Sunday, November 10, 2019

Elizabeth Rowe: does eBay apply to trade secret injunctions?

Elizabeth Rowe has a highly informative new empirical paper, called “eBay, Permanent Injunctions, & Trade Secrets,” forthcoming in Washington and Lee Law Review. Professor Rowe examines—through both high-level case coding and individual case analysis—when, and under what circumstances, courts are willing to grant permanent injunctions in trade secret cases. (So-called “permanent” injunctions are granted or denied after the trade secret plaintiff is victorious, as opposed to “preliminary” injunctions granted or denied prior to on-the-merits review. They need not actually last forever).

Thursday, October 24, 2019

Response to Similar Secrets by Fishman & Varadarajan

Professors Joseph Fishman and Deepa Varadarajan have argued trade secret law should be more like copyright law. Specifically, they argue trade secret law should not prevent people (especially departing employees who obtained the trade secret lawfully within the scope of their employment) from making new end uses of trade secret information, so long as it's not a foreseeable use of the underlying information and is generally outside of the plaintiff's market. The authors made this controversial argument at last year's IP Scholars conference at Berkeley Law, and in their new article in University of Pennsylvania Law Review, called "Similar Secrets."

My full response to Similar Secrets is now published in the University of Pennsylvania Law Review Online. It is called: "Should Dissimilar Uses Of Trade Secrets Be Actionable?" The response explains in detail why I think the answer is, as a general matter, YES. It can be downloaded at: https://www.pennlawreview.com/online/168-U-Pa-L-Rev-Online-78.pdf

Tuesday, September 24, 2019

Lucy Xiaolu Wang on the Medicines Patent Pool

Patent pools are agreements by multiple patent owners to license related patents for a fixed price. The net welfare effect of patent pools is theoretically ambiguous: they can reduce numerous transaction costs, but they also can impose anti-competitive costs (due to collusive price-fixing) and costs to future innovation (due to terms requiring pool members to license future technologies back to the pool). In prior posts, I've described work by Ryan Lampe and Petra Moser suggesting that the first U.S. patent pool—on sewing machine technologies—deterred innovation, and work by Rob Merges and Mike Mattioli suggesting that the savings from two high tech pools are enormous, and that those concerned with pools thus have a high burden to show that the costs outweigh these benefits. More recently, Mattioli has reviewed the complex empirical literature on patent pools.

Economics Ph.D. student Lucy Xiaolu Wang has a very interesting new paper to add to this literature, which I believe is the first empirical study of a biomedical patent pool: Global Drug Diffusion and Innovation with a Patent Pool: The Case of HIV Drug Cocktails. Wang examines the Medicines Patent Pool (MPP), a UN-backed nonprofit that bundles patents for HIV drugs and other medicines and licenses these patents for generic sales in developing countries, with rates that are typically no more than 5% of revenues. For many diseases, including HIV/AIDS, the standard treatment requires daily consumption of multiple compounds owned by different firms with numerous patents. Such situations can benefit from a patent pool for the diffusion of drugs and the creation of single-pill once-daily drug cocktails. She uses a difference-in-differences method to study the effect of the MPP on both static and dynamic welfare and finds enormous social benefits.

On static welfare, she concludes that the MPP increases generic drug purchases in developing countries. She uses "the arguably exogenous variation in the timing of when a drug is included in the pool"—which "is not determined by demand side factors such as HIV prevalence and death rates"—to conclude that adding a drug to the MPP for a given country "increases generic drug share by about seven percentage points in that country." She reports that the results are stronger in countries where drugs are patented (with patent thickets) and are robust to alternative specifications or definitions of counterfactual groups.

On dynamic welfare, Wang concludes that the MPP increases follow-on innovation. "Once a compound enters the pool, new clinical trials increase for drugs that include the compound and more firms participate in these trials," resulting in more new drug product approvals, particularly generic versions of single-pill drug cocktails. And this increase in R&D comes from both pool insiders and outsiders. She finds that outsiders primarily increase innovation for new and better uses of existing compounds, and insiders reallocate resources for pre-market trials and new compound development.

Under these estimations, the net social benefit is substantial. Wang uses a simple structural model and estimates that the MPP for licensing HIV drug patents increased consumer surplus by $700–1400 million and producer surplus by up to $181 million over the first seven years of its establishment, greatly exceeding the pool's $33 million total operating cost over the same period. Of course, estimating counterfactuals from natural experiments is always fraught with challenges. But as an initial effort to understand the net benefits and costs of the MPP, this seems like an important contribution that is worth the attention of legal scholars working in the patent pool area.

Sunday, September 8, 2019

Anthony Levandowski: Is Being a Jerk a Crime?

Former Google employee Anthony Levandowski was recently indicted on federal criminal charges of trade secret theft. As reported in the Los Angeles Times, the indictment was filed by the U.S. attorney’s office in San Jose and is based on the same facts as the civil trade secrets lawsuit that Waymo (formerly Google’s self-driving car project) settled with Uber last year. It is even assigned to the same judge. The gist of the indictment is that, at the time of his resignation from Waymo, and just before taking a new job at Uber, Levandowski downloaded approximately 14,000 files from a server hosted on Google's network. These files allegedly contained "critical engineering information about the hardware used on [Google's] self-driving vehicles …" Each of the 33 counts with which Levandowski is charged carries a penalty of up to 10 years in prison and a $250,000 fine.

This is a crucial time to remember that being disloyal to your employer, on its own, is not illegal. Employees like Levandowski have a clear duty of secrecy with respect to certain information they receive through their employment. But if none of this information constitutes trade secrets, there is no civil trade secret claim. In other words, for a civil trade secrets misappropriation claim, if there is no trade secret, there is no cause of action. 

For criminal cases like Levandowski's, the situation is more complicated. The federal criminal trade secret statute shares the same definition of "trade secret" as the federal civil trade secret statute. See 18 U.S.C. § 1839(3). However, unlike in civil trade secret cases, attempt and conspiracy can be actionable. 18 U.S.C. § 1832(a)(4)-(5). This means that even if the crime was not successful—because the information the employee took wasn't actually a trade secret—the employee can still go to jail. See U.S. v. Hsu, 155 F. 3d 189 (3rd Cir. 1998); U.S. v. Martin, 228 F.3d 1 (2000).  

The Levandoski indictment brings counts of criminal theft and attempted theft of trade secrets. (There is no conspiracy charge, which perhaps suggests the government will not argue Uber was knowingly involved.) But the inclusion of an "attempt" crime means the key question is not just whether Levandowski stole actual trade secrets. It is whether he attempted to do so while having the appropriate state of mindThe criminal provisions under which Levandowski is charged, codified in18 U.S.C. §§ 1832(a)(1), (2), (3) and (4), provide that "[w]hoever, with intent to convert a trade secret ... to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly—steals...obtains... possesses...[etcetera]" a trade secret, or "attempts to" do any of those things, "shall... be fined under this title or imprisoned not more than 10 years, or both…" 

This means Levandowski can be found guilty of attempting to steal trade secrets that never actually existed. This seems odd. It contradicts fundamental ideas behind why we protect trade secrets. As law professor, Mark Lemley, observed in his oft-cited Stanford Law Review article, modern trade secret law is not a free-ranging license for judges to punish any acts they perceive as disloyal or immoral. It is a special form of property regime. Charles Tait Graves, a partner at Wilson, Sonsini, Goodrich & Rosati, who teaches trade secrets at U.C. Hastings College of Law, echoes this conclusion. Treating trade secrets as an employer’s property, Graves writes, counterintuitively "offers better protection for employees who change jobs” than the alternatives, because it means courts must carefully "define the boundaries" of the right, and may require the court to rule in the end "that not all valuable information learned on the job is protectable.” See Charles Tait Graves, Trade Secrets As Property: Theory and Consequences, 15 J. Intell. Prop. L. 39 (2007). 

So where does that leave Levandowski? In Google/Waymo’s civil case against Uber, Uber got off with a settlement deal, presumably in part because Google recognized the difficulty in proving key pieces of its civil case. Despite initial appearances, Google’s civil action was not actually a slam dunk. It was not clear Uber actually received the specific files Levandowski took or that the information contained in those files constituted trade secrets, versus generally known information or Levandonwki's own "general knowledge, skill, and experience.” (I discuss this latter issue in my recent article, The General Knowledge, Skill, and Experience Paradox, forthcoming in the Boston College Law Review). 

But thanks to criminal remedies under 18 U.S.C. §1832, and that pesky "attempt" charge, Levandowsi is left holding the blame and facing millions in fines, and many decades in jail. 

Maybe being a jerk is illegal after all.

Wednesday, July 17, 2019

Pushback on Decreasing Patent Quality Narrative

It's been a while since I've posted, as I've taken on Vice Dean duties at my law school that have kept me busy. I hope to blog more regularly as I get my legs under me. But I did see a paper worth posting mid-summer.

Wasserman & Frakes have published several papers showing that as examiners gain more seniority, their time spent examining patents decreases and their allowances come more quickly. They (and many others) have taken this to mean a decrease in patent quality.

Charles A. W. deGrazia (University of London, USPTO), Nicholas A. Pairolero (USPTO), and Mike H. M. Teodorescu (Boston College Management, Harvard Business) have released a draft that pushes back on this narrative. The draft is available on SSRN, and the abstract is below:

Prior research argues that USPTO first-action allowance rates increase with examiner seniority and experience, suggesting lower patent quality. However, we show that the increased use of examiner's amendments account for this prior empirical finding. Further, the mechanism reduces patent pendency by up to fifty percent while having no impact on patent quality, and therefore likely benefits innovators and firms. Our analysis suggests that the policy prescriptions in the literature regarding modifying examiner time allocations should be reconsidered. In particular, rather than re-configuring time allocations for every examination promotion level, researchers and stakeholders should focus on the variation in outcomes between junior and senior examiners and on increasing training for examiner's amendment use as a solution for patent grant delay.
In short, they hypothesize (and then empirically show with 4.6 million applications) that as seniority increases, the likelihood of examiner amendments goes up, and it goes up on the first office action. They measure how different the amended claims are, and they use measures of patent scope to show that the amended applications are no broader than those that junior examiners take longer to prosecute.

Their conclusion is that to the extent seniority leads to a time crunch through heavier loads, it is handled by more efficient claim amendment through the examiner amendment procedures, and quality is not reduced.

As with all new studies like this one, it will take time to parse out the methodology and hear critiques. I, for one, am glad to hear of rising use of examiner amendments, as I long ago suggested that as a way to improve patent clarity.

Monday, July 8, 2019

Jacob Victor: Should Royalty Rates in Compulsory Licensing of Music Be Set Below the Market Price?

Jacob Victor has a remarkable new article on copyright compulsory licenses, forthcoming in the Stanford Law Review. The article boldly wades into the notoriously convoluted history of the compulsory license option for obtaining rights to copyrighted music, and makes what I think is a very interesting and important normative argument about how compulsory license rates should be set.  Other scholars who have written on compulsory licensing, whose work Victor addresses, include, to name only a few: Kristelia GarciaJane C. Ginsburg, Wendy GordonLydia Pallas Loren, Robert P. Merges, Pam SamuelsonTim Wu, and more herein.

Tuesday, June 18, 2019

Freilich & Ouellette: USPTO should require prophetic examples to be clearly labeled to avoid confusion

Professor Janet Freilich (Fordham Law) has a fantastic forthcoming law review article, Prophetic Patents, which puts a spotlight on the common practice of submitting patent applications containing entirely hypothetical experimental results. These "prophetic examples" are permitted as long as the predicted results are not in the past tense. Using this tense rule, Freilich analyzed over two million U.S. patents in chemistry and biology, and she estimates that 17% of examples in these patents are prophetic. Prophetic examples may be familiar to patent drafters, but scientists and engineers who learn about them generally describe them as bizarre, and even some patent scholars are unfamiliar with the practice. Prophetic Patents was the one article by a lawyer selected for the 2018 NBER Summer Institute on Innovation, and the economist-heavy audience was fascinated by the concept—many were not even aware that researchers can obtain a patent without actually implementing an invention, much less that patents can contain hypothetical data.

Freilich notes the potential benefits of allowing untested ideas to be patented in terms of encouraging earlier disclosure and helping firms acquire financing, though she finds that patents with prophetic examples are not broader (based on claim word count), filed earlier (based on AIA implementation), or more likely to be filed by small entities. I'm very sympathetic to the argument that the current legal standard may allow speculative ideas to be patented too early—I've argued in prior work that all the competing policy considerations raised by Pierson v. Post about the optimal timing of property rights suggest that many patents are currently awarded prematurely. This is a challenging empirical question, however, because we cannot observe the counterfactual innovation ecosystem operating under a different legal standard.

But while pondering the hard question of the timing of patentability, patent scholars should not lose sight of the easy question: even if patenting untested inventions is socially desirable, there is no reason these patents need to be confusing. To me, Freilich's most interesting empirical result is her study of how often prophetic patents are mis-cited in scientific publications. She looked at 100 randomly selected patents with only prophetic examples that were cited in a scientific article or book for a specific proposition, and she found that 99 were not cited in a way that made clear they were prophetic. Instead, they were cited with phrases such as "[d]ehydration reaction in gas phase has been carried out over solid acid catalysts" (emphasis added). And it is not surprising that scientist readers are misled: many prophetic examples do confusingly mimic actual experiments, with specific numerical results. In prior work, I have shown that contrary to the assertions of some patent scholars, a substantial number of scientists do look to the patent literature to learn new technical information. So it is concerning that a large number of patents are written in a way that can be confusing to readers unfamiliar with the tense rule.

Freilich and I teamed up on a new project for which we interviewed patent drafters to explore whether prophetic examples have any important benefits for patentees that could not be obtained through less misleading methods of constructive reduction to practice. In Science Fiction: Fictitious Experiments in Patents—just published in last week's Science—we explain that the answer is no. Patent prosecutors who rarely use prophetic examples argued that there is no legal reason to use fictitious experiments with specific results rather than more general predictions. Those who usually use prophetic examples agreed that more explicit labeling would not affect the patents' legal strength. The only benefit to patentees that would be reduced by requiring greater clarity seems to be any benefit that comes from confusion, which does not seem worth preserving.

The USPTO already requires prophetic examples to be labeled by tense. But the tense rule is unfamiliar to many readers (including scientists and investors), and the distinction in tenses may be literally lost in translation in foreign patent offices. (For example, the form of Chinese verbs does not change with tense.) There is no good justification for not having a more explicit label, such as "hypothetical experiment." As Freilich and I conclude: "Just because some patents are not based on actual results does not mean they need to be confusing. Scientists regularly write grant applications in a way that makes clear what preliminary data they have already acquired and what the expected goal of the proposed project is. Perhaps this is an area in which the patent system could learn from the scientific community."

Monday, May 20, 2019

Inevitable Disclosure Injunctions Under the DTSA: Much Ado About § 1836(b)(3)(A)(i)(1)(I)

When trade secret law was federalized in 2016, some commentators and legislators expressed concern that federalization of trade secret law would make so-called "inevitable disclosure" injunctions against departing employees a federal remedy, and negatively impact employee mobility on a national scale.

In response to such concerns, the Defend Trade Secrets Act (DTSA) included a provision that is ostensibly designed to limit availability of inevitable disclosure injunctions under the DTSA. The limiting provision is codified in 18 U.S.C. 1836(b)(3)(A)(i)(1)(I), discussed further below.

The DTSA has been in effect for just over three years. My preliminary observation is that courts do not appear to view Section 1836(b)(3)(A)(i)(1)(I) as placing novel limitations on employment injunctions in trade secret cases. They also do not seem to be wary of "inevitable disclosure" language.

Friday, May 17, 2019

Likelihood of Confusion: Is 15% The Magic Number?

David Bernstein, Partner at Debevoise & Plimpton, gave an interesting presentation yesterday at NYU Law Engelberg Center's "Proving IP" Conference on the origins of the "fifteen percent benchmark" in trademark likelihood of confusion analysis. (The subject of the panel was "Proving Consumer Perception: What are the best ways to test what consumers and users perceive about a work and how it is being positioned in the market?")

In trademark law, infringement occurs if defendant’s use of plaintiff’s trademark is likely to cause confusion as to the source of defendant’s product or as to sponsorship or affiliation. Courts across circuits often frame the question as whether an "appreciable number" of ordinarily prudent purchasers are likely to be confused. But evidence of actual confusion is not required. There is not supposed to be a magic number. Courts are supposed to assess a variety of factors, including the similarity of the marks and the markets in which they are used, along with evidence of actual confusion, if any, in order to asses whether confusion is likely, at some point, to occur.

In theory.

But in practice, Bernstein asserted, there is a magic number: it's around fifteen percent. Courts will often state that a survey finding 15% or more is sufficient to support likelihood of confusion, while under 15% suggests no likelihood of confusion. See, e.g., 1-800 CONTACTS, INC. v. Lens. com, Inc., 722 F. 3d 1229, 1248-49 (10th Cir. 2013) (discussing survey findings on the low end).

Tuesday, May 14, 2019

The Stanford NPE Litigation Database

I've been busy with grading and end of year activities, which has limited blogging time. I did want to drop a brief note that the Stanford NPE Litigation Database appears to be live now and fully populated with 11 years of data from 2007-2017. They've been working on this database for a long while. It provides limited but important data: Case name and number, district, filing date, patent numbers, plaintiff, defendants, and plaintiff type. The database also includes a link to Lex Machina's data if you have access.

The plaintiff type, especially, is something not available anywhere else, and is the key value of the database (hence the name). There are surely some quibbles about how some are coded (I know of one where I disagree), but on the whole, the coding is much more useful than the "highly active" plaintiff designations in other databases.

I think this database is also useful as a check on other services, as it is hand coded and may correct errors in patent numbers, etc., that I've periodically found. I see the value as threefold:

  1. As a supplement to other data, adding plaintiff type
  2. As a quick, free guide to which patents were litigated in each case, or which cases involved a particular patent, etc.
  3. As a bulk data source showing trends in location, patent counts, etc., useful in its own right.

The database is here: http://npe.law.stanford.edu/ Kudos to Shawn Miller for all his hard work on this, and to Mark Lemley for having the vision to create it and get it funded and completed.

Friday, May 3, 2019

Fromer: Machines as Keepers of Trade Secrets

I really enjoyed Jeanne Fromer's new article, Machines as the New Oompa-Loompas: Trade Secrecy, the Cloud, Machine Learning, and Automation, forthcoming in the N.Y.U. Law Review and available on SSRN. I think Professor Fromer has an important insight that more use of machines in businesses, including but not limited to increasing automation (i.e. using machines as the source of labor rather than humans), has made it easier for companies to preserve the trade secrecy of their information. Secrecy is not only more technologically possible, Fromer argues, but the chances that information will spill out of the firm are reduced, since human employees are less likely to leave and transfer the information to competitors, either illegally in the form of trade secret misappropriation or legally in the form of unprotectable "general knowledge, skill, and experience."

Professor Fromer's main take-home is that we should be a little worried about this situation, especially when seen in light of Fromer's prior work on the crucial disclosure function of patents. Whereas patents (in theory at least) put useful information into the public domain through the disclosures collected in patent specifications, trade secret law does the opposite, providing potentially indefinite protection for information kept in secret. Fromer's insight about growing use of machines as alternatives to humans provides a new reason to worry about the impact of trade secrecy, which does not require disclosure and potentially lasts forever, for follow-on innovation and competition.

Here was what I see as a key passage:
In addition to the myriad of potential societal consequences that a shift toward automation would have on human happiness, subsistence, and inequality, automation that replaces a substantial amount of employment also turns more business knowledge into an impenetrable secret. How so? While a human can leave the employ of one business to take up employment at a competitor, a machine performing this employee’s task would never do so. Such machines would remain indefinitely at a business’s disposal, keeping all their knowledge self-contained within the business’s walls. Increasing automation thereby makes secrecy more robust than ever before. Whereas departing employees can legally take their elevated general knowledge and skill to new jobs, a key path by which knowledge spills across an industry, machines automating employees’ tasks will never take their general knowledge and skill elsewhere to competitors. Thus, by decreasing the number of employees that might carry their general knowledge and skill to new jobs and in any event the amount of knowledge and skill that each employee might have to take, increasing automation undermines a critical limitation on trade secrecy protection.
(17)

For more on trade secret law's "general knowledge, skill, and experience" status quo, see my new article, The General Knowledge, Skill, and Experience Paradox. I recently discussed this work on Brian Frye's legal scholarship podcast, Ipse Dixit  in an episode entitled "Camilla Hrdy on Trade Secrets and Their Discontents".

Wednesday, May 1, 2019

Measuring Patent Thickets

Measuring the effect of patenting on industry R&D is an age old pursuit in innovation economics. It's hard. The latest interesting attempt comes from Greg Day (Georgia Business) and Michael Schuster (OK State, but soon to be Georgia Business). They look at more than one million patents to determine that large portfolios tend to crowd out startups. I'm totally with them on that. As I wrote extensively during troll hysteria, patent portfolios and assertion by active companies can be harmful to innovation.

The question is how much, and what to do about it. Day and Schuster argue in their paper that the issue is patent thickets, as their abstract shows. The draft article Patent Inequality, is on SSRN:
Using an original dataset of over 1,000,000 patents and empirical methods, we find that the patent system perpetuates inequalities between powerful and upstart firms. When faced with growing numbers of patents in a field, upstart inventors reduce research and development expenditures, while those already holding many patents increase their innovation efforts. This phenomenon affords entrenched firms disproportionate opportunities to innovate as well as utilize the resulting patents to create barriers to entry (e.g., licensing costs or potential litigation).
A hallmark of this type of behavior is securing large patent holdings to create competitive advantages associated with the size of the portfolio, regardless of the value of the underlying patents. Indeed, this strategy relies on quantity, not quality. Using a variety of models, we first find evidence that this strategy is commonplace in innovative markets. Our analysis then determines that innovation suffers when firms amass many low-value patents to exclude upstart inventors. From these results, we not only provide answers to a contentious debate about the effects of strategic patenting, but also suggest remedial policies to foster competition and innovation.
The article uses portfolio sizes and maintenance renewals to find correlations with investment. They find, unsurprisingly, that the more patents there are in portfolios in an industry, the lower the R&D investment. However, the causal takeaways from this seem to me to be ambiguous. It could be the patent thickets that cause that limitation, or it could simply be that industries dominated by large players are less competitive and drive out startups. There are plenty of (non-patent) theorists that would predict such outcomes.

They also find that firms with large portfolios are more likely to renew their patents, holding other indicia of patent quality (and firm assets) equal. Even if we assume that their indicia of patent quality are complete (they use forward cites, number of inventors, and number of claims), the effect they find is really, really small. For the one reported industry - biology, the effect is something like a -0.00000982 percent likelihood of lapse for each additional patent. This is statistically significant, I assume, because of the very large sample size and a relatively small variation. But it seems barely economically significant. If you multiply it out, it means that each patent is 1% more likely to lapse for every 1,000 patents in the portfolio (that is, from 50% chance of lapse, to 49% chance of lapse. For IBM - the largest patentee of the time with about 25,000 patents during the relative time period, it's still only a 25% change. Most patentees, even with portfolios, would be nowhere near that. I'm just not sure what we can read into those numbers - certainly not the broad policy prescriptions suggested in the paper, in my view.

That said, this paper provides a lot of useful information about what drives portfolio patenting, as well as a comprehensive look at what drives maintenance rates. I would have liked to see litigation data mixed in, as that will certainly affect renewals one way or the other, but even as is, this paper is an interesting read.

Tuesday, April 23, 2019

How Does Patent Eligibility Affect Investment?

David Taylor (SMU) was interested in how patent eligibility decisions at the Supreme Court affected venture investment decisions, so he thought he would ask. He put together an ambitious survey of 14,000 investors at 3000 firms, and obtained some grant money to provide incentives. As a result, he got responses from 475 people at 422 firms. The response rate by individual is really low, but by firm it's 12% - not too bad. He performs some analysis of non-responders, and while there's a bit of an oversample on IT and on early funding, it appears to be somewhat representative.

The result is a draft on SSRN and forthcoming in Cardozo L. Rev. called Patent Eligibility and Investment. Here is the abstract:
Have the Supreme Court’s recent patent eligibility cases changed the behavior of venture capital and private equity investment firms, and if so how? This Article provides empirical data about investors’ answers to those important questions. Analyzing responses to a survey of 475 investors at firms investing in various industries and at various stages of funding, this Article explores how the Court’s recent cases have influenced these firms’ decisions to invest in companies developing technology. The survey results reveal investors’ overwhelming belief that patent eligibility is an important consideration in investment decisionmaking, and that reduced patent eligibility makes it less likely their firms will invest in companies developing technology. According to investors, however, the impact differs between industries. For example, investors predominantly indicated no impact or only slightly decreased investments in the software and Internet industry, but somewhat or strongly decreased investments in the biotechnology, medical device, and pharmaceutical industries. The data and these findings (as well as others described in the Article) provide critical insight, enabling evidence-based evaluation of competing arguments in the ongoing debate about the need for congressional intervention in the law of patent eligibility. And, in particular, they indicate reform is most crucial to ensure continued robust investment in the development of life science technologies.
The survey has some interesting results. Most interesting to me was that fewer than 40% of respondents were aware of any of the key eligibility decisions, though they may have been vaguely aware of reduced ability to patent. More on this in a minute.

There are several findings on the importance of patents, and these are consistent with the rest of the literature - that patents are important for investment decisions, but not first on the list (or second or third). Further, the survey finds that firms would invest less in areas where there are fewer patents - but this is much more pronounced for biotech and pharma than it is for IT. This, too, seems to comport with anecdotal evidence.

But I've always been skeptical of surveys that ask what people would do - stated preferences are different than revealed preferences. The best way to measure revealed preferences would be through some sort of empirical look at the numbers, for example a differences-in-differences approach before and after these cases (though having 60% of the people say they haven't heard of them would certainly affect whether the case constitutes a "shock" - a requirement of such a study).

Another way, which this survey attempts, is to ask not what investors would do but rather ask what they have done. This amounts to the most interesting part of the survey - investors who know about the key court opinions say they have moved out of biotech and pharma, and into IT. So much for Alice destroying IT investment, as some claim (though we might still see a shift in the type of projects and/or the type of protection - such as trade secrets). But more interesting to me was that there was also a similar shift among those folks who claimed not to know much about patent eligibility or think it had anything to do with their investment. In other words, even for that group who didn't actively blame the Supreme Court, they were shifting investments out of biotech and pharma and into IT.

You can, of course, come up with other explanations - perhaps biotech is just less valuable now for other reasons. But this survey is an important first step in teasing out those issues.

There are a lot more questions on the survey and some interesting answers. It's a relatively quick and useful read.



Thursday, April 18, 2019

Beebe and Fromer: Study on the Arbitrariness of 2(a) Immoral or Scandalous Refusals

For those who have not had the pleasure of seeing it, I recommend the fascinating and, honestly, fun, new study by Barton Beebe and Jeanne Fromer on the arbitrariness and unpredictability of the U.S. Patent & Trademark Office's refusals of trademarks that are deemed to be "immoral" or "scandalous."

The study, entitled Immoral or Scandalous Marks: An Empirical Analysis, has been posted on SSRN. This paper served as the basis for Professors Beebe and Fromer's amicus brief in Iancu v. Brunetti.

This study follows up on Megan Carpenter and Mary Garner's prior 2015 paper, published in the Cardozo Arts & Entertainment Law Journal and Anne Gilson LaLonde and Jerome Gilson's 2011 article, Trademarks Laid Bare: Marks That May Be Scandalous or Immoral.  

All of these studies come to similar conclusions: there are serious inconsistencies in trademark examiners' application of the Section 2(a) "immoral-or-scandalous" rejection. The Beebe/Fromer study is technically 161 pages long, but it's mostly exhibits, and it's very accessible  – worth at least a read to see some of the examples they give, and to oggle at the bizarre interplay between Section 2(a) "immoral-or-scandalous" refusals and Section 2(d) "likely to confuse with prior registered mark" refusals.

Thursday, April 11, 2019

What was the "promise of the patent doctrine"?

What was the "promise of the patent doctrine"?  The short answer is: a controversial doctrine that originated in English law and that, until recently, was applied in Canadian patent law to invalidate patents that made a material false promise about the utility of the invention. A common example would be a claim to therapeutic efficacy in a specification that is not born out.

Warning: the content of this doctrine this may seem bizarre to those familiar with U.S. patent law.