov. 15, 2007) (Powerpoint Presentation at the Actuaries Club of the Southwest Fall Meeting), available at http://www.acsw.us/fall07/Ferris.pdf.
258. See BORD BIA, CHANGING FOOD MARKETS AND MARKETING VISION FOR 2020, at 7 (2009) (citing figures from Deloitte showing that the average time-to-market for new food products is thirteen months);
259. Stephanie Cernivec, 2012 New Product Development Survey: Forecasting a Year of Healthful Introductions, BEVERAGE INDUSTRY Jan. 2013, at 52 (reporting that the average R&D time for new beverages is nine to ten months);
260. Jennifer Zegler, 2012 New Product Development Survey: A Return to Innovation Forecasted-With a Traditional Focus, BEVERAGE INDUSTRY, Jan. 2012, at 56.
261. See MARTIN L. GRISS, HEWLETT-PACKARD, SOFTWARE REUSE: FROM LIBRARY TO FACTORY 6(1993), available at http://www.hpl.hp. Com/techreports/93/HPL-93-67. pdf (reporting an average time-to-market of six to nine months for software components);
262. JERRY KRASNER, TOTAL COST OF DEVELOPMENT: A COMPREHENSIVE COST ESTIMATION FRAMEWORK FOR EVALUATING EMBEDDED DEVELOPMENT PLATFORMS 10 tbl.l (2003), available at http://www.eurotech-inc.com/info/pdf/total-cost-of-development.pdf (reporting an average time-to-market for embedded software platforms that ranged between eight and fourteen months);
263. PETER RASMUSSEN, IMPROVED EFFICIENCY AND FASTER TIME TO MARKET WITH AGILE DEVELOPMENT PRACTICES (2010), available at http://www.ibm.com/smarterplanet/ global/files/danske-bank.pdf (describing how Danske Bank reduced its average time-to-market for new IT products from fourteen months to nine months);
264. Mary Wu, Agile Method to Improve Delivery of Large-Scale Software Projects 38 (May 2011) (unpublished manuscript), available at http://wwwengr.sjsu.edu/ges/media/pdf/mse-prj-rpts/spring2011/ Agile%20Method%20to%20Improve%20D elivery%20of%20Large- Scale%20Software%20Projects.pdf (reporting an average time-to-market of between five and nine months for software projects in the case study). The time-to-market for certain types of software can be much longer.
265. See RAHUL KAPOOR ET AL., MANAGING COMPLEXITY AND CHANGE IN THE SEMICONDUCTOR ECOSYSTEM: FINDINGS FROM THE WHARTON-ATREG INDUSTRY STUDY 5, 14 (2012);
266. See Rebecca Henderson & Cate Reavis, Eli Lilly: Recreating Drug Discovery for the 21st Century (Mar. 13, 2008) (unpublished manuscript), available at https://mitsloan. mit.edu/MSTIR/IndustryEvolution/ RecreatingDrugDiscovery/Documents/07-043-Recreating-Drug-Discovery.pdf;
267. New Report Provides High-Level Data Benchmarks in Key Areas to Help Teams Achieve Success in their WD Development and Marketing Efforts, BUS. WIRE (Apr. 8, 2008, 12:00 PM), http://www.businesswire.com/news/home/20080408005068/en.
268. See Arthur H. Combs, Medical Device Development: Contrasting Key Elements With Drug Development (PowerPoint Presentation), available at http://wenku.baidu.com/view/91d2416648d7clc708al45b2.html (last visited Nov. 6, 2013) (reporting that the average time-tomarket for a basic new medical device is three to five years, with a minimum of two years and a maximum of ten).
269. See Abbie Griffin, Modeling and Measuring Product Development Cycle Time Across Industries, 14 J. ENGINEERING & TECH. MGMT. 1, 2 tbl.l (1997) (reporting an average time-to-market of four to seven years for construction equipment and jet engines, and three to five years for copying equipment).
270. See CHARLES H. FINE ET AL., THE U. S. AUTOMOBILE MANUFACTURING INDUSTRY 21 (1996) (finding that the average time-to-market for U. S. automakers was fifty-two months);
271. Ron Adner, Match Your Innovation Strategy to Your Innovation Ecosystem, 84 HARV. BUS. REV. 98, 103 (2006) (noting that an "average OEM takes three to four years to move a car from design to volume production");
272. See LORI PRESSMAN, DNA PATENT LICENSING UNDER TWO POLICY FRAMEWORKS: IMPLICATIONS FOR PATIENT ACCESS TO CLINICAL DIAGNOSTIC GENOMIC TESTS AND LICENSING PRACTICE IN THE NOT-FOR-PROFIT SECTOR 15(2012), available at http://www.uspto.gov/aia-implementation/gene-cornment-pressman.pdf (finding that for the gene patents held by the National Institutes of Health (NIH) or a university that are licensed to private industry to be developed as a reagent, the average time from patenting to receiving the first royalties was five years).
273. See "Enlightenment" on the Subject of Solar Cells, MATERIALS RES. INST., http://www.rnri.psu.edu/news/2006/2006-taylor-lecture (last visited Dec. 23, 2013).
274. See Richard G. Zimmermann, Why Are Investors Not Interested in My Radiotracer? The Industrial and Regulatory Constraints in the Development of Radiopharmaceuticals, 40 NUCLEAR MED. & BIOLOGY 155, 165 (2013).
275. See FRED WHITFORD ET AL., PURDUE EXTENSION, PPP-71, THE PESTICIDE MARKETPLACE: DISCOVERING AND DEVELOPING NEW PRODUCTS 28(2006), http://www.extension. purdue.edu/extmedia/PPP/PPP-71.pdf (noting that on average, "[i]t takes nine years, the review of 140, 000 compounds, and $180 million to discover and develop a new pesticide product").
276. Aaron V. Kaplan et al., Medical Device Development: From Prototype to Regulatory Approval, 109 CIRCULATION 3068 (2004) (describing the preclinical development and regulatory testing requirements for medical devices that make R&D times for first-in-class devices similar to new drugs).
277. See MICHAEL OLLINGER & LESLIE POPE, U. S. DEPT. OF AGRIC. ECON., REP. NO. 697, PLANT BIOTECHNOLOGY: OUT OF THE LABORATORY AND INTO THE FIELD (1995) (reporting an average development time of six years for genetically modified crops);
278. Andrew Barkley & Forrest G. Chumley, A Double Haploid Laboratory for Kansas Wheat Breeding: An Economic Analysis of Biotechnology Adoption, 15 INT'L FOOD & AGRIBUSINESS MGMT. REV. 99, 105 tbl.l (2012) (reporting average development times for wheat ranging from six to twelve years);
279. Monsanto, Annual R&D Pipeline Review: R&D Pipeline Resource 9 (Jan. 6, 2011) (Powerpoint Presentation), available at http://www.monsanto.com/ SiteCollectionDocuments/Ql-2011-pipelineupdate.pdf (stating that the average duration of R&D for a new biotechnology crop in their pipeline is between six and thirteen years, but that their reported "[a]verage development cycle [is] on the high end of duration estimates because of complexity of traits" involved in those products);
280. see also PHILLIPS MCDOUGALL, CROP LIFE INT'L, THE COST AND TIME INVOLVED IN THE DISCOVERY, DEVELOPMENT AND AUTHORISATION OF A NEW PLANT BIOTECHNOLOGY DERIVED TRAIT 10 (2011) (reporting that it takes thirteen years on average to discover, develop, and secure the regulatory authorization to sell a new plant biotechnology trait).
281. See W. HowardNeal, Oil and Gas Technology Development (July 18, 2007) (unpublished manuscript);
282. See Stephen M. Cassiani et al., Exploration Technology 104 (July 18, 2007) (unpublished manuscript), available at http//www.npc.org/study-topic- papers/21-ttg-explorationtech.pdf ("[D]evelopment of new, breakthrough, drilling-technology advances is necessarily long-range and requires significant pre-investment. All of the breakthrough technologies are funded to a large extent by national governments as well as large oil and gas companies.").
283. See Joseph A. Di Masi, New Drug Development in the United States From 1963 to 1999, 69 CLINICAL PHARMACOLOGY & THERAPEUTICS 286, 292 fig.6 (2001).
284. See PANAYOTIS CHRISTTDIS ET AL., EUROPEAN SCI. & TECH. OBSERVATORY, TRENDS IN VEHICLE AND FUEL TECHNOLOGIES: OVERVIEW OF CURRENT RESEARCH ACTIVITIES 6 (2003) (reporting that the development time-frame for fuel cells is between fifteen and twenty-five years);
285. Sunita Satyapal, Technology Commercialization Showcase 2008: Hydrogen, Fuel Cells & Infrastructure Technologies Program 16-41 (2008) (Powerpoint Presentation), available at http://techportal.eere.energy.gov/commercialization/ pdfs/2008-h2-fuel-cells.pdf (listing the estimated time-to-market (going forward) for a variety of fuel-cell technologies in various stages ofdevelopment).
286. Estimating the start of R&D is far more subjective if it includes the R&D project's "fuzzy front end"-the period when firms are looking for new R&D ideas and deciding whether (and when) to pursue particular projects. See Peter A. Koen et al., Fuzzy Front End: Effective Methods, Tools, and Techniques, in THE PDMA TOOLBOOKFOR NEW PRODUCT DEVELOPMENT 5 (PaulBelliveau etal.eds., 2002).
287. See IAIN M. COCKBURN & REBECCA HENDERSON, SURVEY RESULTS FROM THE 2003 INTELLECTUAL PROPERTY OWNERS ASSOCIATION: SURVEY ON STRATEGIC MANAGEMENT OF INTELLECTUAL PROPERTY, at 1. 3 (2003) (reporting survey results finding that most firms "always file patents as quickly as possible", with less than a third of firms reporting that they ever delay their filings for strategic reasons (emphasis added));
288. Christopher A. Cotropia, The Folly of Early Filing in Patent Lata, 61 HASTINGS L. J. 65, 78-81 (2009);
289. See ROGER G. COOPER, WINNING AT NEW PRODUCTS: ACCELERATING THE PROCESS FROM IDEA TO LAUNCH 41 fig.2.6 (2001);
290. Jeffrey B. Schmidt, Gate Decisions: The Key to Managing Risk During New Product Development, in THE PDMA HANDBOOK OF NEW PRODUCT DEVELOPMENT, supra note 186, at 337, 343 ("[T]he cost and time to complete each subsequent stage of the NPD [new product development] process frequency increases dramatically.");
291. Ted Sichelman, Commercializing Patents, 62 STAN. L. REV. 341, 372-73, 373 n. 183 (2010) ("[I]n practice, it appears that post-invention development and commercialization expenses dwarf pre-invention expenses in nearly all industries.");
292. See 35 U. S. C. § 156 (2006).
293. Cf. Jeannette Colyvas et al., How Do University Inventions Get Into Practice?, 48 MGMT. SCI. 61 (2002) (conducting a detailed case study of eleven patented university inventions). Since university researchers primarily rely on grant money to finance their research, the government could use their grant applications and reports to estimate their R&D start dates.
294. See John W. Boger, Laboratory Notebook: Why They Are So Important, BONEZONE, Fall 2009, at 14, 15-16, available at http://www.hrfmlaw.com/img/ articles/Laboratory-Notebooks-Why-They-Are-So-Important-article-571719.pdf (discussing the various reasons why researchers keep detailed laboratory notebooks documenting their daily work on R&D projects);
295. Anthony C. Tridico & Arpita Bhattacharyya, Don't Throw Away Lab Notebook: Record-Keeping Under AIA, FINNEGAN (Nov. 8, 2012), http://www.firmegan.com/resources/articles/articlesdetail.aspx?news= &de8320-el97-421a-9071-7e401cf62457 (same).
296. See, e.g., Brown v. Barbacid, 436 F.3d 1376 (Fed. Cir. 2006).
297. The United States' experience with interference hearings-in which courts would determine which party was the first to conceive of a particular invention for purposes of establishing priority-suggests that this type of inquiry is manageable but cosdy. See David S. Abrams & R. Polk Wagner, Poisoning the Next Apple? The America Invents Act and Individual Inventors, 65 STAN. L. REV. 517, 533-36 (2013);
298. Mark A. Lemley & Colleen V. Chien, Are the U. S. Patent Priority Rules Really Necessary?, 54 HASTINGS L. J. 1299 (2003).
299. But see Note, The Disclosure Function of the Patent System (or Lack Thereof), 118 HARV. L. REV. 2007, 2014-17 (2005) (noting that firms generally do not patent the inventions they use behind closed doors because detecting infringement is difficult and the patent would disclose to competitors how to make and use the invention).
300. See Jon Dudas & David Kline, Thank the Founding Fathers for the Open Market in Patents, FORBES, Sept. 17, 2013, http://www.forbes.com/sites/ forbesleadershipforurn/2013/09/17/thank-thefounding-fathers-for-the-open-market- in-patents (discussing the long history of inventors licensing their patents instead of commercializing the technology themselves).
301. 35 U. S. C. § 102 (b) (2006).
302. Brown v. Barbacid, 436 F.3d 1376, 1380-32 (Fed. Cir. 2006).
303. See, e.g., supra notes 220-239 and accompanying text. The Product Development Management Association (PDMA) conducts an extensive cross-industry survey every five years that collects more detailed information about the average time-to-market in various fields. See About PDMA Foundation, PDMAFOUND., http://www.pdma.org/p/cm/ld/fid=13 (last visited Dec. 23, 2013).
304. Charles P. Himmelberg & Bruce C. Petersen, R&D and Internal Finance: A Panel Study of Small Firms in High-Tech Industries, 76 REV. ECON. & STAT. 38, 38-42 (1994).
305. See Bronwyn H. Hall & Josh Lerner, The Financing of R&D and Innovation, 1 HANDBOOKS IN ECONOMICS: ECONOMICS OF INNOVATION, supra note 12, at 609, 613-618 (explaining that information asymmetries, moral hazard, and tax disadvantages all increase the costs of financing R&D with external capital).
306. See Frank Kerins et al., Opportunity Cost of Capital for Venture Capital Investors and Entrepreneurs, 39 J. FIN. & QUANTITATIVE ANALYSIS 385 (2004).
307. See MARC A. ANNACCHINO, NEW PRODUCT DEVELOPMENT: FROM INITIAL IDEA TO PROJECT MANAGEMENT 47 (2003);
308. MICHAEL GALLAHER ET AL., NAT'L INST. OF STANDARDS & TECH., U. S. DEP'T OF COMMERCE, ECONOMIC ANALYSIS OF THE TECHNOLOGY INFRASTRUCTURE NEEDS OF THE U. S. BIOPHARMACEUTICAL INDUSTRY 5-1 to 5-26 (2007).
309. See Joseph A. Di Masi & Henry G. Grabowski, The Cost of Biopharmaceutical R&D: Is Biotech Different?, 28 MANAGERIAL & DECISION ECON. 469, 475 (2007).
310. See Roli Varma, Project Selection Models or Professional Autonomy?, 17 PROMETHEUS 269, 277 (1999).
311. See David J. Brunner et al., R&D Project Selection and Portfolio Management: A Review of the Past, a Description of the Present, and a Sketch of the Future, in HANDBOOK OF TECHNOLOGY AND INNOVATION MANAGEMENT 215, 216-220 (Scott Shane ed., 2008);
312. Marcus Hartmann & Ali Hassan, Application of Real Options Analysis for Pharmaceutical R&D Project Valuation-Empirical Results From a Survey, 35 RES. POLY 343, 345-46, 348 (2006);
313. Petri Suomala, Life Cycle Dimension of NewProduct Development Performance Measurement, 8 INT'L J. INNOVATION MGMT. 193 (2004).
314. F. Peter Boer, Risk-Adjusted Valuation of R&D Projects, 48 RES. TECH. MGMT. 50 (2003) (noting that the time value of money frequently plays a decisive role in the decisions about which R&D projects to fund).
315. Cf. Paulo Soares Figueiredo & Elisabeth Loiola, Enhancing New Product Development (NPD) Portfolio Performance by Shaping the Development Funnel, 7 J. TECH. MGMT. & INNOVATION 20, 24 (2012) (noting that project managers often use "the average number of man-hours per project at each stage... as a proxy for complexity");
316. Preston G. Smith & amp; Donald G. Reinertsen, Shortening the Product Development Cycle: Here Are 10 Areas in Which R&D Managers Can Help to Shorten the Cycle Time for New Products and Projects, 1992 RES. TECH., MGMT. 44, 45 ("The degree of complexity in a project determines the effort needed and thus the length of the development cycle.").
317. See Gonçalo G. Aleixo & Alexandra B. Tenera, New Product Development Process on High-Tech Innovation Life Cycle, 58 WORLD ACAD. SCI., ENGINEERING & TECH. 794, 795 (2009);
318. There may be situations in which longer R&D times corresponds to even longer imitation times, such as when firms devote additional time to an invention's R&D to make it harder to reverse engineer. See generally SHANE K. CURTIS ET AL., ASME, ON BARRIERS TO REVERSE ENGINEERING MECHANICAL COMPONENTS (2010) (discussing various strategies firms use to increase the costs of reverse engineering their products).
319. John F. Engel et al., High Performance Business: Innovation Unbound, OUTLOOK, 2006, at 26, 35 ("Fast-follower organizations specialize in starting the innovation process at the development stage. They let others come up with the initial ideas, then reverse engineer them, improve them or implement them so that their offerings are of a higher quality at a more competitive price."). If innovators can patent their inventions and partially protect them through secrecy, imitators may need to replicate some of the innovator's research.
320. See generally Michael Abramowicz & John Duffy, Intellectual Property for Market Experimentation, 83 N. Y. U. L. REV. 337 (2008);
321. Vinesh Raja, Introduction to Reverse Engineering, in REVERSE ENGINEERING: AN INDUSTRIAL PERSPECTIVE 1, 1-3 (Vinesh Raja & Kiran J. Fernandez eds., 2008).
322. PETER MARKS, CAPTURING A COMPETITIVE EDGE THROUGH DIGITAL SHAPE SAMPLING & PROCESSING (DSSP) (2005). Advances in three-dimensional imaging technology now permit firms to measure the precise physical dimensions of even complicated physical products, allowing them to "benchmark [their] competitor's designs" to imitate or improve on them.
323. Michael Raphael & Todd Grimm, The Brainstorm: Reverse Engineering, PRODUCT DESIGN & DEV. (June 22, 2009, 11:38 AM), http://www.pddnet.com/news/ 2009/06brainstorm-reverse-engineering.
324. Karl Matthews, The Brainstorm: Reverse Engineering, supra note 293 (noting that firms now have access to sophisticated computer-aided design (CAD) software that can "extract the original design intent from a scan of a physical model, kick-starting the process of modeling and adapting that design in CAD");
325. Abby K. Monaco, The Brainstorm: Reverse Engineering, supra note 293 (explaining how CAD software now allows firms to "reverse engineer [circuits] into a fully intelligent layout design in a matter of hours", which "means that any portion of a legacy design... Can be revived... much faster than it would take to redesign the same circuitry from scratch").
326. C. K. CHUA ET AL., RAPID PROTOTYPING: PRINCIPLES AND APPLICATIONS 13 (3d ed. 2010) (reporting that with rapid prototyping, "the time to produce any part-once the design data are available-will be fast and can be in a matter of hours");
327. T. Suresh Babu & Romy D. Thumbanga, Reverse Engineering, CAD\CAM & Pattern Less Process Applications in Casting-A Case Study, 5 INT'LJ. MECHANICS 40 (2011).
328. M. Jurkovic et al., Rapid Product Development by Reverse Engineering, in VIRTUALAND RAPID MANUFACTURING: ADVANCED RESEARCH IN VIRTUAL AND RAPID PROTOTYPING 817, 820 (Paulo Jorge Bartolo et al. eds., Taylor & Francis Grp. 2008) ("The reconstruction and manufacture with [rapid prototyping] technologies of defined products is possible in very short time applying reverse engineering.");
329. Carlos Henrique Pereira Mello et al., Integrating Reverse Engineering and Design for Manufacturing and Assembly in Product Redesigns: Results of Two Action Research Studies in Brazil, in REVERSE ENGINEERING: RECENT ADVANCES AND APPLICATIONS 187 (Alexandru C. Telea ed., 2012);
330. Ian McLoughlin, Reverse Engineering of Embedded Consumer Electronic Systems, 2011 IEEE 15TH INT'L SYMP. 1;
331. How Reverse Engineering Can Cut Product Development Times, ENGINEERLIVE, http://www.engineerlive.com/content/17376 (last visited Dec. 23, 2013);
332. Randy Torrance & Dick James, IC Reverse Engineering-A Design Team Perspective, EDN NETWORK (Mar. 11, 2010), http://ww.ecto.com/design/ integratedcircuit-design/4312346/IC-reverse-engineering-a-design-team- perspective (using case studies to describe the "significant[,] immediate[,] and lasting" competitive benefits of reverse engineering in semiconductors, including one case study in which a firm "derisked the design effort for less dian 3% of die [innovator's] R&D budget, saving eight times the investment in... [reverse engineering] in R&D costs alone, and it cut 24 months and S500.000 off the design, saving a multimillion-dollar business and retaining market leadership").
333. WEGO WANG, REVERSE ENGINEERING: TECHNOLOGY OF REINVENTION 12 (2010).
334. FED. TRADE COMM'N, EMERGING HEALTH CARE ISSUES: FOLLOW-ON BIOLOGIC DRUG COMPETITION app. A (2009).
335. Holger M. Kienle & Hausi A. Muller, The Tools Perspective on Software Reverse Engineering: Requirements, Construction, and Evaluation, 79 ADVANCES IN COMPUTERS 189 (2010).
336. Pamela Samuelson, Reverse Engineering Under Siege: Is Reverse Engineering a Lawful Way to Acquire Trade Secrets?, COMM. OF THE ACM, Oct. 2002, at 15, 17.
337. Karen Mercedes Goertzel & Booz Allen Hamilton, Protecting Software Intellectual Property Against Counterfeiting and Piracy, CROSSTALK, Sept./Oct. 2011, at 6, 6-7.
338. Steven A. Berkowitz et al., Analytical Tools for Characterizing Biopharmaceuticals and the Implications for Biosimilars, 11 NAT. REV. DRUG DISCOVERY 527, 527 (2012);
339. Savanna Steele et al., Better Development of Biosimilars, DRUG DISCOVERY & DEV., June 11, 2013, htrp://www.dddmag.com/articles/2013/06/better- development-biosimilars ("[T]echniques for characterizing the structural composition of biologic agents are advancing rapidly with the molecular structural characterization of these agents anticipated to approach 100% in the next five to 10 years.").
340. Momenta Pharmaceuticals' Management Presents at 38th Annual db Access Health Care Conference (Transcript), SEEKING ALPHA (May 29, 2013, 5:17 PM), http://seekingalpha.com/article/1468641-momente-phairnaceuticals-management- presents-at-38th-annual-dbaccess-health-care-conference-transcript?part=single.
341. Joel Huselius, Reverse Engineering of Legacy Real-Time Systems: An Automated Approach Based on Execution-Time Recording 16-17 (Malardalen Univ. Press Dissertations No. 43, 2007).
342. Michael Valek, Should Software Patents Have Shorter Life Spans Than Other Patents?, CNET (Apr. 11, 2008, 4:41 PM), http://news. Cnet.com/8301-13796-3- 991734S-79.html;
343. L. Kamran Bilir, Patent Laws, Product Lifecycle Lengths, and Multinational Activity, AM. ECON. REV. (forthcoming), available at http://www.ssc.wisc.edu/~kbilir/Bilir-IP-and-MNCs.pdf;
344. Christian Broda & David E. Weinstein, Product Creation and Destruction: Evidence and Price Implications, 100 AM. ECON. REV. 691, 701, tbl.5 (2010).
345. Francesca Cornelli & Mark A. Schankerman, Patent Renewals and R&D Incentives, 30 RAND J. ECON. 197, 197 (1999);
346. Gideon Parchomovsky & R. Polk Wagner, Patent Portfolios, 154 U. PA. L. REV. 1, 14-15 (2005).
347. LONDON ECON., ECONOMIC STUDY ON PATENT BACKLOGS AND A SYSTEM OF MUTUAL RECOGNITION: FINAL REPORT TO THE INTELLECTUAL PROPERTY OFFICE 57 (2010).
348. Henry Grabowski & John Vernon, A New Look at the Returns and Risks to Pharmaceutical R&D, 36 MGMT. SCI. 804, 809 (1990) (estimating that a patented drug has a product lifecycle of twentyfive years on average).
349. Eric H. Kessler & Alok K. Chakrabarti, Innovation Speed: A Conceptual Model of Context, Antecedents, and Outcomes, 21 ACAD. M. GMT. REV. 1143 (1996).
350. Aaron Aboagye et al., Finding the Next $100 Billion in Semiconductor Revenues, MCKLNSEY ON SEMICONDUCTORS, Autumn 2012, at 4, 5 ("Fully half of the [semiconductor] industry's revenue, for instance, is derived from products that are less than six months old.");
351. BERNICE LEE ET AL., WHO OWNS OUR LOW CARBON FUTURE?: INTELLECTUAL PROPERTY AND ENERGYTECHNOLOGIES 48 (2009).
352. INST. OF MED., PUBLIC HEALTH EFFECTIVENESS OF THE FDA 510 (K) CLEARANCE PROCESS: BALANCING PATIENT SAFETY AND INNOVATION: WORKSHOP REPORT 20 (Theresa Wizemann ed., 2010);
353. CHRIS ROZEWSKI & WALTER THOMSON, IMPROVING MANUFACTURABILNY, REDUCING COST, AND EXTENDING PRODUCT LIFE-PROCESSES AND PITFALLS UNIQUE TO MEDICAL DEVICES (2004).
354. S. TEMP. NATL ECON. COMM., supra note 3, at 157 ("Technology moves now with a speed once undreamed of-its swift march dictates a shortening of the life of a patent. Industries move at very different tempos-unlikeness suggests life spans accommodated to their distinctive requirements.").
355. C. Merle Crawford, The Hidden Costs of Accelerated Product Development, 9 J. PRODUCT INNOVATION MGMT. 188, 191 (1992).
356. B. A. Lukas & A. Menon, New Product Quality: Intended and Unintended Consequences of New Product Development Speed, 57 J. BUS. RES. 1258 (2004).
357. Steve Lohr, In the High-Tech Patent Wars, an Inventor's Lament, N. Y. TIMES BITS BLOG (Oct. 15, 2012, 8:00 AM), http://bits.blogs.nytimes.com/2012/10/ 15/in-the-high-tech-patent-wars-aninventors-lament.
358. U. S. DEPT. OF JUSTICE & FED. TRADE COMM'N ANTITRUST ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS: PROMOTING INNOVATION AND COMPETITION 61 (2007).
359. Necmi Karagozoglu & Warren B. Brown, Time-Based Management of the New Product Development Process, 10 J. PRODUCT INNOVATION MGMT. 204, 204 (1993);
360. Bronwyn H. Hall & Rosemarie Ham Ziedonis, The Patent Paradox Revisited: An Empirical Study of Patenting in the U. S. Semiconductor Industry, 1979-1995, 32 RAND J. ECON. 101 (2001);
361. Ted Sichelman & Stuart J. H. Graham, Patenting by Entrepreneurs: An Empirical Study, 17 MICH. TELECOMM. TECH. L. REV. 111, 137 (2010);
362. Kamel Mellahi & Michael Johnson, Does It Pay to Be a First Mover in E. Commerce? The Case of Amazon. Com, 38 MGMT. DECISION 445, 447 (2000) (noting that "switching costs in industrial markets often dissipates over time as buyers become more knowledgeable about competing products").
363. Julie Samuels, Oracle v. Google Shows the Folly of U. S. Software Patent Law, WIRED (Apr. 23, 2012, 4:05 PM), http://www.wired.com/wiredenterprise/2012/ 04/opinion-samuels-google-oracle.
364. Note, Everlasting Software, 125 HAW. L. REV. 1454 (2012);
365. Mark A. Lemley, Software Patents and the Return of Functional Claiming 1-4 (Stanford Pub. Law Working Paper No. 2117302, 2012), available at http://www.stanford.edu/dept/law/ipsc/Paper%20PDF/Lernley, %20 Mark%20-%20Paper.pdf.
366. U. S. DEP'T OF JUSTICE & FED. TRADE COMM'N supra note 336, at 61;
367. Alex Blumberg & Laura Sydell, When Patents Attack, NPR (July 22, 2011, 8:04 PM), http://www.npr.org/blogs/money/2011/07/26/138576167/when- patents-attack.
368. John M. Golden, Injunctions as More (or Less) Than "Off Switches": Patent-Infringement Injunctions' Scope, 90 TEX. L. REV. 1399, 1406-09 (2012)
369. Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, 85 TEX. L. REV. 1991 (2007);
370. Arti K. Rai, Fostering Cumulative Innovation in the Biopharmaceutical Industry: The Role of Patents and Antitrust, 16 BERKELEY TECH. L. J. 813 (2001);
371. Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, 1 INNOVATION POLY & ECON. 119, 122-23 (2001);
372. Rosemarie Ham Ziedonis, Don't Fence Me in: Fragmented Markets fir Technology and the Patent Acquisition Strategies of Firms, 50 MGMT. SCI. 804 (2004).
373. See JOHN SUTTON, SUNK COSTS AND MARKET STRUCTURE: PRICE COMPETITION, Advertising, and the Evolution of Concentration 27-43 (1991).
374. See Iain M. Cockburn et al., Patent Thickets, Licensing and Innovative Performance, 19 INDUS. & CORP. CHANGE 899, 900 (2010) (finding that increased fragmentation of patent ownership in a market is associated with diminished innovation by firms that must license IP).
375. But see Einer Elhauge, Do Patent Holdup and Royalty Stacking Lead to Systematically Excessive Royalties?, 4 J. COMPETITION L. & ECON. 535, 565-67 (2008) (arguing that under some circumstances royalty stacking can lead to lower licensing fees).
376. This argument is based on the assumption that it is easier for firms to create a new product without infringing any of the existing patents in a field when there are fewer patents to design around. See, e.g., U. S. DEPT OF JUSTICE & FED. TRADE COMM'N, supra note 336, at 61 n. 20 ("[DJesignaround is very expensive... [and] is worse in industries where a large number of patents have potentially read on a given product because the likelihood of stepping on a landmine is so great."). One possible counterargument is that markets with fewer entrants will tend to have broader patents that are harder to design around, since there will be less prior art in the field to restrain firms from drafting broader claims. Even in a field with little prior art, however, patent scope is still limited by the enablement and written description requirements.
377. U. S. C. § 112 (2006).
378. See JOHN SUTTON, TECHNOLOGY AND MARKET STRUCTURE: THEORY AND HISTORY (1998);
379. John Sutton, Market Structure: Theory and Evidence, in 3 HANDBOOK OF INDUSTRIAL ORGANIZATION 2301, 2313 (Mark Armstrong & Robert H. Porter eds., 2007).
380. See Mervyn Turner, Embracing Change: A Pharmaceutical Industry Guide to the 21st Century, in TRANSLATIONAL MEDICINE AND DRUG DISCOVERY 329 (Bruce H. Littman & Rajesh Krishna eds., 2011).
381. But these me-too drugs are also much less likely to offer patients significant therapeutic value relative to older drugs operating through the same mechanism of action. See Hongyu Zhao & Zongru Guo, Medicinal Chemistry Strategies in Follow-on Drug Discovery, 14 DRUG DISCOVERY TODAY 516, 516-17 (2009). At the same time, me-too drugs and first-in-class drugs often have relatively similar R&D costs and timeto-market, since both types of drugs are subject to the same FDA clinical trial requirements.
382. See PETER BARTONHUTR ET AL., FOOD AND DRUG LAW: CASES AND MATERIALS 576-733 (3d ed. 2007) (describing the FDA's premarket regulatory approval requirements for new drugs). Not surprisingly, firms have trouble recouping their large, sunk R&D costs with me-too drugs that have only minor advantages over existing products, since the lesser degree of product differentiation forces them to compete on price.
383. See FRANKEL GRP., THE CURRENT STATE OF PHARMACEUTICAL INDUSTRY RESEARCH AND DEVELOPMENT: THE BIO/PHARMACEUTICAL Business Model-Innovation Options (2012), http://wwwfrankelgroup. Com/docs/defaultsource/default-document-library/ fg-advisory-board-whitepaper-aug2;
384. PAREXEL, WHITE PAPER: DRUG INNOVATION, APPROVAL, MARKET ACCESS, AND THE "NEWNORMAL" 9 (2010);
385. Nigel Gregson et al., Pricing Medicines: Theory and Practice, Challenges and Opportunities, 4 NATURE REV. DRUG DISCOVERY 121 (2005);
386. Charles G. Smith, Defining the Actual Research Approach to the New Drug Substance, in THE PROCESS OF NEW DRUG DISCOVERY AND DEVELOPMENT 329, 331-32 (Charles G. Smith & James T. O' Donnell eds., 2d ed. 2006) ("Companies that introduce truly unique NCEs into major markets... make considerably more profit for the company from the patented NCE than ever would have been possible with a 'metoo' drug for use in the same disease."); Turner, supra, at 329-30. Consequendy, "lack of differentiation is frequendy cited as a reason for discontinuation in the development of new drugs." Zhao & Guo, supra, at 516 (footnote omitted);
387. see also P. Honig & R. Lalonde, The Economics of Drug Development: A Grim Reality and a Role for Clinical Pharmacology, 87 CLINICAL PHARMACOLOGY & THERAPEUTICS 247, 249 (2010) ("[M]any compounds are being dropped in late phase because of failure to differentiate in a commercially meaningful way from existing therapies...."). Therefore pharmaceutical companies primarily (and increasingly) focus on developing new drugs meant to offer substantial therapeutic benefits over existing drugs or to meet an unmet medical need.
388. See KI Kaitin & JA Di Masi, Pharmaceutical Innovation in the 21st Century: New Drug Approvals in the First Decade: 2000-2009, 89 CLINICAL PHARMACOLOGY & THERAPEUTICS 183 (2011) (noting that while the number of new drug approvals fell between 2000 and 2009, the number of "priority review" approvals increased);
389. B. Munos, A Forensic Analysis of Drug Targets From 2000 Through 2012, 94 CLINICAL PHARMACOLOGY & THERAPEUTICS 407, 407 (2013) (The 'fast follower' strategy, sometimes advocated as a means to lower the risk of drug research and development (R&D), does not dierefore appear to be very effective because most followers fail to make it to market.");
390. Fabio Pammolli et al., The Productivity Crisis in Pharmaceutical R&D, 10 NATURE REV. DRUG DISCOVERY 428, 436 (2011) ("Innovation in pharmaceuticals is a cumulative process-However, bodi private and public payers discourage incremental innovation.... As a consequence, R&D investments tend to focus on new therapeutic targets, which are characterized by high uncertainty and difficulty, but lower expected post-launch competition. "). Indeed, die pharmaceutical industry releases a total of only about twenty-seven novel drugs in die average year, and die FDA normally considers roughly half of diose products to represent a significant departure from existing medical treatments. See Munos, supra, at 406;
391. Summary of NDA Approvals & Receipts, 1938 to the Present, U. S. FOOD & DRUG ADMIN., http://www.fda. gov/AboutFDA/WhatWeDo/History/ ProductRegulation/SummaryofNDAApprovalsReceipts 1938tothepresent/default.htm (last updated Jan. 18, 2013).
392. See FUEL CELL TODAY, THE FUEL CELL TODAY: INDUSTRY REVIEW 2011, at 20 (2011) (noting that the development of fuel cell technology for cars "is not a quick process and many years of development and testing must be undertaken to ensure die product is fit for market before introducing it to die public");
393. See John H. Barton, Patents and Antitrust: A Rethinking in Light of Patent Breadth and Sequential Innovation, 65 ANTITRUST L J. 449, 455-61 (1997);
394. Peter S. Menell, Governance of Intellectual Resources and Disintegration of Intellectual Property in the Digital Age, 26 BERKELEY TECH. LJ. 1523, 1544-45 (2011) (noting that beyond the standard economic theory of IP that focuses on the "non-rivalrous characteristic" of inventions, "[m]ost intellectual property scholars consider cumulative innovation to be a critical rationale for limiting intellectual property rights in both time and strength of rights");
395. Stephen M. Maurer, Ideas Into Practice: How Well Does U. S. Patent Law Implement Modern Innovation Theory?, 12 J. MARSHALL REV. INTELL. PROP. L. 644, 649-51 (2013).
396. See FTC, supra note 2, ch. 3;
397. Einer Elhauge & Alex Krueger, Solving the Patent Settlement Puzzle, 91 TEX. L. REV. 283 (2012);
398. Dana P. Goldman et al., The Benefits From Giving Makers of Conventional 'Small Molecule'Drugs Longer Exclusivity Over Clinical Trial Data, 30 HEALTH AFF. 84 (2011);
399. C. Scott Hemphill & Mark A. Lemley, Earning Exclusivity: Generic Drug Incentives and the Hatch-Waxman Act, 77 ANTITRUST LJ. 947, 948 (2011);
400. See KATHI E. HANNA ET AL., NATL ACAD. OF SCI., INNOVATION AND INVENTION IN MEDICAL DEVICES: WORKSHOP SUMMARY 4 (2001).
401. See Joseph Golec & John Vernon, Measuring US Pharmaceutical Industry R&D Spending, 26 PHARMACOECONOMICS 1005, 1005 (2008);
402. See Charles Clift, The Value of Patent Term Extensions to the Pharmaceutical Industry in the USA, 5 J. GENERIC MED. 201 (2008);
403. Henry Grabowski & Margaret Kyle, Generic Competition and Market Exclusivity Periods in Pharmaceuticals, 28 MANAGERIAL SCDECISION ECON. 491, 499-500 (2007).
404. See Rebecca S. Eisenberg, The Role of the FDA in Innovation Policy, 13 MICH. TELECOMM. & TECH. L. REV. 345, 354 & n. 37 (2007);
405. cf. C. Scott Hemphill & Bhaven N. Sampat, Weak Patents Axe a Weak Deterrent Patent Portfolios, the Orange Book Listing Standard, and Generic Entry in Pharmaceuticals (Dec. 2011) (unpublished manuscript), available at http://conference.nber.org/confer/2012/IPKE/sarnpat.pdf (finding litde evidence that later-filed patents affect the date of generic entry). Moreover, the average effective patent life for new drugs-the time from regulatory approval to generic entry-has remained unchanged at eleven to twelve years for much of the past thirty-years.
406. C. Scott Hemphill & Bhaven N. Sampat, Evergreening, Patent Challenges, and Effective Market Life in Pharmaceuticals, 31 J. HEALTH ECON. 327, 328 (2012). This suggests that to the extent these strategies are effective, they may be an important part of the patent system's incentives for drug development.
407. See U. S. GOVT ACCOUNTABILITY OFFICE, GAO-12-371R, DRUG PRICING: RESEARCH ON SAVINGS FROM GENERIC DRUG USE 1 (2012). Pharmaceutical companies typically lose about 70 percent of their sales within the first six months of generic competition.
408. See Press Release, Datamonitor, US Most Susceptible to Brand Erosion Post Patent Expiry (Jan. 13, 2011), available at http:/about.datamonitor.com/media/ archives/5293. Pharmaceutical companies often try to insulate themselves from generic competition by switching consumers to related drugs that are still patented.
409. See Murray Aitken et al., Prescription Drug Spending Trendsin the United States: Looking Beyond the Turning Point, 28 HEALTH AFF. 151 (2008).
410. See, e.g., Margaret E. Blume-Kohout & Neeraj Sood, Market Size and
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414. Frank L. Meyskens Jr. et al., Regulatory Approval of Cancer Risk-Reducing (Chemopreventive) Drugs: Moving What We Have Learned Into the Clinic, 4 CANCER PREVENTION RES. 311, 311 (2011);
415. James L. Mulshine, Fostering Chemopreventive Agent Development: How to Proceed?, 22 J. CELLULAR BIOCHEMISTRY (Supp.) 254 (1995);
416. Rena Conti, Balancing Safety, Effectiveness, and Public Desire: The FDA and Cancer, COMMONWEALTH FUND, Apr. 2003, at 1, 2.
417. See Jeffrey L. Cummings, Controversies in Alzheimer's Disease Drug Development, 20 INTTL REV. PSYCHIATRY 389 (2008);
418. Harald Hampel et al., Biomarkers for Alzheimer's Disease: Academic, Industry and Regidatory Perspectives, 9 NATURE REV. DRUG DISCOVERY 560, 568 (2010);
419. Eric Karran et al., The Amyloid Cascade Hypothesis for Alzheimer's Disease: An Appraisal for the Development of Therapeutics, 10 NATURE REV. DRUG DISCOVERY 698, 709 box 3 (2011);
420. Zaven S. Khachaturian et al., ARoadmap for the Prevention of Dementia: The Inaugural Leon Thai Symposium, 4 ALZHEIMER'S & DEMENTCA 156, 157 (2008);
421. Tom Rooney, Addressing the R&D Challenges (Sept. 21, 2011) (PowerPoint Presentation), available at http://www.theparliament.com/fileadmin/ theParliament/pdfe/rhomasRooney.pdf.
422. See Carol Ann Homon & Richard M. Nelson, High-Throughput Screening: Enabling and Influencing the Process of Drug Discovery, in THE PROCESS OF NEW DRUG DISCOVERY AND DEVELOPMENT, supra note 362, at 79, 80 ("As patents on chemical matter expire after 20 years, these archived compounds would be starting points for the synthesis of new compounds that could be protected by patent.").
423. Aaron S. Kesselheim et al., Extensions of Intellectual Property Rights and Delayed Adoption of Generic Drugs: Effects on Medicaid Spending, 25 HEALTH AFF. 1637, 1646 (2006) (questioning the gains from longer exclusivity periods relative to die social costs of higher drug prices).
424. cf Arti K. Rai & Rebecca S. Eisenberg, Bayh-Dole Reform and the Progress of Biomedicine, 66 LAW & CONTEMP. PROBS. 289, 302-03 (2003). There is also some discussion about whether particular industries should be allowed to craft their own technology-specific patent laws.
425. See, e.g., Alan Devlin, Systemic Bias in Patent Law, 61 De PAUL L. REV. 57, 57-58 (2011);
426. See Arti K. Rai, Engaging Facts and Policy: A Multi-institutional Approach to Patent System Reform, 103 COLUM. L. REV. 1035, 1128 (2003).