Will Patenting Make As Much Sense in the New Regime of Weakened Patent Rights and Shorter Product Life Cycles?

David Hricik · 20 Vand. J. Ent. & Tech. 457

Abstract

After its founding in 1982, the US Court of Appeals for the Federal Circuit strengthened patent protection. During that time, businesses—which acquire 90 percent of all patents—increasingly applied for and enforced patents. Clearly, the benefit of having a patent outweighed the cost of doing so.

This Article shows that a central benefit of applying for a patent is that it permits its owner to exclude others from making the patented invention. A patent owner can use the coercive power of a patent to exclude others from making the invention, or to permit others to make the patented invention, but only if they pay money to do so. Two forces have reduced the power of that benefit.

First, patent rights have been weakened through changes in the law. The US Supreme Court has, almost without exception, reversed decisions of the Federal Circuit and adopted an approach that is less favorable to patent owners. Compared to today, in the year 2000, more inventions were eligible for patenting, more inventions were not obvious, more claims were definite, “equivalents” more likely infringed, infringement included more overseas conduct, patent rights were less easily exhausted, patentees could subject defendants to suits in districts more favorable to them, a losing patentee would almost never pay attorneys’ fees, and an injunction was the general rule that benefited a successful patent infringement plaintiff. More recently, Congress created administrative proceedings in the US Patent and Trademark Office that made it easier to challenge existing patents. In litigation, because of the statutory presumption of validity, patent claims are construed narrowly and, when possible, to avoid invalidity, and invalidity must be shown by clear and convincing evidence. In these new proceedings, the presumption does not apply, patent claims are construed more broadly, and only preponderant evidence is required to challenge a claim. Further, if a patent owner sues in court, courts will often stay the litigation in favor of allowing the Patent Office proceeding to finish. This effectively eliminates the presumption of validity. Other changes including heightened pleading requirements and state statutes also reduce the coercive benefit that patents confer.

After examining the available data as to whether these legal changes have already significantly altered the incentive to patent, the Article turns to the second force that reduces the benefit of the coercive power of patents: the fact that a greater number of products have shorter life cycles. Because patents take twenty-four months to issue, and the coercive power of a patent can only be utilized once it issues, the pace of change means that fewer patents will exist in time for their coercive power to be meaningfully applied. Further, that rapid pace of innovation has already created 3D printing, a technology that permits rapid and dispersed copying of new products, which further reduces the coercive benefit of patent rights.

This Article concludes by providing practical advice to patent practitioners as to how to manage the impact of these two forces. These include using established procedures to speed up prosecution, using claim drafting techniques that may help address 3D printing, and considering alternatives such as trade secret protection in lieu of patenting.