FedSoc Blog

Exchange on Patent Reform


by Adam Mossoff, Professor, George Mason University School of Law
Posted July 08, 2011, 1:56 PM

* Editor’s Note: The following conversation on patent reform and the Copyright and Patent Clause of the U.S. Constitution originally took place in an e-mail exchange among Prof. Richard Epstein of New York University School of Law, Prof. Adam Mossoff of George Mason University School of Law, and other scholars and practitioners over the course of nearly two weeks. We gained permission from the authors to post their e-mails with some minor changes, and we are pleased to present to you their comments here, exclusively on FedSoc Blog. 

Dan Ravicher and I have drafted a letter to Representatives Lamar Smith and John Conyers on why Section 2 of H.R. 1249 -- the first-to-file provision entitled "first-inventor-to-file" -- is unconstitutional.

We figure that since Dan and I are on the same side that this would be sufficient grounds by itself to join the letter! More seriously, we argue that Section 2 violates the plain terms of the Copyright and Patent Clause, as well as 220 years of congressional and judicial interpretations of this constitutional provision. There's an interesting parallel in this argument to the claim in the Eldred case that the terms in the Copyright and Patent Clause impose limits on Congress's power to adopt patent and copyright laws; in this case, it's the terms "Inventors" and "Discoveries." At a minimum, there is a colorable argument supporting the 64 House Members who have formally requested a debate on the constitutional merits of Section 2.

UPDATE: Click here to view the letter Prof. Mossoff, Daniel Ravicher, and other professors sent to Speaker John Boehner and House Minority Leader Nancy Pelosi on June 17.

Exchange on Patent Reform: Richard Epstein


by Richard A. Epstein, Laurence A. Tisch Professor of Law, New York University School of Law
Posted July 08, 2011, 1:55 PM

Dear All:

I was not on the original recipient list for this letter, but it was forwarded to me by Adam Mossoff. I think that the letter is both erudite and wrongly conceived. I have at this point no brief for FTF versus first-to-invent, but think that there is no constitutional substance. The IP clause says that the purpose is to find ways through a public registry to "secure" property rights. The argument here is that FTF could do this better than FTI, and if that is the case, it is just a means toward and end, and not an end in itself. The parallel to ordinary property is as follows. The usual rule on title is that prior in time is higher in right, which means that the first possessor prevails over all others. But there is nothing in that rule which prevents the formation of a FTF rule for new mining claims and the like in an effort to simplify the confusion about the sequence of claims that are often difficult to deal with otherwise in mining claims, when it is often hard to tell who has started to work on a seam first. The complexity in these areas is quite great, but unless and until there is an effort to defend interlopers, the IP clause has nothing to say about all this. I attach an article by Michael Martin which shows how close we came to adopting FTF when Jefferson was on the patent commission. (Click here to read Michael Martin's article.)  

Needless to say there are strong reasons to oppose FTF on policy grounds, which I won't go into here. And the rest of the bill is a long-term horror story. 

Please think about the source of the opposition to the legislation. 


Exchange on Patent Reform: Corporate Patent Counsel


by Corporate Patent Counsel
Posted July 08, 2011, 1:53 PM

It will come as little surprise that I agree 100% with my former professor's constitutional analysis. I note further that, strictly speaking, the U.S. does not have a "first-to-invent" system, but a "first-to-invent, provided the inventor filed a patent application within one year of the issuance of a patent to another." Under our current system, a prior inventor who fails to publicly disclose, publish, offer for sale, etc. his invention and also fails to file a patent application within one year of the issuance of a patent to a later inventor not only does not receive the patent himself, he may be excluded from practicing his own invention by the patent in question, as prior use or invention is not a defense to patent infringement. Under the constitutional conception of the circulated letter, such a patent grant would be beyond the authority of Congress and the patent should be invalidated as unconstitutionally granted.

Patent Reform: Question from Richard Epstein


by Richard A. Epstein, Laurence A. Tisch Professor of Law, New York University School of Law
Posted July 08, 2011, 1:52 PM

Corporate Patent Counsel:

What do you think of the relative administrative merits of the two systems?


Corporate Patent Counsel Response


by Corporate Patent Counsel
Posted July 08, 2011, 1:50 PM

With the disclaimers that I speak only for myself and not my employer and that I haven't really studied the policy analysis on the topic: 

(1) First-to-file would be easier to administer, as interference proceedings would be eliminated, so all expenses of that system would be eliminated without significant expenses being added on the other side.

(2) First-to-file would lead to greater certainty as the first year of a patent's life would not be clouded by the potential of an interference.

(3) Interferences are relatively rare, so we are tinkering at the margins.

(4) Patent application quality could drop as people prioritize speed of filing over careful drafting (i.e., the "first-to-invent" rule gives practitioners a bit of "breathing room").

(5) From a pure "property" view of patents (one that I do not personally 100% subscribe to), society should not really care who is granted the patent, as the relevant parties will just bargain to achieve the efficient result. Therefore, the system with the most efficient administration that most lowers transaction costs should be adopted. Note, however, that if the quality point of #4 is a concern, then first-to-file could be seen as raising transaction costs as lower quality means more ambiguous patents. On the other hand, by not having our system aligned with other countries, this increases the number of parties one may have to bargain with to obtain both U.S. and foreign rights to the same invention.

(6) From a policy standpoint, first-to-file probably favors patent development companies (e.g., Intellectual Ventures, Rambus, Walker Digital, etc.) over companies with actual products since the inventors at the former can spend 100% of their time on inventing and patenting and are therefore able to file patent applications more quickly than inventors who divide their time between invention and product development. To put it another way, actual reduction to practice takes a lot more effort than constructive reduction to practice.

Probably more than you wanted, but there you go.

Questions for Corporate Patent Counsel


by Richard A. Epstein, Laurence A. Tisch Professor of Law, New York University School of Law
Posted July 08, 2011, 1:49 PM

Two questions, how common are derivation proceedings? And how expensive to deal with? My guess is that they would be a bit more common. But on balance it looks as though point (4) might carry a lot of weight. Not sure about point (6) because an increased size could offset that disadvantage and should be expected of firms that do more things.

But thanks.


Re: Questions for Corporate Patent Counsel


by Corporate Patent Counsel
Posted July 08, 2011, 1:48 PM

I don't have the data on frequency or expense of interference proceedings, but would guess that someone in this group has it.

Can you say more on your reaction to point #6? I am not sure I understood your response.

Industrial Organization Theory and Patents


by Richard A. Epstein, Laurence A. Tisch Professor of Law, New York University School of Law
Posted July 08, 2011, 1:47 PM

The response to point 6 is this. I am not sure that there is anything in industrial organization theory that gives specialty companies an advantage over broad-based companies in working the system. Even if there are no synergies between patent claiming and commercial development, the integrated firm can organize itself in a way that provides the needed resources to do both tasks well. If its claiming business needs more resources, it should be able to get them from outside sources so long as it has a decent rate of return. Put otherwise, the two kinds of firms may have somewhat different strategies, but there is no reason to think that one way of looking at the issue dominates the other.


Patent Reform: Adam Mossoff Responds


by Adam Mossoff, Professor, George Mason University School of Law
Posted July 08, 2011, 1:44 PM

Well, I have no problem with the fact that I disagree with my former professor and good friend's analysis of the Copyright and Patent Clause -- and I have the distinct honor and privilege of having been a student in the one and only patent law class that Richard taught at U of C.

I'm actually happy that someone forwarded to Richard the letter Dan Ravicher and I wrote because I value his analysis and his opinions. To paraphrase the old E.F. Hutton commercials: When Richard speaks, everyone listens -- at least everyone who cares about what is right listens. In fact, I've known that he and I have been on opposite sides of this issue since I read his April 26 column in the Financial Times praising the first-to-file (FTF) system [link to article], although he expressed to me in an email today that his positive assessment of FTF has been tempered somewhat since that column was published.

I'm also skeptical that the new derivation proceedings in the PTO will be an overall cost savings; just as with patent infringers, the moment an invention becomes successful as a patent, prior inventors will pop out of the woodwork and claim that the first filer derived it from him. And just ask copyright lawyers how much fun and costly it is to constantly litigate "derivation."

Of course, I would entirely agree with Richard’s constitutional analysis, if only the Copyright and Patent Clause stated that Congress has the power "To maximize social utility by enacting patent and copyright laws." But that is not what the language of the Copyright and Patent Clause says, and that is not how Congress and the courts have construed it over the years. Over the past 10 years, my academic work has shown the substantial impact of natural rights philosophy on the justification and development of many of the legal rules in the American patent system.

Click here to view the rest »

Re: Industrial Organization Theory and Patents


by Corporate Patent Counsel
Posted July 08, 2011, 1:43 PM

Regarding Richard’s response to point 6, I think that argument goes too far. Couldn't that response be applied to nearly any change in administration/regulation to say that one firm is never advantaged over another because firm A can just reorganize itself to copy the advantage of firm B? 

In the case of patents, one thing to keep in mind is that patents are issued to inventors, not firms. The inventor must be personally involved in the patent application drafting as he has to sign an oath stating that he is the inventor of the invention as claimed. Therefore, there is a limit to the degree to which patent-related activities can be outsourced.  

Assume a world where professors are required to attest that papers they author represent their own research. As between the University of Chicago (where professors are required to teach and publish) and the Hoover Institution (where fellows are not required to teach), wouldn't the University of Chicago be advantaged by a rule that said that the first author to come up with an idea for a paper had the right to publish it, rather than the first to submit the paper, since the professor with teaching duties will likely be slower to submit than the fellow without? One could argue that U of C could just reorganize to divide its faculty into publishers and teachers, but this would likely diminish the quality of both.




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