Last weekend I was honored to give the keynote speech at the Giles S. Rich Inn of Court annual dinner held at the Supreme Court. It was a great time, and I met many judges, lawyers, clerks, and consultants that I had not met before.
Several people asked me what I planned to discuss, so I thought I would post a (very lightly edited) transcription of my talk. I'll note that the kind words I mention at the beginning refer to my introduction, given by Judge Taranto, which really was too kind and generous by at least half.
The text after the jump.
Thank you. Thank you so much for the kind words. Thank you for having me here. I'm honored, I'm pleased, I've had a great time tonight, and I'm thrilled to be here. I want to take a few minutes tonight to talk to you a little bit about the academic's view of change in the patent system. And there has been change in the patent system; I think you all agree. I want to talk about change from the perspective of my writing, important changes that have happened, and what I think it means.
But before I do that, though, I want to look back. When I was first asked to speak, I thought back to the time I spent in my own Inn of Court, the San Francisco Bay Area Intellectual Property American Inn of Court. My first thought was, "That Inn needs a name." You know, it's a little bit long. And I thought back to the time prior to an Inn meeting when I met with Mark Lemley before I went into academia. If you know Mark then it will come as no surprise that he was an active member of the Inn, and he was very helpful.
We talked about what it might be like to go into academia--writing scholarship. I'd been in practice for years before that, and I said glibly that there's probably not too much to write about; everything that there is to say about patent law has already been written, right? He kind of chuckled and said, "No, I don't think so."
And he was right. As it turns out there was a lot to write about, and as an academic you play the long game in your writing -- at least from a theoretical perspective. There is a lot of writing today on empirical work that's not really the long game. That's looking at what happened and analyzing it, and that's very current. But when you are doing theoretical work, as Judge Taranto just mentioned, sometimes what you write about doesn't come up for a while.
So let's take a look at what I wrote about first. My first article was about trade secrets. And suddenly they're relevant! We've got the new DTSA. Though we have to admit to ourselves they were always relevant, weren't they? Trade secrets have always been there, but now they are at the forefront.
My second article was on the broadest reasonable construction rule, also seeing a resurgence. The Supreme Court has agreed to hear a case on that very issue some ten years later.
My third article was about patentable subject matter. Now, that one came on a lot faster than I expected. It turned out I went to print literally the week that the en banc decision was handed down by the Federal Circuit in In re Bilski. I was able to make final edits and I may be the very first person to criticize the machine or transformation test in print.
So, those were my first three articles. For some of them, it took years to come to fruition. Indeed, my very, very first article --one I wrote in law school-- was about the reuse of software elements, and that saw a resurgence some ten or twelve years later in the Oracle v. Google case when that case was first filed. I don't count that article, though, first because I was in law school when I wrote it, and second because I thought software reuse was a live issue at the time I wrote it. It turns out that the issue sort of died away, and the things I thought would be litigated turned out not to be litigated.
In each of these, though, my primary goal was not just to comment on some interesting topic, though that was surely one of the goals. But it was also to fully explore and stake out the theoretical boundaries of the law. And so one finds that there are areas that are ripe for examination, explanation, and solution, even though nobody is talking about those areas yet.
Now, that's the sweet spot for the academic, but sometimes we strike out. Sometimes the ambiguity in the law we think about never comes to fruition. Sometimes the court doesn't buy into our world view. I just read an article today in constitutional law where the author identified a circuit split and said, "This is totally the way this should be resolved," and the Supreme Court went the other way a month later [NB though the article was cited in the dissent]. Sometimes practitioners don't like the academic's view of the law or think it's wrong. A quick look at the comment section on the Patently-O blog will confirm this for you if you don't believe me.
But one thing is certain: there will always be change. And that change keeps academics like me busy just like it keeps practitioners and judges busy. I suspect, though, that we look at these things differently. So I want to spend my remaining time highlighting what I think are a couple of the most important changes and outcomes in each of the years since I pronounced so calmly and so boldly that there was nothing left to write about.
Perhaps you would have picked some of these same ones, or maybe not. When I'm done, I want to give you my takeaway from all of this, which may be different than the conventional wisdom that courts are leaning one way or the other.
So here's my list of some of the major things I see in each of the past 10 or so years:
We start with 2006 – Who could forget eBay? It's much harder to get an injunction. But that year we also saw Illinois Tool Works, which held that patents do not necessarily confer market power, which completely changes how we look at antitrust. Also, we see LabCorp v. Metabolite -- a non-decision that shows that there's a coming change in patentable subject matter.
In 2007, we have KSR v. Teleflex, which returns the Supreme Court to obviousness after a long hiatus. We have Medimmune v. Genentech, saying we can have declaratory relief cases whenever there's a dispute. I put a question mark in my notes on this one. I don't know if that's a big change. I am working on a study to see whether litigation practices changed after MedImmune. When I finish, hopefully I'll publish.
In 2008, we have Quanta, which looks at exhaustion. We have the Cablevision copyright case, which changes how we look at copying that is done remotely - and the voluntariness involved.
In 2009, we return to obviousness with In re Kubin, which is about obvious to try. And Lucent v. Gateway, which ushers in a new era of damages and reasonable royalties.
2010 brings Bilski, a return of the Supreme Court to patentable subject matter -- a return that was just beginning as we'll see in a minute. We have the Ariad case, which settles questions about the role of written description in patents. We have Biosimilars Act, which some say has completely changed the way many drugs are made. And the PTO appoints the first Chief Economist, which changes the way that PTO provides data and information to people who want to study the system. This gives rise to a cottage industry of studies using data.
In 2011, we have Global-Tech, which is about inducement and the intent necessary. We have Uniloc, which throws out the 25% rule of thumb. The FTC issues its Evolving IP Marketplace report, which shines the light on patent plaintiff practices (and patent trolls).
2012 – Inter Partes Review starts in earnest. We also have Mayo v. Prometheus - more patentable subject matter. We have Oracle v. Google: four years ago was that verdict. Also, Apple v. Samsung: the $1 billion verdict was four years ago! Also in 2012: SOPA fails. That was big news for international intellectual property enforcement.
2013 – First to File starts. We have AMP v. Myriad - more patentable subject matter. I think you start seeing a theme here. We also see a crescendo in White House involvement in patents: patents are mentioned in the state of the union, there is discussion of the patent troll debate (in a Google hangout no less!), President Obama vetoes the ITC ban against Apple, and the President appointed a patent person, Colleen Chien, to OSTP. This is more generally indicative of the fact that patent law has now become a mainstream topic. It is no longer in the recesses; it is out there and people are talking about it.
In 2014, we have the Alice case--another patentable subject matter case. We have Octane Fitness, which changes how attorneys fees are going to be assessed. And we have Oracle v. Google (again! this time at the Federal Circuit).
In 2015, Michelle Lee, the first woman to lead the Patent Office is appointed (although she had been working there already-this is the official appointment). Patent invalidation under Alice begins in earnest. The Teva case “ends” de novo review. That's another one of my question marks. We don't know what's actually going to happen, but it theoretically can be a big change. And in trademarks, In re Tam changes what we've seen in trademark law for many, many, many years.
And we're early in 2016, and already the federal trade secrets act has passed, the Court granted cert in Cuozzo to look at how inter partes review will be done, and we have Oracle v. Google going on (again!).
There were other big cases. Some may have touched your practice more directly. For example, the Williamson case and means plus function can change how patents should be read. But I picked these because I believe they reflect systemic changes. Which leads me to the final part of my talk tonight, which is what do we make of these changes. They sound like all sorts of different things.
What I think these changes reflect is an epic battle of rules versus standards. So what do I mean by that? The definition of a rule is something that is a bright line. You either pass it or you don't. So in patent law, think of anticipation. Your prior art is either before the date, or it is not before the date. Compare that to a standard which has a variety of moving parts, and the court can adjust them to come to the right decision. Again with patent law, this is more like obviousness. Would a person having skill consider something obvious? It depends! It depends what the state of the prior art was, it depends on their skill, it depends on how obvious it would have been (not to be circular, but there you have it), how obvious it would have been to combine two references or think of them or to try, it depends on whether you have secondary factors or objective indicia. It all depends...standards.
So what are the benefits of rules? They are easy to apply, but they are over and under inclusive. Lots of things happen that you don't want to happen. What are the benefits of standards? They are hard to apply, but in theory you get a more accurate application of the normative application that you want.
Now the thing about rules and standards is that they don't follow your usual pro- and anti-IP memes.
So, for example, patentees want rules for patenting. They want something clear so they know it is patentable. But they want standards for plaintiff type. For example, they don't want patent trolls to specially disadvantaged. They want you to look at actual behavior.
Defendants, on the other hand, want standards for patenting. They want an obviousness "rule" or patentable subject matter "rule" that allows for some flexibilty. But they want rules for secondary liability. Then want to know whether they will be liable for selling a product.
Now, the hard part is getting the mix right--the mix of rules and standards. So, let's go back to the subject matter example. This is from my article Everything is Patentable. I suggest a rule: everything is patentable. At the time I suggested that, I said everything is patentable if it meets the criteria in the statute: it's a machine, compostion, etc. I said, "Is an abstract idea excluded? We don't count that in the rule. We don't count products of nature." To that date, everyone had said, well sure everything should be allowed except abstract ideas, and I said, "No, that's not a rule! That's a standard."
But in that same paper, I suggested we match my broad rule of patentable subject matter with standards, highly rigorous enforcement of other patentability hurdles, such as obviousness, enablement and others. The Court didn't agree with my suggestion; so it goes. [N.B. those familiar with my work may recognize that I don't actually use the rules/standards framework in Everything is Patentable. In retrospect I should have and it is a theme I have developed later, and I thank TJ Chiang for engaging with that idea, even though we disagree about which subject matter guidelines are rules, which are standards, and which are masquerading as the other.]
But that's really where the battle lines are. Do you use rules, or do you use standards? And even if we have the right mix, do we have rules masquerading as standards or standards masquerading as rules? I'll give three examples.
The first is Octane Fitness, which is about when attorneys fees will be awarded. We have a rule, which is that only in exceptional cases will fees be granted. But do we apply that as a true rule as the Federal Circuit did before Octane Fitness, which made fees very hard to win except in a very specific instance. Or do we have standards, basically what happened after Octane Fitness, which allows the District Court to say, "Well, there's a lot of stuff going on, and we'll make a decision."
Another example, is eBay. We have a standard for injunctions. But before eBay that standard was applied mostly as a rule. The rule was that you almost always got an injunction. So did the Supreme Court change it to a standard? Sort of, only now you almost always don't get an injunction if you are an NPE. So you still have this strange mix of rules and standards and masquerading.
And finally, I'll address patentable subject matter since I've mentioned it several times. We have this two step test: 1) is something an abstract idea? and 2) are there only conventional steps to apply it? It sounds like a rule, but it gets applied as a standard. But because we call it a rule, we have a hard time describing what the rule is, because it's really a standard.
And that's where I'll leave this talk. It's easy to talk about rules and standards when you are an academic. My challenge to you on the front lines is to be cognizant of the rules and standards debate. It doesn't mean you have to pick one side or the other of the patent debate. It just may help guide you in structuring your arguments one way or the other, and to understand what's at stake with each of them.
Thank you very much.
