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!

Jake Sherkow Guest Post: What the CRISPR Patent Appeal Teaches Us About Legal Scholarship

Guest post by Professor Jake Sherkow of New York Law School, who is currently a Visiting Scholar at Stanford Law School.

Yesterday, the Federal Circuit heard oral argument in the dispute between the University of California and the Broad Institute over a set of fundamental patents covering CRISPR-Cas9, the revolutionary gene-editing technology. Lisa has been kind enough to invite me to write a few words here about the dispute, and I thought I’d take that generous opportunity to discuss two aspects of yesterday’s argument: the basics of the appeal and, given that this blog is devoted to legal scholarship about patent law, what the argument can teach us, if anything, about IP scholarship in general. I think the short answer to the second question is, Quite a lot, although perhaps not for obvious reasons.

We Robot Comments on Ryan Abbott's Everything is Obvious

I’ve been busy with lots of interesting conferences and workshops in the past few weeks, and since I wrote out detailed notes for two of them, I thought I would post them for people who weren’t able to attend. First, my comments from the We Robot conference two weeks ago at Stanford:

Ryan Abbott’s Everything is Obvious is part of an interesting series of articles Ryan has been working on related to how developments in AI and computing affect legal areas such as patent law. In an earlier article, I Think, Therefore I Invent, he provocatively argued that creative computers should be considered inventors for patent and copyright purposes. Here, he focuses on how these creative computers should affect one of the most important legal standards in patent law: the requirement that an invention not be obvious to a person having ordinary skill in the art.

Ryan’s definition of “creative computers” is purposefully broad. The existing creative computers he discusses are all narrow or specific AI systems that are programmed to solve particular problems, like systems from the 1980s that were programmed to design new microchips based on certain rules and IBM’s Watson, which is currently identifying novel drug targets for pharmaceutical research. And Ryan thinks patent law already needs to change in response to these developments. But I think his primary concern is the coming of artificial general intelligence that surpasses human inventors.

Do Machines, and Women, Need a Different Obviousness Standard?

This blog post addresses two different articles that might at first blush seem to be very different. The first is Ryan Abbott's new article Everything Is Obvious, which explores the implications of machine-generated IP for the nonobviousness standard of patentability. Abbott argues the inventiveness standard should be adjusted to take into account the new reality that inventors are frequently assisted by machines or, in some cases, are machines. The second article is Dan Burk's Diversity Levers, published in 2015 in the Duke Journal of Gender Law & Policy. In the article, Burk argues the standard for nonobviousness should be adjusted to take into account the unique mindset and institutional situation of female inventors. (To be clear, Burk is not coming at this issue out of the blue. He has previously written about feminism in collision with copyright, arguing that copyright can be used to suppress feminist discourse).

Abbott's thesis is that, in comparison to machines, humans are all a little less skilled, so a human-based obviousness standard will necessarily lead to too many patents if machines are commonly employed. Burk's point is that, in comparison to men, women are typically more risk-adverse, so a male-based obviousness standard will necessarily lead to too few female-invented patents.

Apple v. Samsung, Part ?? (not the Supreme Court case)

I've lost count of the rounds back and forth in Apple v. Samsung. But another opinion issued today, and it was a doozy. When we last left our intrepid litigants in late March, the panel had reversed the $120m verdict in favor of Apple, ruling a) non-infringement of a patent, and b) obviousness of two patents (slide to unlock and autocorrect). These rulings were as a matter of law - that is, they reversed jury findings to the contrary.

Apple filed for an en banc hearing, and we never heard anything again...until today. The en banc Federal Circuit (except Judge Taranto, who did not participate) vacated the panel opinion. The decision came without briefing, and it was unanimous...except for the three members of the original panel, who all dissented.

The opinion begins with a statement (rebuke?) about what appellate review should do: take the facts as found by the factfinder, and then review them for substantial evidence. The opinion takes umbrage at the fact that substantial evidence is not really addressed by the original panel at all. The opinion also takes issue with "extra record" material being considered for claim construction on appeal. The opinion then goes through each patent and shows the substantial evidence that would support a verdict, even if the appeals court would disagree with it.

Perhaps most telling of the deferential approach is the slide to unlock patent, which I think is the weakest of the bunch. The prior art, when combined, clearly has all the elements. But in finding non-obviousness, the jury found that the person with skill in the art would not have combined the references. That might be wrong, but evidence was submitted to support it, and thus the claim is non-obvious. The dissent takes issue with this, saying that KSR loosened up the combination standard. More on this later.

This opinion has a lot of important aspects:
1. It is another en banc opinion without briefing. I am sure the litigants (especially the losing ones) hate that. As an observer, I'm not so bothered in this case. The briefing was full and complete, and there was little to add in the way of analysis.

2. Why is the en banc circuit showing up only now to defend substantial evidence? I can think of at least two prominent cases in which juries made non-obvious findings of fact that a Federal Circuit panel disregarded to find a patent obvious and the en banc request was denied. Why now?

3. Just what is the obviousness standard of review and who is supposed to make these decisions? In general, the final obviousness determination is one of law, based on underlying findings of fact. Many judges have juries decide those underlying findings of fact, such as the scope of the prior art or the motivations to combine references. Some jury instructions ask in detail, and some just say "is it obvious?" If it is the latter case, then any jury finding is entitled to all inferences on appeal - if the jury said non-obvious, then it must have found no motivation to combine. The problem with this approach (and even the specific question approach) is that it makes it hard to "loosen" a standard as KSR v. Teleflex says we should. KSR affirmed a grant of summary judgment by the district court - in other words, it affirmed a finding that references could be combined as a matter of law. It is unclear why an appellate court could not have made the same determination here. At the same time, why have trials and findings of fact if we are simply going to ignore them? Deciding how obviousness should get decided is almost as important as the obviousness standard itself.

4. This opinion shows the importance of which panel you draw at the Federal Circuit. Apple had the bad fortune to draw the only three judges to disagree here. Of course, we don't know how the en banc dynamics work, and perhaps some in the majority here would have concurred in the original panel opinion. To generalize, though, judicial preferences may drive the disparity in opinions in Section 101 right now. A couple cases that have just issued are ripe targets for en banc review as well to aid this.

This is my final takeaway - if any part of this case is to make it to the Supreme Court, it will be the slide to unlock patent. This is a patent where all the elements are in the prior art, and there is a real dispute about the procedure for determining obviousness. This question has been presented to the Court before, but perhaps this version will take hold.

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."

Jacob Sherkow: Negativing Invention

Does nonobviousness favor "flash of genius" inventions over laborious ones, despite Congress's explicit declaration that "[p]atentability shall not be negatived by the manner in which the invention was made"? Jacob Sherkow argues that it does in his forthcoming article, Negativing Invention. Sherkow is currently an E.D.N.Y. clerk, and before law school he received an M.A. in Biotechnology, a background that shines in his discussions of the inventive process in different disciplines.

Abramowicz & Duffy: Inducement Standard

While reading patent article submissions for the Yale Law Journal, I was delighted to come across The Inducement Standard of Patentability by Professors Michael Abramowicz and John Duffy (both at GW Law). This article will be published in YLJ this spring (making two patent articles in one volume!), and a draft is available on SSRN.

Abramowicz and Duffy make two novel contributions to the old economic idea that patents should only be granted for inventions that would not be created and disclosed absent the inducement of a patent. First, they argue that this "inducement standard," which was mentioned by the Supreme Court in Graham, can and should be read into an economic (rather than cognitive) definition of nonobviousness. Although they are probably stretching the Graham quote beyond its original intent, the authors explain that "'obvious' can mean not merely 'easily understood' but also 'easily discovered.'" Because this reading is both plausible and normatively desirable (for minimizing deadweight losses), the article argues that the Supreme Court should update § 103 (which was enacted to codify the common law of nonobviousness), just as it read economic analysis into the Sherman Act.

Providing a legal justification for the inducement standard is already a significant achievement, but Abramowicz and Duffy make a second contribution by refining the inducement standard to consider the dynamism of innovation and the prospect theory of patents (Part II) and by exploring how the standard could be administered (Part III). Their economic analysis is more sophisticated than previous treatments of the topic, and I hope it will rejuvenate the lines of scholarship about this theory. My biggest question about the article is whether the inducement standard really is administrable. It seems no less administrable than the current nonobviousness standard, but I fear that this concern will deter any courts from experimenting with this theory. Still, the article is one of the most interesting contributions to the patent literature that I have read in the past year; I highly recommend it.