The problem of low patent quality has recently plagued the world of high-technology innovation. (1) Low patent quality results when the U.S. Patent and Trademark Office (PTO) issues too many bad patents -- patents that in a perfect system should never have been issued (for instance, because of obviousness or lack of novelty). (2) When combined with the problem of patent thickets, which cause "so much overlap among the technologies developed by different companies that it is difficult to bring any product to market without potentially infringing patents held by other companies," (3) the problem of low patent quality threatens to undermine the very innovation that the patent system is supposed to foster. (4)
In an ideal world, the PTO would never issue bad patents and would instead insist that patents consistently satisfy the basic patentability requirements, in particular novelty and nonobviousness; however, the PTO can do so only if it "can, at the time of patent application, run a substantial and relatively reliable evaluative process." (5) In practice, the PTO's limited budget, the nonadversarial nature of the patent application process, and the absence of thirdparty information mean that "bad patents routinely slip through." (6) Because of the great (and constantly increasing) number of patents issued by the PTO and the considerably smaller number of patents that are litigated, "the PTO doesn't do a very detailed job of examining patents, but we probably don't want it to. It is 'rationally ignorant' of the objective validity of patents, in economics lingo, because it is too costly for the PTO to discover those facts." (7) An inquiry into patent reform directed at alleviating the problem of low patent quality must therefore begin from a baseline that takes for granted the PTO's issuance of bad patents. (8)
An important question then arises: how can the various institutions of the patent system get rid of bad patents? A secondary question is who should bear the cost of having such bad patents invalidated, given that invalidating (9) bad patents is a public good and thus presents a collective action problem. (10) In answering these questions, it is important to keep in mind that, to address a problem as endemic as low patent quality, approaches to reform must be multi-institutional and must take into account how each cog in the U.S. patent system fits into a broader whole. (11) Notwithstanding the multi-institutional approach that is required by an endemic public problem, only two options for invalidating bad patents currently exist: post-grant review by the PTO and invalidation by district courts. (12)
The patent system thus neglects the "other patent agency" (13) -- the U.S. International Trade Commission (ITC or Commission), an independent, bipartisan, quasi-judicial agency created by Congress. (14) The ITC, an increasingly popular forum for patent litigation, (15) is not currently an option for invalidating bad patents because its patent invalidity findings are not granted collateral estoppel effect in the district courts. Reforming the ITC to give its patent findings collateral estoppel effect would recast it into a new role as an efficient forum for invalidating bad patents.
Though commentators have proposed applying collateral estoppel to ITC patent findings, (16) it is the answer to the secondary question -- who bears the burden of invalidating bad patents? -- that suggests why the ITC, with its findings given collateral estoppel effect, would be a better forum for invalidating bad patents than the current options: there is an underappreciated but significant collective action problem in both the PTO and the district courts that is not as pronounced at the ITC. Combined with the ITC's inherent benefits, including an accelerated timetable and expert decisionmakers, the ITC's ability to minimize collective action problems makes it a prime candidate for becoming an efficient forum for invalidating bad patents. …