What is the Probability of Receiving a US Patent?

Following my post last week, I confidently proclaimed at a conference yesterday that the true abandonment rate was about 9%. I was--kindly, thankfully--corrected by the target of the comment, who just so happens to be a co-author of a working paper called What is the Probability of Receiving a US Patent?, by Michael Carley, Deepak Hegde, and Alan Marco at the US PTO. Marco is chief economist, and Hegde is at NYU Stern Business School, but also an Edison fellow at the PTO. I had read the paper before, but hadn't focused on the abandonment rate aspect.

They use data that's generally unavailable to the rest of us (some for good reasons, some for not - this should really be made public) to trace the outcomes of each initial patent application.  This differs from the methodology of Cotropia, Quillen & Webster, who cannot trace each application, but can merely count them up from reports for a given year.

The differences between the studies are not that important for the key measure of that study - how many patent applications are there? Cotropia, et al., want to adjust a report of applications each year so they subtract out continuations to get the real count of new applications.

But it turns out that that this matters for abandonments, because today's abandonments are yesterday's (or four years ago's) applications. And so you have to trace all the way through to get the real number. Indeed, we won't know the real abandoment rate for applications this year for many years - the Carley, Hegde, Marco study only looks at applications between 1996 and 2005, to ensure that most of the cases have resolved. It turns out the real abandonment rate is in the 30% range, depending on technology.

Weighing Treatises v. Restatements - Copyright Edition

In A Restatement of Copyright Law as More Independent and Stable Treatise, 79 Brooklyn L. Rev. 457 (2014), Ann Bartow considers the pitfalls of treatises as overarching guides to complex laws. These pitfalls include conflicts of interest, "pole positions" by a sole author, and lack of transparency. They also include overreliance on treatises and underreliance on other sources of analysis (such as academia). Some of these reflect arguments made in a prior paper. Ann Bartow, The Hegemony of the Copyright Treatise, 73 U. Cin. L. Rev. 581 (2004). She notes in several places that her concerns transcend content; she criticizes even places where she agrees with the underlying treatment of the law. Here is the abstract:

This article maps the problematic consequences of over reliance by judges, lawyers and policy makers on copyright law treatises, with a particular focus on the negative effects Nimmer on Copyright has had on the evolution of various copyright law doctrines. It proposes that an ALI Restatement of Copyright Law is needed to create a reference tool that is transparently authored and edited.

Haber & Werfel on Trolls

Stephen Haber and Seth Werfel (Stanford Political Science) have posted Why Do Inventors Sell to Patent Trolls? Experimental Evidence for the Asymmetry Hypothesis. Here is the abstract:

Why do individual patent holders assign their patents to "trolls" rather than license their technologies directly to manufacturers or assert them through litigation? We explore the hypothesis that an asymmetry in financial resources between individual patent holders and manufacturers prevents individuals from making a credible threat to litigate against infringement. First, individuals may not be able to cover the upfront costs associated with litigation. Second, unsuccessful litigation can result in legal fees so large as to bankrupt the individual. Therefore, a primary reason why individual patent holders sell to PAEs is that they offer insurance and liquidity. We test this hypothesis by experimentally manipulating these financial constraints on a representative sample of inventors and entrepreneurs affiliated with Stanford University and UC Berkeley. We find that in the absence of these constraints, subjects were significantly less likely to sell their patent to a PAE in a hypothetical scenario. Furthermore, treatment effects were significant only for subjects who were hypothesized to be most sensitive to these constraints.

For readers who, like me, are most curious about the experiment, here are the details: They invited 1200 inventors or entrepreneurs to fill out an email survey and ended up with 103 useful responses. (This seems like a reasonable response rate given the nature of the survey, though it is worth thinking about whether the type of people who respond are likely to influence the results.) Subjects wrote about an improvement for a product they use regularly, and then were told to imagine they had been awarded a patent for the idea that was worth $1 million, and also that a large corporation saw the idea and decided to infringe the patent without paying for it. Subjects in the control condition were given the option of selling to a patent assertion entity (PAE) for $100,000 or hiring a lawyer to assert the patent for $1,000 per hour; subjects in the treatment condition were told the lawyer worked on a contingent fee basis for one-third the total award. They also tested the subjects' risk preferences and loss aversion, and they asked subjects to self-identify as inventors or entrepreneurs.

Haber and Werfel found that the contingent fee treatment reduced the proportion of subjects who chose to sell to PAEs, and that the effect was only significant for subjects who either self-identified as inventors rather than entrepreneurs, or subjects who exhibited loss aversion. These results seem somewhat intuitive given their setup, though I think the implications for patent policy are less clear.

Carol Rose on Surprising Commons

Carol Rose (Univ. of Arizona, and emeritus at Yale Law) has posted a BYU symposium article, Surprising Commons. Here is the abstract:

“Tragedies of the commons” due to overuse and underinvestment have long been known to affect open access resources. Yet decimation of open access commons often catches everyone by surprise. Why the surprise? Among other reasons, overuse may occur in very small increments, or may be an accidental byproduct of seemingly unrelated technology; more generally, a resource’s common status undermines investment in learning about it. Open access to intellectual achievements does not destroy physical resources, but may undermine creative effort — but, in a happy surprise, may instead enhance creativity. An interesting surprise is that the drive to privatize creative achievements has generated a counter-movement to defend open access to these achievements. Scholars following Elinor Ostrom study common resources that are not left in open access but rather limited and managed; here surprises also show a mixture of attractive and unattractive features both in physical and intellectual domains, but they also generate lessons for such modern day developments as crowdsourcing and citizen science.

Rose is the author of the classic article The Comedy of the Commons, published in 1986 in response to Garrett Hardin's 1968 The Tragedy of the Commons.

Interest in common resources has only grown since then; Elinor Ostrom won the 2009 Nobel Prize for her work on commons governance, and Brett Frischmann, Mike Madison, and Kathy Strandburg have extended this line of work with their just-published volume, Governing Knowledge Commons (intro and first chapter here), which is on my reading list.

Do We Need a Federal Trade Secret Statute?

There is a current push for federalizing civil trade secret law. I don't really understand it, quite frankly. I've listened to many folks in IP intensive industries, and their reasons for asking for it, for the most part, are nothing that can't currently be achieved procedurally under current law. I also spent most of my career litigating trade secret cases, representing both plaintiffs and defendants, and the concerns I've heard about state practice just weren't there in my experience. That's not to say there are a few outliers, but I have yet to hear of an actual, real-live compelling case where the outcome would have been different if only we had a civil federal trade secret statute. Thus, I'm not convinced that federalization will actually aid IP owners in solving the very real problem of trade secret misappropriation in the information age. It reminds me of a great line from The American President:

Well then, congratulations. It's only taken you three years to put together crime prevention legislation that has no hope of preventing crime.

This makes me wonder whether the push for federalization is because the substantive law will be different. Drafts I've seen, for example, are unclear about whether reverse engineering is a defense. That, to me, is a big deal. Changing the law of reverse engineering would be huge. Or, maybe the goal is to impose inevitable disclosure on California, which has rightly rejected that doctrine so far. I don't know, but it worries me. Those who know my work know that I usually fall much more toward the IP owner's view of life than your average academic. If this federalization thing bothers me, that's saying something.

It also worries Dave Levine (Elon; Princeton fellow) and Sharon Sandeen (Hamline), who've written Here Come the Trade Secret Trolls. They posit that the proposed statutes could have the unintended effect of causing trade secret hold-up cases by small shops that overvalue their secrets that aren't really secret.

McKenna on Sampat on Serendipity

A long running debate in the modeling of innovation is whether discoveries are sure to arise by targeted research investment or by unexpected moments of invention. Suzanne Scotchmer lays out the different models in her book Innovation and Incentives. (Side note: I think every patent scholar should read this book. I would put it on my list of classic patent scholarship, but it's not pre-2000.) I tend to fall in the middle, as I usually do - some advances can be targeted, and some must remain unexpected. I think it is hard to justify a fully path directed model or else, as Scotchmer noted, everything would have been invented one or two hundred years ago. Then again, sometimes things are invented and the world is just not ready for them.

This brings us to serendipity, or rather Serendipity. Serendipity, by Bhaven Sampat (Columbia School of Health) came across my SSRN feed this morning, and I was all ready to write about it when I saw that Mark McKenna (Notre Dame) beat me to it, at Jotwell.

Professor Sampat goes about testing the role of unexpected discovery in pharmaceutical advances. It's an impressive study with impressive results, finding that money spent targeting one disease may often lead to results for other diseases. It also shows that funding in basic science can lead to specific but unexpected results; that's good, because I'm a fan of funding basic science.

I'll say little else other than to point readers to Professor McKenna's summary and analysis, which is thorough and insightful. I only have one addition those remarks. The jotwell discussion focuses on government policy for grants - targeting, amount, gaming, and so forth. I would add that the findings, if we believe them truly to be about serendipity, hold up outside of grant funding and apply to general inventive efforts. So long as there is some incentive mechanism, patents, prizes, grants, etc. that gets people doing research then we might hope to see unexpected spillovers from those research efforts.

Teva v. Sandoz: Fact Issues in Claim Construction Reviewed for Clear Error, Ultimate Decision De Novo

The Supreme Court released its opinion in Teva v. Sandoz this morning, holding 7-2 that fact issues in claim construction are reviewed for clear error, as required by Fed. R. Civ. P. 52(a)(6). As I predicted after watching the argument, Justice Breyer wrote the opinion vacating the Federal Circuit's judgment, though he got more votes than I expected: he was joined by everyone except Justices Thomas and Alito. Today's opinion joins a long line of Supreme Court decisions rebuking the Federal Circuit for patent law exceptionalism. But the opinion is also a partial win for the Federal Circuit and the many tech companies favoring de novo review, in that the ultimate claim construction decision will still be reviewed de novo.

Guest Post on Dan Burk's "Curious Incident of the Supreme Court in Myriad Genetics"

This is a guest post by Vikram Iyengar, a J.D. student at Stanford Law School. He thanks Prof. Mark Lemley for introducing him to Patent Law, and Prof. Hank Greely for his guidance with this research topic.

How Many Patent Applications Are There?

Thank you to Lisa for inviting me to join her blog, and for the very kind introduction. For my first post, I’d like to briefly point to a recent update of a prior paper published by Christopher A. Cotropia, Cecil D. Quillen, Jr., and Ogden H. Webster. The paper is called Patent Applications and the Performance of the U.S. Patent and Trademark Office. The link includes the new FY 2014 update, as well as the prior version through FY 2012.

Patent Forum Selling

Two papers have been posted this fall related to the negative effects of courts consciously encouraging litigants to file cases in their districts, such as E.D. Tex. and D. Del. with patent cases—one by Jonas Anderson, and another by Daniel Klerman and Greg Reilly. I recommend both; they're the most interesting discussions of venue in the patent context that I've seen since Jeanne Fromer's Patentography.

Introducing New Blogger: Michael Risch

I'm thrilled to welcome Professor Michael Risch (Villanova Law) as a new Written Description blogger. He is a prolific scholar whose work includes detailed empirical studies of NPEs, an investigation of America's first patents, and thoughtful analyses of patent licensing markets. His work on patentable subject matter has been cited by the Supreme Court, and his work on the utility requirement of patent law was some of the first scholarship highlighted on this blog. He has even written about the doctrine for which this blog is named.

Risch has blogged at Madisonian, PrawfsBlawg, and Patently-O, and he has contributed to my classic patent scholarship project. I can also say from experience that he is very generous with young scholars; even when I was still a law student, he was always willing to give me detailed comments on drafts, and he was one of the people who made me feel very welcome at my first IP Scholars Conference. I look forward to his contributions to Written Description!

Tex. L. Rev. Evidence-Based IP Symposium

The Texas Law Review, which has displayed impeccable taste in IP articles, focused its 2014 symposium issue on the topic "Steps Toward Evidence-Based IP." This symposium is part of a growing trend in evidenced-based IP, including numerous works that have been covered on this blog and various empirical IP initiatives sprouting up at law schools including Chicago-Kent, NYU, Northwestern, and Stanford. If you're interested in IP policy and haven't seen the Texas symposium issue, it is well worth a look. Here are the papers included:

de Rassenfosse & Jaffe on Weeding Out Bad Patents with Fees

Gaétan de Rassenfosse and Adam Jaffe have posted a new empirical working paper, Are Patent Fees Effective at Weeding Out Low-Quality Patents? Short answer: yes. Longer answer: