The Non-Obvious Problem: How the Indeterminate Non-Obvious Standard Produces Excessive Patent Grants
Gregory N. Mandel
Temple University - James E. Beasley School of Law
UC Davis Law Review, Vol. 42, p. 57, 2008
Temple University Legal Studies Research Paper No. 2008-66
The dominant current perception in patent law is that the core patent requirement that an invention be non-obvious is applied too leniently, resulting in a proliferation of patents on trivial inventions that actually retard technological innovation in the long run. This article reveals that the common wisdom is only half correct. The non-obvious standard is not too low, but both too high and too low. It is indeterminate. Three principal factors produce nonobviousness indeterminacy: a failure to identify the quantum of innovation necessary to satisfy the standard, a failure to define the baseline level of ordinary skill against which to measure an innovation, and the epistemic infeasibility of requiring a technologically lay decision-maker to make a judgment from the perspective of a more highly trained and educated person of ordinary skill in the art.
This article introduces a mathematical model of innovation and patenting in order to analyze the effects of non-obvious indeterminacy. Based on this model, indeterminacy in non-obvious decisions has several dramatic, and unexpected, consequences. First, indeterminacy results in too many patents being granted in total and in many patents being granted on obvious inventions. Second, indeterminacy leads to too many patent applications being filed on obvious inventions and to too few applications being filed on non-obvious inventions. Third, uncertainty causes more patents to be litigated than is optimal, and leads to incorrect litigation outcomes. Fourth, indeterminacy leads to inefficiently low incentives to research and develop great advances, and excessively high incentives to invest in mundane innovation. All of these effects occur even assuming that the non-obvious standard is applied correctly on average.
That many of the current patent system ills may result from indeterminacy rather than from too low a non-obvious standard has significant consequences for the patent system and for current recommendations for patent reform. Perhaps most critically, arguments for raising (or lowering) the non-obvious threshold, a mainstay of recent legal and economic analysis, may be somewhat inapposite, unless and until we can establish greater specificity in the standard. The article concludes with several recommendations for improving determinacy in nonobviousness decisions, including differentiating non-obvious analysis and developing a substantive non-obvious standard.
Number of Pages in PDF File: 72
Keywords: patent, non-obvious, nonobviousness, indeterminacy, federal circuit, PHOSITA
JEL Classification: O31, O33, O34
Date posted: April 9, 2008 ; Last revised: March 12, 2013
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