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Fuel to the Innovation Fire

Posted by Devin Cole  December 1, 2011 04:02 PM

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Patent law matters for innovation. Abraham Lincoln famously said that "the Patent System adds the fuel of interest to the fire of genius." The US Constitution states that "Congress shall have power ... to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." But what is the best way to promote such progress?

Michael Meurer.jpgPhoto: Professor Michael Meurer, Professor of Law, Boston University

Michael Meurer, a law professor at Boston University, thinks that intellectual property law ought to provide proper boundaries the way that real estate does.

If you don't know where your property ends and where your neighbor's begins, you might plant flowers and get sued for it. Good fences make good neighbors.

Patent law provides no such clarity.

After having applied for a patent, you are allowed to wait 18 months, and sometimes more, before disclosing it. And furthermore, it is perfectly legal to file so-called continuation patents that refine, expand, and amend an original application.

There is a famous case where Rambus was found to participate in a technical standard-setting committee without disclosing that it was simultaneously pursuing a patent. Once the standard was agreed upon, Rambus amended the patent so that it would benefit from the new standard.

Another famous case involved Jerome Lemelson, who kept filing these continuations over a period of thirty years getting an ever broader patent on bar code readers. His patent was issued in 1984, long after such readers had become widely used. This enabled Lemelson to collect more than a billion dollars in license fees from large companies using bar code readers.

Lemelson was obviously very clever in doing so, but his action did not benefit society in general. Patent law enabled him to fly under the radar screen while bar codes were being commercialized. Commercializing new technology is risky at the best of times, and we do not need additional risk of unknown future costs.
Michael Meurer's main point is that patent law allows for a lack of clarity that is detrimental to society as a whole.

What should be done? Meurer considers the easiest step to eliminate the 18 month disclosure delay. Another course of action is to ?use prices to internalize the external costs of notice failure?. This is economics-speak for saying that patent applications should pay for the right to not disclose the contents of a patent application. In fact, Meurer also recommends increasing the fee paid to the US Patent Office ten-fold ? this wouldn't actually increase the cost of a patent that much, since patent applicants spend most of their money on attorneys helping them file.

Would it be possible to get Congress to change patent law? Probably not. The mechanism for change is rather to change the attitude of the judges on the Federal Circuit over the next 15-20 years. The Federal Circuit's decisions on patent cases constitute binding precedent within the US, and while the judges are political appointees, so far the appointments have not been partisan. So the main change in the attitude of the Federal Circuit will lie in the next generation's legal training. Meurer points to two similar developments that have already taken place. Anti-trust law has changed since 1965 along with the attitude of a new generation of judges, and within the Federal Circuit itself the doctrine of equivalence has been cut back with reference to notice.

The Federal Circuit was created in 1982, when Japan seemed to challenge the US's predominance in technical innovation, and expansive patents was generally seen to be a fair way to have American inventors participate in the success of Japanese companies commercializing their inventions. But in 2011, such a notion seems quaint, and instead the general benefit of clarity seems more important.

Bad patent fences makes for American companies litigating each other.

Arne Hessenbruch is a Danish expat and the founder of Boston Denmark Partnerships, where he connects Danish companies with an interest in doing business in Boston.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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