Friday, October 19, 2007

USPTO: punishing the many for the bad acts of the few?

A comment by Jordan at patenthawk encapsulated many of the problems, not only with the new USPTO rules but also with patent reform in general: there are proper ways to fix problems, and then there is the PTO way, which consistently punishes the masses based on the actions of a few.

In the context of reform, there are some underlying fundamental disagreements over basic terms. Some of this came up in a comment on an IPBiz post, wherein the commenter submitted quotes from the Supreme Court that a patent confers a monopoly:

"A patent confers a monopoly. So this court has decided in the Paper Bag Case, supra, and in many other cases." Crown Die & Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 37 (1923); see Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 63(1998)("the patent system represents a carefully crafted bargain that encourages both the creation and the public disclosure of new and useful advances in technology, in return for an exclusive monopoly for a limited period of time").

If one looks at the patent statute, one notes that a patent confers the right to exclude others from making, selling, etc. It does not say anything about conferring a right to make, sell, etc. IPBiz cited the radio patent wars, a classic case of blocking patents, wherein different entities had valid patents that kept everyone from making the best radio product because each possible product infringed someone else's patent. As Hylton (and others) writing on antitrust law have said: "The economic definition of monopoly is simple: sole producer." To have a monopoly, one has to be able to produce. None of the radio guys, all with patents, could produce. Any patentee, armed with a patent, has the right to exclude, but not the right (or even the ability) to produce. Ask Chester Carlson in his pre-Haloid days if he had a monopoly on xerography. By the time Xerox did have an (economic) monopoly, the initial patents were long expired, and the world was free to use them royalty-free.

Imprecise language by the US Supreme Court does not alter the reality of what a patent is. The concept of monopoly is directed to producing, not excluding others: Exclusive control by one group of the means of producing or selling a commodity or service.

Of relying on the texts of courts, Krattenmaker et al have written in the antitrust area:

Examination of key antitrust law opinions, however, shows that courts define 'market power' and 'monopoly power' in ways that are both vague and inconsistent. We conclude that the present level of confusion is unnecessary ...


The commenter's comment on "promote innovation" was less on point:

"Federal patent law reflects the objectives of Congress, which include 'seek[ing] to foster and reward invention,' 'promot[ing] disclosure of inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires,' promoting 'the stringent requirements for patent protection ... to assure that ideas in the public domain remain there for the free use of the public'", Ultra-Precision Mfg., Ltd. v. Ford Motor Co., 411 F.3d 1369, 1378 (Fed. Cir. 2005), quoting Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979).

See IPBiz post:

http://ipbiz.blogspot.com/2007/10/invention-vs-innovation.html

2 Comments:

Blogger David Woycechowsky said...

A patent can effectively confer a monopoly.

IMHO, both antitrust law and economists make too much of a fetish out of monopoly. It should come down to how competitive the supply and demand sides of a given market are behaving.

A monopolist can behave competitively if it really believes that it will lose its monopoly if it does not. On the other hand, and probably more importantly, an oligopoly, even a relatively diffuse one, can fail to behave in competitive ways.

Generally speaking though, bigness does equal badness. Not a perfect approximation, but a better one than it is given credit for being.

8:24 AM  
Blogger Bill Heinze said...

The punishment is also being directed at practitioners. See "TGIF for the New Ethics of Procedural Compliance at the USPTO" at http://ip-updates.blogspot.com/2007/10/new-ethics-of-rule-compliance-at-uspto.html

6:54 AM  

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