Monday, June 18, 2018

Evidence on Patent Disclosure via Depository Libraries

When I first started practice, the place to go for patents was the Patent Depository Library at the Sunnyvale Public Library. Not only did they have copies of all the patents, they had other disclosures, like the IBM Technical Disclosure series. For those who wonder whether people actually read patents, I can attest that I never went to that library and found it empty. Many people, mostly individual inventors who did not want to pay for Delphion or some other electronic service, went there to look at the prior art. Sadly, the library ceased to be at the end of 2017. Widespread free availability on the Internet, plus a new USPTO center in San Jose siphoned off all the traffic.

Rather than rely on my anecdotal evidence, a new NBER paper examines the role of Patent Depository Libraries as evidence of patent disclosure. Jeffrey Furman (Boston U. Strategy & Policy Dept), Markus Nagler, and Martin Watzinger (both of Ludwig Maximillian U. in Munich) have posted Disclosure and Subsequent Innovation: Evidence from the Patent Depository Library Program to NBER's website (sorry, it's a paywall unless you've got .gov or .edu rights). The abstract is here:
How important is information disclosure through patents for subsequent innovation? Although disclosure is regarded as essential to the functioning of the patent system, legal scholars have expressed considerable skepticism about its value in practice. To adjudicate this issue, we examine the expansion of the USPTO Patent and Trademark Depository Library system between 1975 to 1997. Whereas the exclusion rights associated with patents are national in scope, the opening of these patent libraries during the pre-Internet era yielded regional variation in the costs to access the technical information (prior art) disclosed in patent documents. We find that after a patent library opens, local patenting increases by 17% relative to control regions that have Federal Depository Libraries. A number of additional analyses suggest that the disclosure of technical information in the patent documents is the mechanism underlying this boost in patenting: the response to patent libraries is significant and of important magnitude among young companies, library opening induces local inventors to cite more geographically distant and more technologically diverse prior art, and the library boost ceases to be present after the introduction of the Internet. We find that library opening is also associated with an increase in local business formation and job creation, which suggests that the impact of libraries is not limited to patenting outcomes. Taken together, our analyses provide evidence that the information disclosed in patent prior art plays an important role in supporting cumulative innovation.
 The crux of the study is the match to other, similar areas with Federal Depository (but not patent) Libraries. The authors acknowledge that the opening of a patent library might well be a leading indicator of expected future patenting, but the authors discount this by arguing that the Patent Libraries would have had to somehow predict the exact year of increased patenting, and then apply in advance of that date and get approved just in time. The odds of this seem low, especially when the results are localized to within 15 miles of the library (and no further).

The first core finding, that patenting increased, is ambiguous normatively. The authors discuss enhanced innovation, but equally likely alternatives are that people just got excited about patenting or that innovation already occurring was more easily patented. That said, they find the same quality, which implies that the patenting wasn't simply frivolous.

The second finding is more important: that the types of citations and disclosures changed (and that those changes disappeared when patents were more readily available on the Internet). This finding implies that somebody was reading these patents. The question is who. A followup study looking at how the makeup of inventorship changed would be interesting. Were the additional grants solo inventors or large companies? Who used these libraries?

Even without answering this question, this study was both useful and interesting, as well as a bit nostalgic.

Monday, June 11, 2018

Measuring Patent Thickets

Those interested in the patent system have long complained of patent thickets as a barrier to efficient production of new products and services. The more patents in an area, the argument goes, the harder it is to enter. There are several studies that attempt to measure the effect of patent thickets, with some studies arguing that thickets can ease private ordering. I'd like to briefly point out another (new) one. Charles deGrazia (U. London, Royal Holloway College), Jesse Frumkin, Nicholas Pairolero (both of USPTO) have posted a new draft on SSRN, called Embracing Technological Similarity for the Measurement of Complexity and Patent Thickets. Here is the abstract:
Clear and well-defi ned patent rights can incentivize innovation by granting monopoly rights to the inventor for a limited period of time in exchange for public disclosure of the invention. However, when a product draws from intellectual property held across multiple firms (including fragmented intellectual property or patent thickets), contracting failures may lead to suboptimal economic outcomes (Shapiro 2000). Researchers have developed several measures to gauge the extent and impact of patent thickets. This paper contributes to that literature by proposing a new measure of patent thickets that incorporates patent claim similarity to more precisely identify technological similarity, which is shown to increase the information contained in the measurement of patent thickets. Further, the measure is universally computable for all patent systems. These advantages will enable more accurate measurement and allow for novel economic research on technological complexity, fragmentation in intellectual property, and patent thickets within and across all patent jurisdictions.
 The authors use natural language processing to determine overlap in patent claims (and just the claims, arguing that's where the thicket lies) for both backward and forward citations in "triads" - patents that all cite each other. Using this methodology, they compare their results to other attempts to quantify complexity and find greater overlap in more complex technologies - a sign that their method is more accurate. Finally, they validate their results by regressing thickets against examination characteristics, showing that the examination factors more likely to come from thickets (e.g. pendency) are correlated with greater thickets.

This is an interesting study. The use of citations (versus technological class) will always be a limitation because not every patent in a thicket winds up being cited by others. However, the method used here (using forward and backward citations) is better than the alternative, which is using only blocking prior art.

The real question is what to do with all this information. Can it be applied beyond mere study of which areas have thickets? I suppose it could be helpful for portfolio purchases, and maybe to help decisions about whether to enter into a new technology.

Wednesday, June 6, 2018

A Couple Thoughts on Apple v. Samsung (part ?100?)

I've done a few interviews about the latest Apple v. Samsung design patent jury verdict, but journalistic space means I only get a couple sentences in. So, I thought I would lay out a couple points I see as important. We'll see if they hold up as predictions.

There's been a lot written about the case, so I won't rehash the epic story. Here's the short version. The design patent law affords the winning plaintiff all of the profits on the infringing article of manufacture. The Supreme Court ruled (reversing about 100 years of opposite practice) that the article of manufacture could be less than the entire accused device for sale. Because the original jury instructions did not consider this, the Court remanded for a determination of what the infringing article of manufacture was in this case (the design patents covered the shape of the phone and the default screen). The Federal Circuit remanded, and the District Court decided that, yes, in fact, the original jury instructions were defective and ordered a retrial of damages.

The District Court adopted the Solicitor General's suggested test to determine what the article of manufacture was, determined that under that test it was a disputed fact question, and sent it to the jury. Apple asked for $1 billion. Samsung asked for $28 million. The jury awarded $533 million, which is more than $100 million more than the damages were before the Supreme Court ruled.

After the trial, one or more jurors stated that the entire phone was the article of manufacture because you can't get the screen without the rest of the phone. I suppose that the half a billion is deducting expenses that Apple didn't want to deduct.

So, here are my points: