Rethinking Patent Law's Presumption of Validity
Lichtman, Doug, Lemley, Mark A., Stanford Law Review
INTRODUCTION: THE "BAD PATENT" PROBLEM I. THE PRESUMPTION TODAY A. Deference to the PTO B. Patent Certainty II. LAYERED PRESUMPTIONS A. Eliminate the Clear and Convincing Evidence Presumption B. Gold-Plated Patents C. Deference to Adversarial Determinations III. OBJECTIONS A. Layered Presumptions Favor Patent Applicants Who Have Adequate Resources over Individual Inventors and Start-Ups B. Reducing the Presumption of Validity Will Encourage Frivolous Validity Challenges and Wasteful Searches for Obscure Prior Art C. Trained Patent Examiners Are Better at Determining Validity than Generalist Judges and Lay Juries D. The PTO Will Have Incentives to Grant Bad Gold-Plated Patents E. Presumptions Don't Matter Anyway IV. EFFECTS ON CURRENT STAKEHOLDERS CONCLUSION
INTRODUCTION: THE "BAD PATENT" PROBLEM
The United States Patent and Trademark Office (PTO) is tasked with the job of reading patent applications and determining which ones qualify for patent protection. It is a herculean task. One problem is resources. The PTO expects more than 450,000 new patent applications to be filed in 2007. (1) To accurately evaluate the merits of all of those purported inventions would cost billions. Add to that the administrative costs of both interacting with all of the relevant lawyers and documenting the entire process, and the required budget would make patent application fees prohibitively expensive. (2)
Information is a second significant impediment to PTO review. Patent applications are evaluated early in the life of a claimed technology, and thus at the time of patent review there is typically no publicly available information about matters such as how well the technology has been received by experts in the field or whether consumers have deemed the technology to represent in some way an advance over existing alternatives. Worse, patent examiners cannot solicit these sorts of credible outsider opinions, not only because for many technologies it is unclear at the early stages who the relevant experts and customers might be, but also because patent evaluation is at least in part a confidential conversation between applicant and examiner, (3) designed to keep an applicant's work secret in case the patent application is ultimately denied. (4)
Given all this, it is hardly a surprise that the PTO makes mistakes during the initial process of patent review, granting patents that, on the merits, should never have been issued. (5) The real surprise is that the law makes issuance mistakes hard to reverse.
The culprit is a legal doctrine known as the presumption of validity. Under that doctrine, courts are obligated to defer to the PTO's initial determination that an invention qualifies for patent protection unless the defendant can show by "clear and convincing" evidence that the PTO erred. Thus, if the PTO issues a patent covering a technology that the purported inventor did not in fact pioneer, defendants face an uphill battle persuading the courts to overrule that errant determination. The theoretical justification is that patent examiners have expertise when it comes to questions of patent validity, and if patent examiners have decided that a given invention qualifies for protection, judges and juries should not second-guess the experts. (6) But the reality is that PTO expertise is brought to bear under such poor conditions that any advantages associated with expertise are overwhelmed by the disadvantages associated with insufficient funding and inadequate outsider information. Contrast that to court review, where information is a natural product of the adversarial process, and where financial constraints are reduced because only a tiny fraction of all issued patents end up sufficiently valuable and contentious to warrant litigation.
Thus, the presumption of validity backfires. …