Institutional Design and the Nature of Patents

By Masur, Jonathan S. | Iowa Law Review, July 2019 | Go to article overview

Institutional Design and the Nature of Patents


Masur, Jonathan S., Iowa Law Review


I. Introduction

What is a patent? That is, what is the nature of a patent? What sort of legal instrument is it? Is it a piece of property, like a tract of land or an automobile? Is it a government license, like a license to operate a business, except in this case a license to operate a government-sanctioned monopoly? Is it a form of "new property," like an entitlement to welfare or Social Security benefits? Is it some combination of these things, or something else entirely?

For some readers, to pose the question in this fashion is to misunderstand the inquiry. To inquire what type of legal instrument a patent is hearkens back to the era before legal realism. This is how the formalist judges of the 19th century would reason: first, determine the category into which a legal instrument or claim fell; next, apply the legal rules that attached to objects or claims within that category.1

The legal realists rejected this entire mode of thinking. They argued that form should follow function, rather than the other way around.2 Rather than first categorizing a legal instrument, courts should begin by determining what rules should be applied to that instrument in order to best effectuate the policies and principles underlying it.3 Only after the courts have determined the nature of the instrument should they turn to the question of categorizing it.4 Put another way, any given legal instrument should be categorized according to how it operated-with that operation determined in light of underlying policies and principles-not according to its intrinsic or inherent nature.

For decades, it seemed as though the legal realist mode of thinking was, if not the unanimous approach among scholars, then at least the dominant one. In recent years, however, that has changed. The primary locus for that change has been patent law. Patent law scholarship is riven by an internal debate, one that has frequently bubbled to the surface, over how to classify patents.5 Some scholars view patents as property, in the same sense that a house or an automobile is property.6 Others conceive of a patent as a government license, akin to a license to emit a certain type of pollutant.7 This debate has sometimes proceeded in a fashion that would have been familiar to 19th century formalist scholars. The two sides have debated the patent "type," as if that is a question that exists independent of other functionalist considerations, while understanding full well that the determination of type will have practical consequences for how the law treats patents.

The primary object of this Essay is to describe and explain the deep structure of this disagreement. When scholars argue about a variety of institutional patent law questions, they are at bottom arguing about a single issue: what a patent really is. In many cases, scholars ignore or gloss over this underlying question. The result is that scholars with differing points of view sometimes appear to talk past each other, with each ignoring the considerations that are most fundamental to the other. Laying bare the underlying debate over the nature of patents will not necessarily bridge the divide between formalist and functionalist methodologies. But it should help clarify the terms of these debates, so that opposing camps can at least engage on the same turf.

This Essay's secondary objective is to flesh out the institutional consequences of arriving at a conclusion regarding the nature of patents. Function should precede form, as I will argue below. But once the larger-scale questions as to function, and then form, have been answered, conclusions regarding intermediate questions about institutional arrangements follow directly. Those institutional arrangements have great significance for the operation of the patent system, and they implicate nearly every contemporary controversy about the America Invents Act8 and the conduct and organization of the Patent and Trademark Office ("PTO"). Solving them in what amounts to one fell swoop would be a substantial step forward. …

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