Helsinn Argument Recap: Did the AIA Change the Meaning of Patent Law's "On Sale" Bar?

As Michael previewed this morning, the Supreme Court heard argument today in Helsinn v. Teva, which is focused on the post-America Invents Act § 102(a)(1) bar on patents if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public" before the relevant critical date. The Federal Circuit held that Helsinn's patents were invalid because Helsinn had sold the claimed invention to a distributor more than one year before filing for a patent, but Helsinn (supported by the United States as amicus) argues that the "on sale" bar is triggered only by sales that make the invention "available to the public" under a broad reading of "public."

During argument, none of the Justices seemed inclined to favor Helsinn's attempt to argue that "on sale" clearly means on sale to everybody—Justice Kavanaugh said "it's pretty hard to say something that has been sold was not on sale," and Chief Justice Robert's noted that Helsinn's interpretation "might not be consistent with the actual meaning of the world 'sale'" because "if something's on sale, it doesn't have to be on sale to everybody." Nor did they jump at the government's argument that "on sale" means a product can be purchased by its ultimate consumers—Justice Sotomayor said: "This definition of 'on sale,' to be frank with you, I've looked at the history cited in the briefs, I looked at the cases, I don't find it anywhere."

Helsinn's better statutory argument is that the meaning of "on sale" is modified by "or otherwise available to the public" to require that the sale be publicly available. Indeed, for a reader with no background in patent law, this might seem like the most natural reading of the statute. Justice Alito said that "the most serious argument" against the Federal Circuit's position is "the fairly plain meaning of the new statutory language," and that he "find[s] it very difficult to get over the idea that this means that all of the things that went before are public." And Justice Gorsuch suggested, at least for hypothetical purposes, that "the introduction of the 'otherwise' clause introduced some ambiguity about what 'on sale' means now." But if there was more support to reverse the Federal Circuit, it was not apparent from the argument.

Much of the statutory language used in the Patent Act—including "on sale"—has developed a technical legal meaning over time, generally due to courts' attention to the law's utilitarian focus. For example, patentable subject matter caselaw is "implicit" in § 101, courts have put a highly specialized gloss on the word "obvious" in § 103, and—relevant here—the § 102 categories of prior art have long been interpreted to include relatively obscure and private uses. Although this expansive definition of prior art might seem unfair to patentees, there are also strong policy arguments in its favor, including (1) encouraging patentees to get to the patent office early (leading to earlier disclosure and patent expiration) and (2) avoiding patents when their costs (including higher prices for consumers and subsequent innovators) aren't likely to be outweighed by their innovation-incentivizing benefits, such as when there is independent invention—even when evidence of that invention is relatively obscure.

As Justice Kavanaugh noted at argument today, Mark Lemley's amicus brief on behalf of forty-five IP professors describes the long history of treating relatively non-public disclosures as prior art, including (1) "noninforming public use" cases, (2) "output of a patented machine or process" cases, and (3) cases involving secret, confidential, and nonpublic sales transactions. Justice Breyer also mentioned the Lemley brief, and he said it "seems right" to have the on-sale bar include private sales "to prevent people from benefitting from their invention prior to and beyond the 20 years that they're allowed." The legislative history of the AIA does not suggest that Congress intended to do sweep away all of these cases—Justice Kavanaugh said that he thinks "the legislative history, read as a whole, goes exactly contrary" to Helsinn's contention because "there were a lot of efforts … to actually change the 'on sale' language, and those all failed," leaving the losers "trying to snatch victory from defeat" with "a couple statements said on the floor."

It is perhaps because of this history that Helsinn and the government seemed more focused on the argument that "on sale" has always excluded nonpublic sales than on the argument that the AIA changed the law. Justice Ginsburg's only comment during argument was to ask Helsinn to clarify this: "I thought that one argument was that the AIA changed the way it was. But … you seem to say there was no change; 'on sale' never included the secret sale." Arguing for the government, Malcolm Stewart even conceded—in response to questioning from Justice Kagan—that if the law was settled pre-AIA such that "on sale" included nonpublic sales, then the new AIA language ("or otherwise available to the public") "would be a fairly oblique way of attempting to overturn" the law. But based on my reading of the transcript, it doesn't seem likely that the argument that "on sale" has always meant "on sale publicly" will get five votes.

I waited until after writing the above to get Ronald Mann's take at SCOTUSblog, but I think I very much agree on his bottom line conclusion: while this isn't "a case in which the argument clearly presages the result," the overall transcript "suggests that the most likely outcome will be an affirmance."

How Important is Helsinn?

In honor of the oral argument in Helsinn today, I thought I would blog about a study that questions its importance. For those unaware, the question the Supreme Court is considering is whether the AIA's new listing of prior art in 35 U.S.C. §102(a)(1): "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public..." changed the law.

Since forever, on sale meant any offer or actual sale, regardless of who knew about it. Some have argued that the addition of "or otherwise available to the public" means that only offers that are publicly accessible count as prior art. I think this is wrong, and signed on to an amicus brief saying so. We'll see what the Court says. Note that non-public does not mean "secret." True secret activity is often considered non-prior art, but the courts have defined "public" to mean "not-secret." The question is whether that should change to be "publicly accessible."

But how big a deal is this case? How many offers for sale would be affected? Steve Yelderman (Notre Dame, and soon to be Gorsuch clerk) wanted to know as well, so he did the hard work of finding out. In a draft paper on SSRN that he blogged about at Patently-O, he looked at all invalidity decisions to see exactly where the prior art was coming from. Here is the abstract for Prior Art in the District Court:

This article is an empirical study of the evidence district courts rely upon when invalidating patents. To construct our dataset, we collected every district court ruling, verdict form, and opinion (whether reported or unreported) invalidating a patent claim over a six-and-a-half-year period. We then coded individual invalidation events based on the prior art supporting the court’s analysis. In the end, we observed 3,320 invalidation events based on 817 distinct prior art references.

The nature of the prior art relied upon to invalidate patents informs the value of district court litigation as an error correction tool. The public interest in revoking erroneous patent grants depends significantly on the reason those grants were undeserved. Distinguishing between revocations that incentivize future inventors and those that do not requires understanding the reason individual patents are invalidated. While prior studies have explored patent invalidity in general, no study has reported data at the level of detail necessary to address these questions.

The conclusions here are mixed. On one hand, invalidations for lack of novelty bear many indicia of publicly beneficial error correction. Anticipation based on obscure prior art appears to be quite rare. When it comes to obviousness, however, a significant number of invalidations rely on prior art that would have been difficult or impossible to find at the time of invention. This complicates — though does not necessarily refute — the traditional view that obviousness challenges ought to be proactively encouraged.

So, let's get right to the point. The data seem to show that "activity" type prior art (that is sale or use) is much more prevalent in anticipation than in obviousness. This is not surprising, given that this category is often the patentee's own activities.

With respect to non-public sales, they estimate that a maximum of 14% of anticipation and 2% of obviousness invalidations based on activity were based on plausibly non-public sales. This translates to about 8% of all anticipation invalidations and 1% of all obviousness invalidations. Because there are about as many obviousness cases as anticipation cases, this averages to 4.25% of all invalidations. They note that with a different rule, some of these might have been converted to "public" sales upon more attention paid to providing such evidence.

A related question is whether the inventor's actions can invalidate, or whether the AIA overruled Metallizing Engineering, which held that an inventor's secret use can invalidate, even if a third-party's secret use does not. The study found that the plaintiff's actions were relevant in 27% of anticipation invalidations and 13% of obviousness invalidations.  Furthermore, they found that most of the secret activity was associated with either the plaintiff or defendant--this makes sense, as they have access to such secret information.

So, what's the takeaway from this? I suppose where you stand depends on where you sit. I think that wiping out 4% of the invalidations, especially when they are based on the actions of one of the two parties, is not a good thing. It's bad to allow the patentee to non-publicly sell and have the patent, and it's bad to hold the defendant liable even if it has been selling the patent in a non-public (though non-secret) way. We're talking about 20 claims per year that go the other way - too high for my taste, especially when it means we have to start defining new ways to determine whether something is truly public.

Furthermore, the stakes of reversing Metallizing are much higher. I freely admit that the "plaintiff's secret actions only" rule has a tenuous basis in the text of the statute, but it has been the law for a long time without being expressly overruled by two subsequent revisions. Given that more than 25% of the invalidations were based on the plaintiffs actions, I think it would be difficult to reverse course.

Judging Patents by their Rejection Use

The quest for an objective measure of patent quality continues. Scholars have attempted many, many ways to calculate such value, including citations, maintenance fee payments, number of claims, length of claims, and so forth. As each new data source has become available, more creative ways of measuring value have been developed (and old ways of measuring value have been validated/questioned).

Today, I'd like to briefly introduce a new one: the use of patents rejecting other patents. Chris Cotropia (Richmond) and David Schwartz (Northwestern) have posted a short essay on SSRN introducing their methodology.* The abstract for the cleverly named Patents Used in Patent Office Rejections as Indicators of Value is here:

The economic literature emphasizes the importance of patent citations, particularly forward citations, as an indicator of a cited patent’s value. Studies have refined which forward citations are better indicators of value, focusing on examiner citations for example. We test a metric that arguably is closer tied to private value—the substantive use of a patent by an examiner in a patent office rejection of another pending patent application. This paper assesses how patents used in 102 and 103 rejections relate to common measures of private value—specifically patent renewal, the assertion of a patent in litigation, and the number of patent claims. We examine rejection data from U.S. patent applications pending from 2008 to 2017 and then link value data to rejection citations to patents issued from 1999 to 2007. Our findings show that rejection patents are independently, positively correlated with many of the value measurements above and beyond forward citations and examiner citations.

The essay is a short, easy read, and I recommend it. They examine nearly 700,000 patents used in anticipation and obviousness rejections and find that not all patent citations are equal, and that those citations that were used in a rejection have additional ability to explain value, even when other predictors, such as forward citations and examiner citations are included in the model. The only value measure that had no statistically significant relationship to rejection patents was use in litigation (even though forward citations did). This may say something about the types of patents that are litigated or about the role of rejection patents in litigation.

That's about all I'll say about this essay. The paper is a brief introduction to the way this new data set might be used, and this blog post is a brief introduction to the paper.

*At least, I think it's theirs. If you know of an earlier article that measures this on any kind of scale, please let me know!

The Uneasy Case for Ariosa Diagnostics v. Illumina

The Supreme Court's request for views from the Solicitor General in Ariosa Diagnostics v. Illumina has renewed interest in this nerdy issue of patent prior art. I appear to be in a very small minority that believes that Federal Circuit's rule on this may be right (or at least is not obviously wrong), so I thought I would discuss the issue.

Let's start with the (pre-AIA) statute. 35 U.S.C. 102(e) says that one type of prior art may be where:

the invention was described in ... a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent...

This is a pretty old rule, dating back to the Alexander Milburn case. The gist of the rule is that delays in the patent office should not deprive references of being prior art. Thus, even though the patent application is "secret" until published, we backdate the reference to the date of filing once the patent is granted (or the application published, which is covered in a subsection I do not reproduce above).

The issue in Ariosa v. Illumina is what to do with provisional patent applications. For the reference at issue, the prior art patent first relied on a provisional patent application, which is never published but becomes publicly available if a patent that relies on it is granted. Later, a regular patent application was filed and eventually issued. There is a dispute about whether the invention was even described in the provisional, but we'll assume that it was. However, the PTAB ruled (and the Fed. Cir. affirmed) that because the issued patent claims were not supported by the provisional patent disclosure, then the reference could not be backdated to the filing of the provisional patent, even if the invention was described in the final patent.

This is where the objections come in. If the patent relies on the filing date of the provisional patent (and incorporates it by reference), then surely it is described as of the provisional patent date and should be prior art. We are, after all, living in a first to invent world and it is unfair that the first inventor (in the provisional patent) should not count as prior art.

Let's start with Alexander Milburn. I love that case. I have assigned it to my students. I think it explains this statute well. But it is not controlling. It was an interpretation of the statute at that time. We have a later adopted statute that defines what is and is not prior art, and Alexander Milburn does not speak to the facts of the Ariosa dispute because there were no provisional patents at that time. This is not like, say, on sale (Section 102(b)) in Helsinn in which that statute remained unchanged and the meaning of the words remained unchanged. There were no provisional patents when Alexander Milburn was granted, and thus it has little to say; the statute was intended to deal with that (and even that has a difficult time).

As a corollary to this analysis, I want to put the rest that there is a problem with the Federal Circuit's rule because it rewards the second inventor. I would bet dollars to donuts that many people arguing this scoffed at complaints that the AIA's first to file rule was unconstitutional because it rewarded second inventors. Both arguments fail for the same reason - the patent system has a long history of allowing the second invention to issue as a patent under certain circumstances. Indeed, even the current version of 102(e) disallows many early foreign patent filings, even though such filings are clearly the first invention. Once again, we have to look at the statute.

So, let's look at the statute: "The invention is described in" - critics focus on this, saying it makes no sense to look at a patent's claims. We only care about whether the invention was described. Fair enough - I agree.

But what about the next part: "a patent granted on an application for patent by another filed in the United States before the invention." Looking at this in pieces, we see a few requirements. First, the description must be in the patent, not the provisional application. Thus, looking at what the provisional patent says should be irrelevant...for this piece.

Second, that description must be in a patent "granted on an application for patent...filed...before." This is where the action is. What does it mean for a patent to be granted on an application for patent filed? For a provisional application, means that the patent must satisfy Section 119(e). It must be filed within one year, and the final patent claim must be supported by the written description of the provisional patent. It is as simple as that - the plain words of the statute dictate the Federal Circuit's rule.

There is a policy benefit to this reading. I think that patentee's can take advantage of the jump from provisional to final patent disclosures, adding new matter while always claiming priority back to the provisional. The provisional patent is not easily obtained, and it takes work to parse out which claims are actually entitled to the earlier filing date. Enforcing the rules on prior art better incentivizes complete provisional patent disclosures.

Then why do I say this is an uneasy case? Well, did I mention that I like Alexander Milburn? The policy it states, that delay in the patent office shouldn't affect prior art can easily be applied here. So long as the description is in the provisional patent, and so long as that provisional patent is eventually publicly accessible, then the goal, even if not the strict language, of the statute is met.

Also, my reading leads to a potentially unhappy result. A party could file a provisional that supports invention A, and then a year later file a patent that claims invention A but describes invention B. The patent could then be asserted against B while relying on the earlier filing date of A, even though B was never described in the provisional as of the earlier date. Similarly, a provisional patent could describe B, and B could then be removed from the final patent application, and the patent would not be prior art because B was not described in the patent, even though B had been described in the earlier, now publicly accessible provisional application.

I don't know where I land on this - as readers of this blog know, I tend to be a textualist. Sometimes the Court has agreed with that, but sometimes (see patentable subject matter and patent venue) it does not.

What happened in patent law in the past year?

Last Thursday I gave a 25-min recap patent law update to judges and practitioners at the Northern District Practice Program Patent Law Symposium, and I thought blog readers might be interested in my recap of highlights from the past year:

Patent Case Filings and Procedure: Venue, PTAB, and Stays

Lex Machina reports that there were 4057 cases filed in 2017, down 10% from the 4529 in 2016. The biggest procedural change was to venue. As I have explained, in its May 2017 decision in TC Heartland, the Supreme Court held that for purposes of the patent venue statute, a corporation only "resides" in its state of incorporation. The Federal Circuit has since held that this was a change in law, so the venue defense was not "available" under FRCP 12(g)(2), allowing district courts in pending cases to consider venue arguments that were not previously raised by defendants. And the Federal Circuit has offered guidance on the other possibility for proper venue—"where the defendant has committed acts of infringement and has a regular and established place of business"—saying that this requires (1) a fixed, physical presence that (2) is regular and established (not transient) and that (3) is a place of the defendant (not merely of an employee).

TC Heartland is likely responsible for the decline in cases filed in E.D. Tex. and the uptick in districts like D. Del. and N.D. Cal., though in neither of the latter have filings reached pre-2015 levels:

Helsinn v. Teva Oral Argument Recap

In March, I posted about an amicus brief filed by 42 IP profs in Helsinn v. Teva, which argued that contrary to the district court's opinion and position taken by the USPTO, the America Invents Act (AIA) did not change the meaning of "on sale" and "public use" in 35 U.S.C. § 102(a)(1). The case was argued yesterday before the Federal Circuit, and the panel (Judge Dyk, Judge Mayer, and Judge O'Malley) didn't seem eager to conclude that the AIA wrought a significant change.

The appeal involves Teva's challenge to Helsinn's post-AIA patent on the nausea drug palonosetron, which was filed over a year after a secret licensing and supply contract for the drug. In Pfaff v. Wells Electronics (1998), the Supreme Court held that the on-sale bar applies when a product is (1) "the subject of a commercial offer for sale" and (2) "ready for patenting" as of the critical date (one year before filing). Both issues are contested here, as the district court said that the drug was neither ready for patenting nor on sale within the meaning of the post-AIA § 102. I'll focus here just on the AIA issue, but note that Judge O'Malley asked about remanding for further factfinding and whether it is necessary to reach the AIA issue.

The only line of questioning on the AIA issue for Teva was Judge Dyk's criticism of the dueling canons of statutory interpretation for figuring out what "or otherwise available to the public" means in the new § 102. Teva argued that under the "last antecedent" canon, "to the public" modifies only "otherwise available"; Helsinn countered that under the "series qualifier" canon, the concluding phrase "otherwise available to the public" qualifies everything in the series, including "on sale." But Judge Dyk stated that neither canon can apply because the modifier would be "available to the public," leaving just the word "otherwise," which doesn't make sense. Teva pivoted to its argument that "or otherwise available to the public" is a catchall category for new technologies, which the panel seemed comfortable with; Judge Dyk suggested "an oral description at a conference" as something that might fall into this bucket.

42 IP Profs: AIA Didn't Change Meaning of "On Sale" and "Public Use" in § 102

Mark Lemley and Rob Merges just filed a Federal Circuit amicus brief on behalf of 42 IP professors in Helsinn v. Teva, arguing that the AIA did not change the meaning of "on sale" and "public use" in 35 U.S.C. § 102(a)(1). Under pre-AIA caselaw such as the classic Metallizing Engineering, secret commercial use is not prior art against a third party, but it does start a one-year clock for the inventor to encourage the inventor to disclose. The district court opinion in Helsinn held that the AIA changed this rule: sales and offers for sale only count as prior art if they are "available to the public."

The district court decision is based on the addition of "or otherwise available to the public" to § 102(a)(1), but the IP prof brief notes that this interpretation is hard to square with the statutory text of § 102(b)(1), which distinguishes between 102(a)(1) art that is (A) "disclosed" by the inventor (or those who obtained the subject matter from the inventor) versus (B) "publicly disclosed" by third parties. Under the district court's Helsinn's opinion, this distinction between disclosures and public disclosures becomes "nonsensical."

The legislative history of this provision is complicated. For the pro-overturning-Metallizing view, see p. 470-71 of this account by Joe Matal, who was a staffer to Senator Jon Kyl. But the IP profs argue that Senator Kyl tried and failed to make this change in the statutory text, and that the supporters of overturning Metallizing are now trying to use ambiguous statutory text and manufactured legislative history to accomplish what they didn't have the votes to accomplish by clear statutory amendment. Preventing this kind of gambit is the underlying rationale for statutory interpretation canons such as "Congress does not hide elephants in mouseholes."

The IP prof amicus brief concludes with a thorough explanation of how the district court's reading of § 102(a) "attributes a quite radical intent and effect to the new prior art provision" that "would sweep away scores of cases" and cause "decades of uncertainty as to the scope of prior art." Congress reenacted the same statutory terms—"on sale" and "public use"—which is normally presumed to ratify judicial interpretations of those terms. There were no legislative hearings on eliminating secret prior art, and the IP profs argue that it is implausible that Congress intended "a major sea change in this very old and very much relied-upon body of law" without clear notice or explanation.

Roin on Unpatentable Drugs

Unpatentable Drugs and the Standards of Patentability, by Ben Roin (Harvard Law), is older than most articles I blog about (published in 2009), though too young to be a classic. But in rereading it for an article I'm working on, I decided it is worth a quick post, especially for those who missed it when it first came out. Roin's basic claim is simple but important: "the standards by which drugs are deemed unpatentable under the novelty and nonobviousness requirements bear little relationship to the social value of those drugs or the need for a patent to motivate their development."

Donald Chisum: Priority Among Competing Patent Applicants Under the America Invents Act

How will the “First Inventor to File” provisions of the America Invents Act (AIA) impact patent applications filed after the March 16, 2013 implementation date? Donald Chisum’s article, Priority Among Competing Patent Applicants Under the America Invents Act, utilizes a patent bar-esque hypothetical to highlight several important features of the new legislation. Chisum begins his article by outlining a fact pattern involving inventors A and B and the independent steps each inventor takes to patent invention X, a protein that controls muscle spasms.

Kara Swanson: Feminism, Corsets, and IP

This is a guest post by Allison Tait, a Yale 3L with a Yale Ph.D. in French literature. Allison writes about women's property and marriage regulation and is the former Editor-in-Chief of the Yale Journal of Law & the Humanities.

What do feminism, the corset, and intellectual property have in common? Quite a bit, it turns out, according to Kara W. Swanson (Northeastern Law) in her latest paper, Getting a Grip on the Corset: A Feminist Analysis of Patent Law. For Swanson, feminine interventions in patent-protected technology converge in the corset. The corset involved women as both consumers and litigants. The corset constructed gender by shaping the feminine form into a graceful silhouette with a small waist. And the corset narrated gender by calling into question the divide between public and private in Egbert v. Lippmann—the 1881 “corset case” that provided a foundational examination of the public use doctrine. The case turned on the question of Francis Lee Barnes’ right to her deceased husband’s patent for an improvement in corset springs. Problems abounded for Francis because the Court cast her as a public woman at a time when the public space of the market belonged to men and the private sphere of domestic relations to women.

Mark Lemley: Point of Novelty

Who knew that there were so many novel things to say about novelty! In an earlier post, I described Sean Seymore's argument that the novelty test is too strict for complex inventions. This post examines how Mark Lemley (Stanford Law, and the most cited IP prof) criticizes novelty doctrine in a more fundamental way in Point of Novelty. Lemley argues that although "the goal of the patent system is to encourage new invention," "[p]atent law today goes out of its way to avoid focusing attention on ... the point of novelty of the invention." He argues that courts should focus on the point of novelty when assessing patents.

Lemley notes that patent claims used to describe the new features of the invention ("central claiming"); it was only around 1870 that courts shifted to interpreting claims as defining an invention's boundaries ("peripheral claiming"), a trend that has accelerated with the decline of "Jepson" claims and the Markman decision that interpreting claims is a question of law. Patentees today rarely identify the point of novelty of their inventions; for example, patent claims for a 4-step process will not tell you if only one of those steps is new.

The insistance that there is no point of novelty of an invention developed out of cases in which courts had to determine whether combination inventions (where the novelty lies in the combination) are obvious, but the rule has spread to other patent doctrines, including anticipation, subject matter, best mode, claim construction, infringement, and damages. Lemley notes some areas where the point-of-novelty approach survives, but the most interesting section of his paper is II.B, with examples of where he believes "the no-point-of-novelty doctrine leads [courts] astray":

• Repair vs. reconstruction. In Aro v. Convertible Top, the Supreme Court "held that car owners could bypass the patent on convertible top assemblies by replacing what is arguably the most important part of the top an unlimited number of times," which "allowed a third party supplier to capture a significant part of the value supposedly resident in the invention."
• Written description. Although "[t]he most reasonable theory" for having a separate written description requirement is "to prevent 'late claiming' by a patentee who changes her claims during the prosecution process to cover things she didn't actually understand," "subsequent Federal Circuit decisions have used the no-point-of-novelty rule to read ... the late-claiming concern ... out of written description law."
• Best mode. The no-point-of-novelty rule exacerbates the problem of best mode being "a potential trap for the unwary." Under current doctrine, "the court would invalidate a patent on the car with intermittent windshield wipers if the inventor did not disclose her preferred brand of tires, a rather extreme requirement."
• Infringement. "[A] defendant can avoid infringement by eliminating any one of those elements [of the patentee's invention], even if it appropriates the point of novelty ... in its entirety."

At this point, Lemley addresses the question that his examples raised for me: "If patent owners can hamstring themselves by including prior art elements in their patent claims, why do they do it?" His answer: Much of it is related to damages being calculated as a percent of the sales of the relevant product. "[I]f the inventor of the intermittent windshield wiper claims a windshield wiper, his damages in a lawsuit will be measured by the sale of windshield wipers. But claim the identical invention as a car with an intermittent windshield wiper as an element, and the royalty base is the sale of cars – a much larger number."

But is this really a problem? If all the inventor made was a windshield wiper, why should his royalty base be a car? Doesn't the no-point-of-novelty doctrine help prevent overreaching by patentees? Perhaps Lemley would respond that damages should also be calculated based on the point of novelty, but he doesn't address this question. I do think he is right, however, in his conclusion to this section: "The heart of the problem may be the law's focus on the language of lawyer-created claims rather than inventor-created technologies."

Sean Seymore on Novelty and Disclosure

Coming to patent law from physics, I have been interested in patent doctrines that seem crazy when I try to explain them to my physics friends. So I was intrigued to discover the work of a professor with a similar research agenda: Sean Seymore is a professor of law and chemistry at Vanderbilt, and he describes his project (in both of his papers I read) as "bridg[ing] the disconnect between patent law and the norms of science."

His latest published paper, Rethinking Novelty in Patent Law (Duke L.J. 2011), argues that the novelty test is too strict for complex technologies. He describes the "quintessential novelty problem" as trying to claim compound X when an earlier third-party patent recites the structure X as one of many compounds without additional details, leaving a question of enablement: was X already in the public's possession? He notes that the current novelty regime incentivizes the earlier patentee to conceal experimental failures and that "it appears that a third-party patent’s mere recitation of X by name or structure is, as a practical matter, sufficient to anticipate a subsequent inventor’s claim to the compound."

Seymore proposes a new novelty paradigm in which the examiner has the initial burden of proving that the disclosure of X in the earlier third-party patent is enabling, for which only documents dated earlier than the third-party patent may be used. He argues that this would promote innovation by allowing X to be patented (and thus enabled and exploited), but the article does not consider the innovation costs of this proposal. Making it easier to patent X will cause dynamic inefficiencies by increasing costs for other innovators who want to use X (in addition to creating static inefficiencies due to the increased price of X). These inefficiencies may well be outweighed by the benefits Seymore outlines, but due to the difficulty of measuring innovation, the problem should at least be acknowledged.

I also read The Teaching Function of Patents (Notre Dame L. Rev. 2010) as background for my own draft paper on patent disclosure (for which I surveyed nanotechnology researchers about how they use the technical content of patents). In this article, Seymore argues in favor of stronger patent disclosures to improve "the ability of the patent to disseminate technical knowledge." Jeanne Fromer (Fordham Law) had put forth a similar defense of robust disclosure requirements in Patent Disclosure (Iowa L. Rev. 2009), and Seymore could have more strongly recognized her contribution (rather than only citing her as part of "a limited amount of scholarship which addresses patent disclosure"). But Seymore's contribution is still valuable, as he joins Fromer in arguing against a long line of patent law theorists and economists who have critiqued the disclosure theory of patents (the idea that we award patents as quid pro quo for the patent disclosure), and he offers some different prescriptive suggestions.

Seymore's main suggestion for improving disclosure is that patent examiners should be able to require "working examples." When I read the abstract, I thought he was talking about physical models, but he actually means that "at least for complex inventions, an actual reduction to practice must become the standard of disclosure" (i.e., patents should not be awarded for "prophetic examples" through the legal fiction of "constructive reduction to practice"), and that inventors should "prove, through adequate detail in the written description, that the claimed invention has been constructed and works for its intended purpose." I think this suggestion is probably sound; as I describe in my own patent disclosure paper, many scientists are surprised to learn that patents can currently be awarded for a Gedankenexperiment, rather than only for inventions that have been shown to work. But it also seems difficult to compare the benefits of increased disclosure with the costs to innovation, which is a problem Seymore again does not address. Still, I enjoyed both articles, and I appreciate reading about patents from someone who actually knows about the technologies that they are trying to promote.

Update 2/22/11: I posted my patent disclosure paper on SSRN last week, so I added links to it. If you are planning on citing it, let me know so I can keep you apprised of updates.