Mark A. Lemley

Examiner Characteristics and Patent Office Outcomes

In this paper, we show that there are important differences across patent examiners at the U.S. Patent and Trademark Office. We show that more experienced examiners cite less prior art, are more likely to grant patents, and are more likely to grant patents without any rejections. These results suggest that the most important decisions made by the patent office are significantly affected by the happenstance of which examiner gets an application. They also point to human resource policies as potentially important levers, hitherto neglected, in patent system reform.

Are Universities Patent Trolls

The confluence of two significant developments in modern patent practice leads me to write a paper with such a provocative title. The first development is the rise of hold-up as a primary component of patent litigation and patent licensing. The second development in the last three decades is the massive surge in university patenting. At the confluence of these developments is a growing frustration on the part of industry with the role of universities as patent owners. Time and again, when I talk to people in a variety of industries, their view is that universities are the new patent trolls.In this paper, I argue that Universities should take a broader view of their role in technology transfer. University technology transfer ought to have as its goal maximizing the social impact of technology, not merely maximizing the universitys licensing revenue. Sometimes those goals will coincide with the universitys short-term financial interests. Sometimes universities will maximize the impact of an invention on society by granting exclusive licenses for substantial revenue to a company that will take the invention and commercialize it. Sometimes, but not always. At other times a non-exclusive license, particularly on a basic enabling technology, will ultimately maximize the inventions impact on society by allowing a large number of people to commercialize in different areas, to try out different things and see if they work, and the like. University policies might be made more nuanced than simply a choice between exclusive and nonexclusive licenses. For example, they might grant field-specific exclusivity, or exclusivity only for a limited term, or exclusivity only for commercial sales while exempting research, and they might condition continued exclusivity on achievement of certain dissemination goals. Finally, particularly in the software context, there are many circumstances in which the social impact of technology transfer is maximized either by the university not patenting at all or by granting licenses to those patents on a royalty-free basis to all comers.Finally, I think we can learn something about the raging debate over whos a patent troll and what to do about trolls by looking at university patents. Universities are non-practicing entities. They share some characteristics with trolls, at least if the term is broadly defined, but they are not trolls. Asking what distinguishes universities from trolls can actually help us figure out what concerns us about trolls. What we ought to do is abandon the search for a group of individual companies to define as trolls. In my view, troll is as troll does. Universities will sometimes be bad actors. Nonmanufacturing patent owners will sometimes be bad actors. Manufacturing patent owners will sometimes be bad actors. Instead of singling out bad actors, we should focus on the bad acts and the laws that make them possible.

Encouraging Software Reuse

In the last fifteen years, the primary means of legal protection for computer software has shifted from copyright to patent. We argue that one unanticipated effect of this trend may be to encourage software reuse. Traditionally, computer programmers have reinvented software components, coding programs from scratch each time a new one is desired rather than buying and reusing existing components. This process is inefficient, and is in stark contrast to the normal practice in other engineering disciplines. We argue that copyright law encourages reinvention and discourages the development of a market for tradeable software components because it allows competitors to appropriate the value of a new software invention without payment to the original developer of that invention, but forbids competitors from copying the computer code implementing that invention. The result is that competitors take inventions from others, but write their own code to implement those inventions. By contrast, patent law gives strong protection to inventions, forcing competitors to license the patent in order to make any product incorporating the idea. It is reasonable to expect that one effect of increasing reliance on patent law will be an increase in licenses of both the patented idea and the implementing code. This licensing should in turn pave the way for the trading and reuse of software components.

Beyond Preemption: The Law and Policy of Intellectual Property Licensing

Introduction ..................................................................................... 114 I. The Tension Between Article 2B and Intellectual Property ....... 117 A. Article 2Bs Expansion of the Scope and Power of Contracts ................................................................ 118 B. Potential Conflicts with Intellectual Property Law .................. 124 1. Patent Law ...................................................................... 126 2. Copyright Law ................................................................ 128 3. Trade Secret Law ............................................................ 133 4. Trademark Law .............................................................. 134 5. Remedies ........................................................................ 135 C. Conclusions .......................................................................... 136 II. Preemption as a Partial Solution .................................................. 136 A. The Nature of Intellectual Property Preemption .................... 137 1. The Basic Nature of Preemption ..................................... 137 2. Intellectual Property Preemption ..................................... 138 a. Patent Law ................................................................ 138 b. Copyright Law .......................................................... 139 c. Applying Preemption to Contract Law ...................... 143

IP in a World Without Scarcity

Things are valuable because they are scarce. The more abundant they become, they cheaper they become. But a series of technological changes is underway that promises to end scarcity as we know it for a wide variety of goods. The Internet is the most obvious example, because the change there is furthest along. The Internet has reduced the cost of production and distribution of informational content effectively to zero. In many cases it has also dramatically reduced the cost of producing that content. And it has changed the way in which information is distributed, separating the creators of content from the distributors. More recently, new technologies promise to do for a variety of physical goods and even services what the Internet has already done for information. 3D printers can manufacture physical goods based on any digital design. Synthetic biology has automated the manufacture not just of copies of existing genetic sequences but any custom-made gene sequence, allowing anyone who want to create a gene sequence of their own to upload the sequence to a company that will “print�? it using the basic building blocks of genetics. And advances in robotics offer the prospect that many of the services humans now provide can be provided free of charge by general-purpose machines that can be programmed to perform a variety of complex functions. While none of these technologies are nearly as far along as the Internet, they share two essential characteristics with the Internet: they radically reduce the cost of production and distribution of things, and they separate the informational content of those things (the design) from their manufacture. Combine these four developments – the Internet, 3D printing, robotics, and synthetic biology – and it is entirely plausible to envision a not-too-distant world in which most things that people want can be downloaded and created on site for very little money. The role of IP in such a world is both controverted and critically important. IP rights are designed to artificially replicate scarcity where it would not otherwise exist. In its simplest form, IP law takes public goods that would otherwise be available to all and artificially restricts their distribution. It makes ideas scarce, because then we can bring them into the economy and charge for them, and economics knows how to deal with scarce things. So on one view – the classical view of IP law – a world in which all the value resides in information is a world in which we need IP everywhere, controlling rights over everything, or no one will get paid to create. That has been the response of IP law to the Internet so far. But that response is problematic for a couple of reasons. First, it doesn’t seem to be working. By disaggregating creation, production, and distribution, the Internet democratized access to content. Copyright owners have been unable to stop a flood of piracy with 50,000 lawsuits, a host of new and increasingly draconian laws, and a well-funded public education campaign that starts in elementary school. Second, even if we could use IP to rein in all this low-cost production and distribution of stuff, we may not want to. The point of IP has always been, not to raise prices and reduce consumption for its own sake, but to encourage people to create things when they otherwise wouldn’t. More and more evidence casts doubt on the link between IP and creation, however. Empirical evidence suggests that offering money may actually stifle rather than drive creativity among individuals. Economic evidence suggests that quite often it is competition, not the lure of monopoly, that drives corporate innovation. The Internet may have spawned unprecedented piracy, but it has also given rise to the creation of more works of all types than ever before in history, often by multiple orders of magnitude. Far from necessitating more IP protection, then, the development of cost-reducing technologies may actually weaken the case for IP. If people are intrinsically motivated to create, as they seem to be, the easier it is to create and distribute content, the more content is likely to be available even in the absence of IP. And if the point of IP is to encourage either the creation or the distribution of that content, cost-reducing technologies may actually mean we have less, not more, need for IP. IP rights are a form of government regulation of market entry and market prices. We regulated all sorts of industries in the 20th century, from airlines to trucking to telephones to electric power, often because we couldn’t conceive of how the industry could survive without the government preventing entry by competitors. Towards the end of that century, however, we experimented with deregulation, and it turned out that the market could provide many of those services better in the absence of government regulation. The same thing may turn out to be true of IP regulation in the 21st century. We didn’t get rid of all regulation by any means, and we won’t get rid of all IP. But we came to understand that the free market, not government control over entry, is the right default position in the absence of a persuasive justification for limiting that market. The elimination of scarcity will put substantial pressure on the law to do the same with IP. A world without scarcity requires a major rethinking of economics, much as the decline of the agrarian economy did in the 19th century. How will our economy function in a world in which most of the things we produce are cheap or free? We have lived with scarcity for so long that it is hard even to begin to think about the transition to a post-scarcity economy. IP has allowed us to cling to scarcity as an organizing principle in a world that no longer demands it. But it will no more prevent the transition than agricultural price supports kept us all farmers. We need a post-scarcity economics, one that accepts rather than resists the new opportunities technology will offer us. Developing that economics is the great task of the 21st century.

Convergence in the Law of Software Copyright

Virtually all the courts to consider non-literal infringement of software copyrights have lined up with the “narrow constructionists,” engaging in “analytic dissection” of computer programs in order to determine whether any copyrightable expression has actually been copied. Most commonly, this analytic dissection has taken the form of the “abstraction-filtration-comparison” test set forth in Computer Associates v. Altai. While there are still a few courts in which the “total concept and feel” approach remains the law, the approach is moribund: since Altai was decided, no court has endorsed the broader “total concept and feel” approach. Rather than ending, the debate over software copyright law appears to be shifting its focus. Having finally resolved the debate that has been plaguing software copyright law since its inception, courts are discovering to their chagrin, that deciding what test to apply actually tells you very little about how to apply that test. Despite the convergence of courts on Altais filtration approach, courts remain fundamentally conflicted in deciding how broadly to protect software copyright. Further, there remains a good deal of misunderstanding about what exactly it means to “abstract” and “filter” a computer program. I suggest a unified approach to evaluating non-literal infringement in software copyright cases. This approach focuses on exactly what is alleged to have been copied. It also acknowledges the increasing role of patent law in protecting computer software, and the role of other copyright concerns such as compatibility and fair use. The result of this unified approach is to provide relatively narrow copyright protection for computer programs in most cases of non-literal infringement.

The Economic Irrationality of the Patent Misuse Doctrine

This Comment evaluates the economic effects of the patent misuse doctrine. The patent misuse doctrine is an equitable remedy analogous to the “unclean hands” doctrine in tort law. It bars infringement suits by patentees who have “misused” their patent grant, either by using the patent to violate the antitrust laws or by extending their patent monopoly in some other way. The author first describes the nature and scope of antitrust protection in the patent area, and contrasts the antitrust laws with the patent misuse doctrine. Next, the author argues that the patent misuse doctrine is irrational from an economic standpoint for three reasons: the level of sanction is unrelated to the injury caused; the sanction duplicates antitrust remedies, leading to excessive recoveries; and the sanction is awarded as a windfall to the patent infringer even if that party was not injured by the misuse. These effects combine to make the patent misuse doctrine indefensible from the standpoint either of proportionality or of deterrence. Finally, the author reviews recent legislative efforts to reform the patent misuse doctrine and argues that they are misguided because they fail to deal with the fundamental problems described herein. The author concludes that the patent misuse doctrine ought to be abolished, and that the antitrust laws can serve the same purposes that the patent misuse doctrine was designed to serve.

Software Patents and the Return of Functional Claiming

Commentators have observed for years that patents do less good and cause more harm in the software industry than in other industries such as pharmaceuticals. They have pointed to a variety of problems and offered a variety of solutions. While there is some truth to each of these criticisms, the real problem with software patents lies elsewhere. Software patent lawyers are increasingly writing patent claims in broad functional terms. Put another way, patentees claim to own not a particular machine, or even a particular series of steps for achieving a goal, but the goal itself. The resulting overbroad patents overlap and create patent thickets. Patent law has faced this problem before. The Supreme Court ultimately rejected such broad functional claiming in the 1940s as inconsistent with the purposes of the patent statute. When Congress rewrote the Patent Act in 1952, it adopted a compromise position: patentees could write their claim language in functional terms, but when they did so the patent would not cover the goal itself, but only the particular means of implementing that goal described by the patentee and equivalents thereof. These “means-plus-function” claims permitted the patentee to use functional language to describe an element of their invention, but did not permit her to own the function itself however implemented. Most software patents today are written in functional terms. If courts would faithfully apply the 1952 Act, limiting those claims to the actual algorithms the patentees disclosed and their equivalents, they could prevent overclaiming by software patentees and solve much of the patent thicket problem that besets software innovation.

Antitrust, intellectual property and standard setting organizations

Standard-setting organizations (SSOs) regularly encounter situations in which one or more companies claim to own proprietary rights that cover a proposed industry standard. The industry cannot adopt the standard without the permission of the intellectual property owner (or owners). Given the importance of SSO rules governing intellectual property rights, there has been surprisingly little treatment of SSOs or their intellectual property rules in the legal literature. My aim is to fill that void. SSO rules governing intellectual property fundamentally change the way in which we must approach the study of intellectual property. It is not enough to consider IP rights in a vacuum; we must consider them as they are actually used in practice. And that means considering how SSO rules affect IP incentives. Second, there is a remarkable diversity among SSOs in how they treat IP rights. This diversity is largely accidental, and does not reflect conscious competition between different policies. Third, antitrust law is not well designed to take account of the modern role of SSOs. Antitrust rules may unduly restrict SSOs even when those organizations are serving procompetitive ends. Fourth, the enforcement of SSO IP rules presents a number of important but unresolved problems of contract and intellectual property law.

The Surprising Resilience of the Patent System

The patent system seems in the midst of truly dramatic change. The last twenty years have seen the rise of a new business model – the patent troll – that grew to become a majority of all patent lawsuits. They have seen a significant expansion in the number of patents granted and a fundamental change in the industries in which those patents are filed. They have seen the passage of the most important legislative reform in the last sixty years, a law that reoriented legal challenges to patents away from courts and toward the Patent and Trademark Office (PTO). And they have seen remarkable changes in nearly every important legal doctrine, from patent eligibility to obviousness to infringement to remedies. These changes have prompted alarm in a number of quarters. From the 1990s to the 2000s, as the number of patents and patent troll suits skyrocketed, technology companies and academics worried about the “crisis” in the patent system – a crisis of overprotection that might interfere with rather than promote innovation. By 2015, as patent reform took effect and the Supreme Court undid many of the Federal Circuit’s expansions of patent rights, it was patent owners who were speaking of a crisis in the patent system – a crisis of underprotection that might leave innovators without adequate protection. Depending on one’s perspective, then, the sky seems to have been falling on the patent system for some time. Despite the undeniable significance of these changes in both directions, something curious has happened to the fundamental characteristics of the patent ecosystem during this period: very little. Whether we look at the number of patent applications filed, the number of patents issued, the number of lawsuits filed, the patentee win rate in those lawsuits, or the market for patent licenses, the data show very little evidence that patent owners and challengers are behaving differently because of changes in the law. The patent system, then, seems surprisingly resilient to changes in the law. This is a puzzle. In this article, I document this phenomenon and give some thought to why the fundamental characteristics of the patent system seem resistant to even major changes in patent law and procedure. The results pose some profound questions not only for efforts at patent reform but for the role of the patent system in society as a whole.