Pathological Patenting: The PTO as Cause or Cure

Abstract:     
Just as Congress is about to consider patent reform, Adam Jaffe and Josh Lerner have offered a timely critique of the existing system. In Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, they suggest that patenting has undergone a fundamental change in the last 25 years and has done so across two dimensions. The number of patents has skyrocketed and their power has increased dramatically. Arguing that the invalidity of many of these patents imposes a heavy tax on innovation, the authors attribute their prevalence to the establishment of the Federal Circuit to hear most patent appeals and to financial restructuring of the Patent and Trademark Office (PTO). The book ends with a vision of a revamped procedure which would accord resources to examination and patent challenges in proportion to the importance of the invention protected.

The confluence of an explosion in patenting, the Federal Circuit's establishment, and the PTO's financial problems is certainly provocative. However, when these events occurred, equally dramatic shifts were happening in the organization, methodology, and production of science. Because these changes alter the factual bases on which patent law is grounded, a strong argument can be made that the problems the authors observe are not caused merely by the implementation of the law, but also by its articulation - by an institutional failure to keep patent law and policy abreast with developments at the technological frontier. Although the Federal Circuit was arguably established with this goal in mind, as an appellate court, it cannot easily reach the factual issues embedded in patent jurisprudence. (What do ordinary artisans know? What can they learn from a reference?) The authors' proposals, although not designed for the purpose, would (with some additional changes) dramatically improve the operation of the PTO, raising the question whether it would make sense to delegate to it greater authority over the development of patent law.

Number of Pages in PDF File: 18

JEL Classification: K23, O31, O34

Accepted Paper Series