Tuesday, March 21, 2006

Jaffe/Lerner in the Wall Street Journal

In response to a post by Lynne Kiesling at knowledgeproblem about an article by Jaffe and Lerner in the Wall Street Journal, I submitted the following post at knowledgeproblem:

The following letter had been sent to the Wall Street Journal on March 2, 2006, but not published:

The editorial "Patently Absurd" (A14, March 1, 2006) depicts an out-of-control Patent Office approving almost 90% of submitted applications and a powerless court system constrained by a "clear and convincing evidence" standard. In reality, patent grant rates have been steadily declining since 1999, when the rate was 70.8%; the rate was 62.5% in 2004. Efforts to fashion adjusted patent grant rates, initiated by Quillen and Webster and later relied upon by Jaffe and Lerner, have been shown to be flawed on both numerical and legal bases. If there were indeed a tide of questionable patents, the court system would readily invalidate them over prior work, under any evidentiary standard. Studies by Lunney have shown that invalidation of patent claims by the court system has declined over the last twenty years. In situations wherein there is published prior work, either dead-on to the later work or rendering the later work obvious, the procedure of re-examination is available to invalidate claims on a preponderance of evidence standard. The patents asserted against RIM, Microsoft, and eBay have been placed in the re-examination process. The patent system is about disclosure of inventions that meet the requirements of patent law, which disclosure increases the public knowledge base. It is up to businessmen to innovate, with attention to the disclosed knowledge. People who disregard public disclosures may suffer, but ignoring the work of others should be made perilous so that society can operate efficiently. (end of letter)

Of the Metabolite case, on the matter of "patenting" a law of nature, one notes some background information. First, the patent in question was allowed through the Bayh-Dole Act, and is the work of three university professors, two at Colorado (still alive and represented by a different university professor, from the Stanford Law School, who otherwise advocates patent reform) and one at Columbia (now deceased). It does indeed rely on a correlation, first identified by the professors and not accepted by the scientific community initially, rather than a law of nature. There was no evidence at trial that anyone else had discovered the correlation previously, and the current issue is on the indefiniteness of the claim. Second, the present two corporate litigants were previously in a posture of licensee and sublicensee, so this litigation has the appearance of a business deal gone bad.

One can debate whether this sort of patent claim is of the type that fosters innovation. However, it is becoming increasingly clear that the business community does not want to hear about its role in the problems: the failure to conduct negotiations that, if implemented, would decrease the involvement of the court system in the market and the failure to treat the patent system seriously (the RIM case being a notable example of something that could have turned out differently, but for some bad decisions on the front end).

Although one can certainly point to many sound byte examples of bad patents (which largely have been eliminated through re-exam), it is a sad day when the Wall Street Journal and the eBay brief rely on false figures of patent approval rates to advance their arguments.

Lawrence B. Ebert
March 21, 2006

Some text of Jaffe and Lerner:

The problems of the U.S. patent system are under discussion today with an urgency not seen in decades. The Supreme Court will soon hear oral arguments in eBay v. MercExchange LLC, which promises to be its most far-reaching examination of patent law in many years. Today the court will also consider LabCorp v. Metabolite Laboratories -- the contested matter is whether a patent can be issued for the correlation between a disease and a naturally occurring substance in the human body. That is: Can you actually patent the laws of nature? And shockingly, Research in Motion has been forced to pay $612 million to prevent all of our BlackBerry handhelds from going dark, even though the U.S. Patent and Trademark Office (USPTO) has indicated that it is likely to find all of the patents behind this ransom demand invalid. Congressional subcommittees, with good reason, have recently held hearings asking fundamental questions about developments like these in the patent system.

The importance of this long-overdue focus on patents cannot be overemphasized. The past decade has seen periodic uproars over particular patents, such as Amazon's "one click" patent for online shopping. The troubling patents have been well publicized, but the wrong lessons have typically been drawn. Commentators have tended to focus on the incompetence of the USPTO in allowing "bad patents." Others have concluded that the patent system is not working with respect to a particular area of technology. Concerns about software awards led, for instance, Jeff Bezos of Amazon to propose a new patent type for software; others have suggested that biotechnology be excluded in various ways from the patent regime.

Congress set us on this road in 1982 when it created a centralized appellate court for patent cases, the Court of Appeals for the Federal Circuit. Its decisions -- which advocates argued would simply ensure judicial consistency -- are largely responsible for the significant strengthening of the legal potency of patents. Then, a decade later, Congress turned the USPTO into a "profit center." The office has been pushed to return "excess" revenue to the U.S. Treasury. This shift led to pressures to grant more patents, difficulties in attracting and retaining skilled examiners, and a torrent of low-quality patent grants. These include such absurdities as patents on wristwatches (paw-watches?) for dogs, a method of swinging on a swing ("invented" by a five-year-old), and peanut butter and jelly sandwiches. But they also include the patents on broad ideas related to mobile email -- virtually devoid of any details of implementation -- that have imposed a $612 million tax on the maker and users of BlackBerries.

***posted elsewhere-->

Of Crichton's article, see http://ipbiz.blogspot.com/2006/03/michael-crichton-assails-metabolite.html.

Whether a patent claim for a method involving two steps, one of assaying (testing) and one of correlating (the elevated level of the tested compound to infer a deficiency of a different compound) can be questioned in a health context. It seems evident that the professors were the first to discover the correlation, and apparently the correlation was not readily accepted by their peers at the time. The correlation itself is not patented, but a method of using the correlation is patented, somewhat like a patent previously sustained by the Supreme Court which used the Arrhenius equation. The three professors did the work under federal grant, so this is an example of a Bayh-Dole patent. Separately, one notes that the controversial Eolas patent also has a strong academic flavor.


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