{"id":3174,"date":"2012-08-11T18:37:06","date_gmt":"2012-08-11T17:37:06","guid":{"rendered":"http:\/\/emilkirkegaard.dk\/en\/?p=3174"},"modified":"2012-08-11T18:38:37","modified_gmt":"2012-08-11T17:38:37","slug":"3174","status":"publish","type":"post","link":"https:\/\/emilkirkegaard.dk\/en\/2012\/08\/3174\/","title":{"rendered":"Review of Patent Failure (James Bessen & Michael J. Meurer)"},"content":{"rendered":"

Certainly every person with an interest in patents shud read this book. It is rather clearly written, it is not overly long (260 pages), has a good use of illustrations. The authors take an admireable clear-headed, disinterested, empirical look at the patent system. I definitely recommend this book.<\/p>\n

James Bessen and Michael J. Meurer – Patent Failure How Judges, Bureaucrats, and Lawyers Put Innovators at Risk<\/a><\/p>\n

Below are some quotes and comments to the book.<\/p>\n

Chapter 2<\/h3>\n

Claims to veins of minerals create the third, hybrid case, where surface<\/span><\/p>\n

claims can not entirely avoid costly disputes and the tragedy of the com-<\/span><\/p>\n

mons might occur, even when miners hold fairly broad rights. A remark-<\/span><\/p>\n

able example is the so-called War of the Copper Kings in Butte, Montana<\/span><\/p>\n

(Glasscock 1935). The mountain standing outside of Butte was once<\/span><\/p>\n

known as the Richest Hill on Earth. It was mined for gold, silver, and,<\/span><\/p>\n

most notably, copper. The early miners at Butte exhausted the relatively<\/span><\/p>\n

small supplies of gold and silver in the 1860s and 1870s. At that point<\/span><\/p>\n

four large mining interests began to buy old claims in a search for copper<\/span><\/p>\n

ore. By the mid-1880s it was becoming clear that the mountain was laced<\/span><\/p>\n

with a rich tangle of copper veins that penetrated deep into the mountain.<\/span><\/p>\n

It was very dif\ufb01cult to trace the copper veins to the surface of the moun-<\/span><\/p>\n

tain. As a result, it did not become clear until about twenty years later who<\/span><\/p>\n

owned what copper.<\/span><\/p>\n

Glasscock explains the source of uncertainty:<\/span><\/p>\n

The federal mining laws . . . protect[ed] the prospector who \ufb01rst lo-<\/em><\/span><\/p>\n

cated an outcropping mineral vein. Such surface indication of valuable<\/em><\/span><\/p>\n

ore was known as the apex of the vein. The owner was guaranteed the<\/em><\/span><\/p>\n

right to follow that vein downward, even when it led under the hold-<\/em><\/span><\/p>\n

ings of claims located behind it. That would have been \ufb01ne if veins<\/em><\/span><\/p>\n

were always continuous from the surface down, but too frequently<\/em><\/span><\/p>\n

they are not. They are broken or faulted, cut off here and elsewhere by<\/em><\/span><\/p>\n

worthless rock. If a vein leading down from the surface is lost near the<\/em><\/span><\/p>\n

vertical side wall of a claim, and a similar vein of identical ore is found<\/em><\/span><\/p>\n

below it or to one side in the adjoining claim, who is to decide<\/em><\/span><\/p>\n

whether the second discovery is a geological continuation of the \ufb01rst?<\/em><\/span><\/p>\n

Who but the courts, basing decision on the expert testimony of geol-<\/em><\/span><\/p>\n

ogists and engineers?<\/em><\/span><\/p>\n

The interlaced veins meant that different mining companies often dug<\/span><\/p>\n

tunnels beneath or beside the tunnels of their rivals. Occasionally, miners<\/span><\/p>\n

would break through into a neighboring tunnel. Sales (1964) reports that<\/span><\/p>\n

gun \ufb01ghts and chemical warfare occurred in the mines. Sales and Glasscock<\/span><\/p>\n

both suggest malicious blasting by one mining company injured miners in<\/span><\/p>\n

other mines. Glasscock reports that one company would develop its claims<\/span><\/p>\n

so that the water in its mines would drain into rivals\u2019 mines. And both writ-<\/span><\/p>\n

ers relate that the mining companies would use inef\ufb01cient extraction meth-<\/span><\/p>\n

ods in their race to mine a contested vein before their rival was able to.<\/span><\/p>\n

Legal control over these socially harmful tactics was dif\ufb01cult to achieve be-<\/span><\/p>\n

cause ownership was unclear and litigation was protracted and costly.17<\/span><\/p>\n

–<\/p>\n

Chapter 3<\/h3>\n

In some cases, when tangible property is taken from nature, the scope<\/span><\/p>\n

of the property rights is not so clear. In these cases, simple physical char-<\/span><\/p>\n

acteristics are not so useful for establishing legal boundaries because the<\/span><\/p>\n

relevant characteristics change over time or are not fully known initially<\/span><\/p>\n

(that is, they are revealed over time). The mining disputes discussed in the<\/span><\/p>\n

previous chapter make this point. Another example comes from water law.<\/span><\/p>\n

In certain jurisdictions, the right to use water from a stream running<\/span><\/p>\n

through a property depends on the consumption of others elsewhere on<\/span><\/p>\n

the streamcourse. Hence, a newcomer will need to investigate her neigh-<\/span><\/p>\n

bors\u2019 water use to determine whether and to what extent property rights<\/span><\/p>\n

already exist for the stream flow.<\/span><\/p>\n

In the case of migratory wild animals, property law follows the \u201crule of<\/span><\/p>\n

capture\u201d: you can own what you capture, but not the stock from which it<\/span><\/p>\n

came. Thus, when someone shoots a wild duck, she does not gain rights to<\/span><\/p>\n

the flock. It is easy to see how the rule of capture promotes clear notice.<\/span><\/p>\n

Suppose the first hunter to shoot a duck in a flock actually gained owner-<\/span><\/p>\n

ship over the flock. It would be virtually impossible for hunters in the next<\/span><\/p>\n

county to recognize the flock was owned. Furthermore, the counterfactual<\/span><\/p>\n

property rule would invite endless disputes about who was the true owner<\/span><\/p>\n

of the flock, and which ducks belong to which flock.31<\/span><\/p>\n

Similarly, the possession rule in patent law is designed to mitigate notice<\/span><\/p>\n

problems. Paragraph 1, Section 112 of the patent statute, United States<\/span><\/p>\n

Code Title 35, requires that the patent describe how to make and use the<\/span><\/p>\n

invention in sufficient detail so that others can do so. This \u201cenablement\u201d re-<\/span><\/p>\n

quirement makes the patentee demonstrate the practical knowledge needed<\/span><\/p>\n

to usefully own the claimed invention.32<\/span><\/p>\n

This possession requirement allows courts to invalidate patent claims<\/span><\/p>\n

that are \u201ctoo broad\u201d insofar as the inventor did not really possess all the<\/span><\/p>\n

claimed technology. A famous example concerns patents on the light bulb.<\/span><\/p>\n

Thomas Edison was not the first inventor of the incandescent light bulb.<\/span><\/p>\n

He had many competitors, and his light bulb built on many earlier contri-<\/span><\/p>\n

butions.33 William Sawyer and Albon Man together obtained a light bulb<\/span><\/p>\n

patent before Edison achieved his famous invention and they sued Edison.<\/span><\/p>\n

Their patent claimed a light bulb with a \u201cconductor of carbon, made of fi-<\/span><\/p>\n

brous or textile material.\u201d Edison made a light bulb with a bamboo filament<\/span><\/p>\n

that fell within the language of the broad Sawyer and Man claim. The court<\/span><\/p>\n

ruled in favor of Edison because Sawyer and Man had actually only made a<\/span><\/p>\n

light bulb using carbonized paper as a filament. They did not make light<\/span><\/p>\n

bulbs with other filaments drawn from the wide range of fibrous and textile<\/span><\/p>\n

carbon-based filaments\u2014in fact, most of those filaments would not work.<\/span><\/p>\n

Edison labored mightily to find a bamboo filament, which worked very<\/span><\/p>\n

well\u2014he tried over six thousand different substances before settling on<\/span><\/p>\n

bamboo. But the Sawyer and Man patent did not describe this important<\/span><\/p>\n

detail. They possessed the specific invention of a light bulb using car-<\/span><\/p>\n

bonized paper, but they did not possess the claimed knowledge to make<\/span><\/p>\n

and use all \u201cfibrous or textile\u201d forms of carbon, including the bamboo later<\/span><\/p>\n

discovered by Edison. Therefore, the court invalidated Sawyer and Man\u2019s<\/span><\/p>\n

claim because it claimed more than they actually possessed\u2014they claimed<\/span><\/p>\n

technology that had not yet been invented.34<\/span><\/p>\n

Ideally, enablement restricts patent scope so that inventors\u2019 property<\/span><\/p>\n

rights do not stray far from the invention they actually possess. In the past,<\/span><\/p>\n

inventors had to demonstrate a working prototype or scale model of the<\/span><\/p>\n

invention in order to demonstrate possession. Inventors no longer need to<\/span><\/p>\n

provide a working prototype in order to obtain a patent; the general pos-<\/span><\/p>\n

session requirement, however, remains central to patent law.<\/span><\/p>\n

Thus, we are troubled by the many recent examples of patent claims<\/span><\/p>\n

that have been read broadly to cover infringing technologies that are dis-<\/span><\/p>\n

tant from the invention actually possessed by the patent owner. Many of<\/span><\/p>\n

these infringers have arrived at significant inventions independent of any<\/span><\/p>\n

information contained in the patent at issue. Consider, for example, the<\/span><\/p>\n

following two cases.<\/span><\/p>\n

–<\/p>\n

Chapter 4<\/h3>\n

Perhaps one of the clearest lessons of the Cold War was that private-property<\/span><\/p>\n

and market economies can be powerful engines of economic growth and<\/span><\/p>\n

innovation. While centralized economies have mustered impressive eco-<\/span><\/p>\n

nomic efforts, especially during times of war, they have generally failed to<\/span><\/p>\n

provide a high and rapidly growing standard of living. Moreover, what they<\/span><\/p>\n

have achieved has sometimes come at a horrible human cost.<\/span><\/p>\n

The experience of the Cold War seems to lend force to arguments that<\/span><\/p>\n

intellectual property, too, promotes economic growth and innovation.<\/span><\/p>\n

Indeed, it is now often argued that the institutions responsible for the suc-<\/span><\/p>\n

cess of Western economies are \u201cthe rule of law and private property rights,<\/span><\/p>\n

including intellectual property.\u201d1 Similarly the Intellectual Property Own-<\/span><\/p>\n

ers Association suggests that property-based incentives explain U.S. tech-<\/span><\/p>\n

nological leadership: \u201cThe possibility of patent rights gives incentives to<\/span><\/p>\n

inventors and their employers to create new technology and to invest in<\/span><\/p>\n

commercializing technology. Policy makers have generally agreed that the<\/span><\/p>\n

American tradition of strong patent laws has contributed to making this<\/span><\/p>\n

country the world\u2019s technological leader, a position it has held for more<\/span><\/p>\n

than a century.\u201d2 This is a seductive argument. There is solid empirical ev-<\/span><\/p>\n

idence that secure property rights are conducive to economic growth. So it<\/span><\/p>\n

might seem to follow that \u201cstrong\u201d patent laws should also promote inno-<\/span><\/p>\n

vation and economic growth. But what is the actual empirical evidence<\/span><\/p>\n

that patents and other forms of intellectual property are responsible for<\/span><\/p>\n

the technological leadership of the United States in particular and the<\/span><\/p>\n

West generally?<\/span><\/p>\n

Casual observation suggests that the United States and other Western<\/span><\/p>\n

nations share both technologically advanced economies and well-developed<\/span><\/p>\n

patent systems. But this is a correlation, not evidence of causation. That is,<\/span><\/p>\n

well-developed patent systems might cause economic growth in these na-<\/span><\/p>\n

tions. Or it might be, instead, that successful technology companies or<\/span><\/p>\n

other groups, such as the patent bar, have lobbied for patent protection. In<\/span><\/p>\n

this latter case, economic success promotes the expansion of the patent<\/span><\/p>\n

system, not the other way around. Indeed, the patent systems in advanced<\/span><\/p>\n

nations today consist of highly sophisticated institutions supported by sub-<\/span><\/p>\n

stantial funding. These institutions were not simply legislated, but rather<\/span><\/p>\n

developed, along with a wide variety of other legal and social institutions.<\/span><\/p>\n

Their evolution required both extensive experience and a large allocation<\/span><\/p>\n

of resources and they would seem as out of place in nineteenth-century<\/span><\/p>\n

America as they would in many of today\u2019s less-developed nations. Thus the<\/span><\/p>\n

correlation between the sophistication of a nation\u2019s technology and the<\/span><\/p>\n

sophistication of its patent system does not provide evidence of a causal<\/span><\/p>\n

link in and of itself; a more advanced analysis is required.<\/span><\/p>\n

It might well be true, as the Intellectual Property Owners maintain, that<\/span><\/p>\n

most policymakers see a link between \u201cstrong\u201d patent laws and U.S. tech-<\/span><\/p>\n

nology leadership.3 But as James Boyle acerbically notes, policymakers have<\/span><\/p>\n

too often ignored empirical evidence, basing policy, instead, on \u201cfaith-<\/span><\/p>\n

based\u201d reasoning about property rights with regard to such matters as soft-<\/span><\/p>\n

ware patents, broadcast rights, copyright term, and database rights.4<\/span><\/p>\n

–<\/p>\n

Of course, the economic effectiveness of all forms of property depends<\/span><\/p>\n

on details of the supporting institutions\u2014this is evident from the disparate<\/span><\/p>\n

growth-paths of Soviet Bloc economies. But the economic effectiveness of<\/span><\/p>\n

patents might be much more sensitive to the details of the relevant institu-<\/span><\/p>\n

tions than are general property rights. Perhaps this is because patent law<\/span><\/p>\n

might be much more specialized, complex, and sophisticated than, say, real<\/span><\/p>\n

property law, and thus effective institutions might be more difficult to<\/span><\/p>\n

develop and maintain.<\/span><\/p>\n

In any case, the empirical economic evidence strongly rejects simplistic<\/span><\/p>\n

arguments that patents universally spur innovation and economic growth.<\/span><\/p>\n

\u201cProperty\u201d is not a ritual incantation that blesses the anointed with the<\/span><\/p>\n

fruits of innovation; legislation of \u201cstronger\u201d patent rights does not auto-<\/span><\/p>\n

matically mean greater innovation. Instead, the effectiveness of patents as<\/span><\/p>\n

a form of property depends critically on the institutions that implement<\/span><\/p>\n

patent law. And there appear to be important differences in the effective-<\/span><\/p>\n

ness of the implementation across different technologies and industries.<\/span><\/p>\n

On the other hand, we can also reject the view that patents uniformly<\/span><\/p>\n

stifle innovation. In the pharmaceutical industry and in the nineteenth-<\/span><\/p>\n

century United States, we see definite evidence that patents do and did<\/span><\/p>\n

sometimes provide positive private incentives for innovation.<\/span><\/p>\n

Of course, we have asked and answered an intentionally narrow ques-<\/span><\/p>\n

tion here. We have not asked whether the patent system is the best way<\/span><\/p>\n

to encourage innovation. Nor have we even asked whether the total net<\/span><\/p>\n

effect of the patent system is positive. Some argue, for instance, that<\/span><\/p>\n

mechanisms such as rewards or purchase contracts would be more so-<\/span><\/p>\n

cially efficient ways of encouraging pharmaceutical research. Others,<\/span><\/p>\n

such as Boldrin and Levine (2005), argue that even though patents pro-<\/span><\/p>\n

vide some individuals with rewards, they are not necessary to encourage<\/span><\/p>\n

innovation and that they are socially wasteful because they make subse-<\/span><\/p>\n

quent innovations more difficult. These are interesting and important<\/span><\/p>\n

questions, but we doubt that they can be answered very well at this time<\/span><\/p>\n

based strictly on the empirical evidence. That is, the evidence is incon-<\/span><\/p>\n

clusive with regard to these questions.<\/span><\/p>\n

Our approach in the following chapters is to focus on the narrower<\/span><\/p>\n

questions of whether and where today patents do function effectively as a<\/span><\/p>\n

property system, what factors affect this performance, and what institu-<\/span><\/p>\n

tional changes might improve the effectiveness of the patent system. We<\/span><\/p>\n

limit our inquiry to the extent that we seek to obtain definitive answers. We<\/span><\/p>\n

do, however, think that the effectiveness of patents as a property system is<\/span><\/p>\n

central in any case to some of the other considerations noted above. If the<\/span><\/p>\n

patent system can be made more effective, then this necessarily affects any<\/span><\/p>\n

comparison to alternative policies. It also affects any assessment regarding<\/span><\/p>\n

the balance between private incentives for initial innovation and those for<\/span><\/p>\n

follow-on innovations. If patents can be made to work like property, then<\/span><\/p>\n

this constitutes a powerful argument in favor of the patent system.<\/span><\/p>\n

–<\/p>\n

Chapter 5<\/h3>\n

Moreover, even after controlling for a wide range of variables, the more a<\/span><\/p>\n

\ufb01rm spends on R&D, all else being equal, the more likely it is to be sued for<\/span><\/p>\n

infringement. This is inconsistent with the notion that infringers cheat to<\/span><\/p>\n

avoid R&D. We would expect cheaters to spend less on R&D, all things<\/span><\/p>\n

again being equal. And to the extent that R&D expenditures can be used to<\/span><\/p>\n

hide infringing technology, we would also expect greater R&D spending <\/span><\/p>\n

to be associated with a lower risk of detection. Instead, this pattern is en-<\/span><\/p>\n

tirely consistent with the inadvertent-infringement explanation\u2014the more<\/span><\/p>\n

a \ufb01rm invests in technology, the more it inadvertently exposes itself to<\/span><\/p>\n

patents of which it is not aware.3<\/span><\/p>\n

The idea that patent infringers are large R&D spenders also seems to be<\/span><\/p>\n

at odds with the picture of pirates we hold from other areas of law. Copy-<\/span><\/p>\n

right and trademark pirates are often small-time operators such as street<\/span><\/p>\n

vendors. They hope to \u201c\ufb02y under the radar\u201d of the property owners\u2019 mon-<\/span><\/p>\n

itoring efforts. Large retailers, on the other hand, take great pains to make<\/span><\/p>\n

sure that they are not selling counterfeit goods because any infractions<\/span><\/p>\n

would likely come to the notice of the property owners and their cus-<\/span><\/p>\n

tomers. We would expect large technology companies to take great pains<\/span><\/p>\n

to avoid infringement (as Kodak did) precisely because they are so visible.<\/span><\/p>\n

This raises yet another point: if RIM consciously stole NTP\u2019s property,<\/span><\/p>\n

then one would expect RIM to at least make some effort to hide its crime.<\/span><\/p>\n

Instead, RIM publicized its allegedly infringing technology. RIM came to<\/span><\/p>\n

NTP\u2019s attention because of a press release that RIM put out\u2014the func-<\/span><\/p>\n

tional description of RIM\u2019s product in the press release was suf\ufb01cient for<\/span><\/p>\n

NTP to determine that an infringement lawsuit could be \ufb01led.<\/span><\/p>\n

It would appear that actual evidence of hiding seems rather limited. Al-<\/span><\/p>\n

leged infringers often act like RIM. For example, in lawsuits involving soft-<\/span><\/p>\n

ware, the alleged infringer typically has a publicly available product or service.<\/span><\/p>\n

Quite frequently patent holders claim that certain publicly observable prod-<\/span><\/p>\n

uct features are infringing. Moreover, the powerful reverse-engineering tools<\/span><\/p>\n

available for software mean that publicly available products can easily be<\/span><\/p>\n

checked for infringement. If most alleged infringers were cheaters, then we<\/span><\/p>\n

would expect relatively few lawsuits over publicly observable products\u2014<\/span><\/p>\n

cheaters would avoid technologies where they could not hide their theft. But,<\/span><\/p>\n

in fact, most patent lawsuits involving software appear to involve publicly <\/span><\/p>\n

observable features and litigation rates on software patents are relatively high<\/span><\/p>\n

(Allison et al. [2004]; see also chapter 9 in the present volume). And in gen-<\/span><\/p>\n

eral, \ufb01rms report that they can detect infringement in most products, but not<\/span><\/p>\n

in most processes.4 This does not seem to inhibit patent lawsuits over prod-<\/span><\/p>\n

ucts relative to processes.<\/span><\/p>\n

–<\/p>\n

Even simple delay can impose large business costs. Consider, for example,<\/span><\/p>\n

litigation against Cyrix, a start-up \ufb01rm that introduced Intel-compatible<\/span><\/p>\n

microprocessors. Intel, the dominant maker of microprocessors, sued Cyrix<\/span><\/p>\n

and the litigation lasted four years (there were multiple suits). During much<\/span><\/p>\n

of that time Cyrix had dif\ufb01culty selling microprocessors to computer manu-<\/span><\/p>\n

facturers because most of them were also customers of Intel and they were<\/span><\/p>\n

reluctant to buy a product that might infringe. Cyrix also had dif\ufb01culty \ufb01nd-<\/span><\/p>\n

ing fabricators willing to manufacture their chips\u2014again, for fear of being<\/span><\/p>\n

sued themselves. In the meantime, Intel responded by accelerating its devel-<\/span><\/p>\n

opment of chips that would compete against Cyrix\u2019s offerings. In the end,<\/span><\/p>\n

Cyrix won the lawsuit, but lost the war, having lost much of its competitive<\/span><\/p>\n

advantage. In effect, Cyrix lost the window of opportunity to establish itself<\/span><\/p>\n

in the marketplace. Litigation exacted a heavy toll, indeed.<\/span><\/p>\n

Never heard of that. Fuck you Intel!<\/p>\n

http:\/\/en.wikipedia.org\/wiki\/Cyrix<\/a><\/p>\n

–<\/p>\n

Chapter 8<\/h3>\n

More notable still is that some of the most successful individual inven-<\/span><\/p>\n

tors succeeded not because of their inventive contribution but because of<\/span><\/p>\n

their patents. Jerome Lemelson, a proli\ufb01c inventor with close to 600<\/span><\/p>\n

patents, is renowned among patent lawyers as the master of \u201csubmarine\u201d<\/span><\/p>\n

patents\u2014patents kept hidden for many years. Lemelson slowed the prose-<\/span><\/p>\n

cution of his patents, sometimes for over twenty years.3 He waited until<\/span><\/p>\n

his technologies were independently invented and commercialized, and<\/span><\/p>\n

then he brought his patent to the surface and negotiated royalties after the<\/span><\/p>\n

potential licensees were locked into the patented technology.4 Although<\/span><\/p>\n

his patents covered breakthrough technologies such as bar-code scanning,<\/span><\/p>\n

he did not contribute these breakthroughs to society.<\/span><\/p>\n

–<\/p>\n

Chapter 9<\/h3>\n

In sum, patents on software are not just like other patents. The evidence<\/span><\/p>\n

shows that software patents are particularly prone to litigation and to dis-<\/span><\/p>\n

putes over patent boundaries, a concern that has been raised about them<\/span><\/p>\n

since the 1960s. We attribute these problems to the abstract nature of soft-<\/span><\/p>\n

ware technology; too many software patents claim all technologies with<\/span><\/p>\n

similar form or all means of achieving a result, when the actual invention<\/span><\/p>\n

is much more limited and often trivial. <\/span><\/p>\n

Patent law has developed a number of doctrines to circumscribe ab-<\/span><\/p>\n

stract patent claims. Unfortunately, the Federal Circuit has set software-<\/span><\/p>\n

speci\ufb01c precedents that essentially remove most restrictions on abstract<\/span><\/p>\n

claims in software. Perhaps the court acted out of a desire to promote<\/span><\/p>\n

patents in this \ufb01eld of technology that has historically not used patents.<\/span><\/p>\n

The result has been both a proliferation of software patents and lawsuits.<\/span><\/p>\n

Software patents are not the only patents to suffer problems of abstract<\/span><\/p>\n

claims. Any technology can be claimed abstractly and, to make matters<\/span><\/p>\n

worse, the Federal Circuit has recently eroded limits on abstract patents<\/span><\/p>\n

for nonsoftware business processes and even basic scienti\ufb01c ideas (for ex-<\/span><\/p>\n

ample, Laboratory Corp. of America v. Metabolite Laboratories). But overall,<\/span><\/p>\n

software patents likely have a far greater in\ufb02uence on the performance of<\/span><\/p>\n

the patent system than do nonsoftware business processes.<\/span><\/p>\n

Software patents are, in fact, responsible for a major share of patent <\/span><\/p>\n

lawsuits. They thus play a central role in the failure of the patent system as<\/span><\/p>\n

a whole. Any serious effort at patent reform must address these problems<\/span><\/p>\n

and the failure to deal with the problems of software patents\u2014either with<\/span><\/p>\n

software-speci\ufb01c measures or general reforms\u2014will likely doom any reform <\/span><\/p>\n

effort. We turn to possible changes in patent policy in the next chapter.<\/span><\/p>\n

–<\/p>\n

Chapter 12<\/h3>\n

Real property rights, as opposed to abstract conceptions of property, have<\/span><\/p>\n

limits, however. The messy, practical details of de\ufb01ning boundaries, provid-<\/span><\/p>\n

ing public notice, facilitating clearance, and so forth, place real constraints<\/span><\/p>\n

on where property can be effective. A reasonable property system recognizes<\/span><\/p>\n

such limits. A landowner gets no rights to untapped oil \ufb02owing beneath her<\/span><\/p>\n

land nor to migratory ducks who put down on it nor to the airplanes that <\/span><\/p>\n

\ufb02y over it. Property rights should be granted only when property owners <\/span><\/p>\n

can manage them ef\ufb01ciently, and only if third parties can effectively cope<\/span><\/p>\n

with them.<\/span><\/p>\n

The same is true with property rights in inventions. Economics re-<\/span><\/p>\n

search con\ufb01rms that the effectiveness of patents varies by type of inven-<\/span><\/p>\n

tion. For example, patents have worked best where boundaries can be<\/span><\/p>\n

staked in veri\ufb01able physical characteristics, like small molecules. With<\/span><\/p>\n

many chemical patents, third parties can test alternative substances and<\/span><\/p>\n

unambiguously determine whether they fall within the patent claims or<\/span><\/p>\n

not. In this case, the boundaries are clear, disputes and litigation are rela-<\/span><\/p>\n

tively infrequent, and the economic bene\ufb01ts of patents are high.2 <\/span><\/p>\n

On theother hand, patents work poorly when they are highly abstract, claiming<\/span><\/p>\n

technologies that are not known to the patentee or not even developed at<\/span><\/p>\n

the time of application. As was seen in chapter 9 with respect to software,<\/span><\/p>\n

it is sometimes dif\ufb01cult, or even impossible, to distinguish which tech-<\/span><\/p>\n

nologies are covered by abstract patent claims; not surprisingly, software<\/span><\/p>\n

patents have high litigation rates and high costs, as do patents on \ufb01nancial<\/span><\/p>\n

and other business inventions.<\/span><\/p>\n

And so we return to our theme of abstraction in another guise. As with<\/span><\/p>\n

limitations on other property, the law has long recognized that there are<\/span><\/p>\n

substantive limits on which inventions can be patented, including limita-<\/span><\/p>\n

tions on abstract patents. Yet implementing this limitation is one of the<\/span><\/p>\n

most intractable problems facing any property rights system for inven-<\/span><\/p>\n

tions. Since the eighteenth century, patent law has attempted to proscribe<\/span><\/p>\n

abstract patents, but the doctrines used and their application have not al-<\/span><\/p>\n

ways been successful or uncontroversial. It bears repeating that we do not<\/span><\/p>\n

claim to know how to craft the best policy regarding abstract patents. Yet<\/span><\/p>\n

the empirical evidence convinces us that allowing patents on \u201ceverything<\/span><\/p>\n

under the sun\u201d while simultaneously encouraging that patenting by relax-<\/span><\/p>\n

ing non-obviousness and enablement standards for key technologies con-<\/span><\/p>\n

stitute a major departure from the policy of the past. And although this<\/span><\/p>\n

departure might sound good in the abstract, its record, like the record <\/span><\/p>\n

regarding claim construction, has been one of failure.<\/span><\/p>\n

The problem with mistaking abstract conceptions of property for the<\/span><\/p>\n

real thing is that this substitutes rhetoric for reasoned policy, where per-<\/span><\/p>\n

formance can be measured, evaluated, and adjusted. The result is policy<\/span><\/p>\n

that loses touch with reality. In the worst case, abstract rhetoric about<\/span><\/p>\n

property rights or about the sanctity of the patent statute simply provides<\/span><\/p>\n

cover for special interests.3 The antidote is empirical evidence, and the ev-<\/span><\/p>\n

idence we have assembled unequivocally shows an all-too-real patent sys-<\/span><\/p>\n

tem far removed from the ideal found in so much of the rhetoric. But the<\/span><\/p>\n

picture we paint is also far removed from what the patent system could be.<\/span><\/p>\n

–<\/p>\n

We think the historical record is clear\u2014the patent system can perform<\/span><\/p>\n

well, and it can perform badly. The legal and institutional details are criti-<\/span><\/p>\n

cal. So is the economic and technological environment. Like other times<\/span><\/p>\n

in American history, we face a challenge today to improve the perform-<\/span><\/p>\n

ance of the patent system. Yet the data in \ufb01gure 12.1 give us pause. The<\/span><\/p>\n

challenge facing the patent system today might be more dif\ufb01cult and the<\/span><\/p>\n

stakes might be higher than they have been in the past. A unitary patent<\/span><\/p>\n

system simply cannot survive if it works well in some industries, but fails<\/span><\/p>\n

critically in others. If patent institutions prove in\ufb02exible, then perhaps we<\/span><\/p>\n

will be left with a patent system for chemicals and pharmaceuticals and lit-<\/span><\/p>\n

tle else. In any case, the future of the patent system will depend on getting<\/span><\/p>\n

beyond rhetoric and abstract thinking to build institutions that improve<\/span><\/p>\n

patent notice, even if this comes with realistic limits on what can be<\/span><\/p>\n

patented and how it can be claimed. Then, perhaps, the patent system can<\/span><\/p>\n

deliver on its promise as a property system for inventions.<\/span><\/p>\n

These are the closing words.<\/p>\n","protected":false},"excerpt":{"rendered":"

Certainly every person with an interest in patents shud read this book. It is rather clearly written, it is not overly long (260 pages), has a good use of illustrations. The authors take an admireable clear-headed, disinterested, empirical look at the patent system. I definitely recommend this book. James Bessen and Michael J. Meurer – […]<\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1898],"tags":[1924],"class_list":["post-3174","post","type-post","status-publish","format-standard","hentry","category-economics","tag-patents","entry"],"_links":{"self":[{"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/posts\/3174","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/comments?post=3174"}],"version-history":[{"count":4,"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/posts\/3174\/revisions"}],"predecessor-version":[{"id":3179,"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/posts\/3174\/revisions\/3179"}],"wp:attachment":[{"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/media?parent=3174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/categories?post=3174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emilkirkegaard.dk\/en\/wp-json\/wp\/v2\/tags?post=3174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}