The Uneasy Case for Patent Federalism
59 Pages Posted: 20 Jun 2017
Date Written: June 15, 2017
Nationwide uniformity is often considered an essential feature of the patent system, necessary to fulfill that system’s disclosure and incentive purposes. In the last few years, however, more than half the states have enacted laws that seek to disrupt this uniformity by making it harder for patent holders to enforce their patents. There is an easy case to be made against giving states greater authority over the patent system: doing so would threaten to disrupt the system’s balance between innovation incentives and a robust public domain and would permit rent seeking by states that disproportionately produce or consume innovation.
There is, nevertheless, an uneasy case that this particular form of patent federalism may be a good thing. The federal patent system has systemic flaws that lead to low-quality patents, nuisance patent litigation, and patent trolls exploiting asymmetric bargaining power. And efforts to address these flaws have faltered, or have had limited effects, due to public-choice dynamics in the patent system, so the scope of patent protections has expanded over time without regard to the system’s purpose of encouraging innovation.
States may help address some of these problems not in spite of, but because of, their own flaws. States have their own public-choice dynamics that happen to offset some of the flaws of the federal system. State anti-patent laws have been driven largely by small businesses and local small-business groups, which, unlike most patent holders, have preexisting influence in state government. And the laws they have crafted using this influence are well-targeted to affect only the most troublesome patent cases: nuisance cases, cases asserting low-quality patents, and cases targeting end users. States pushing back with anti-patent laws, then, may represent an effective second-best solution to the problem of harmful patent assertions. Moreover, recognizing the dynamics that led to these laws may provide helpful insights in designing federal patent reforms.
Note: Copyright 2017 Roger Allan Ford. After June 15, 2018, this Article will be available for reuse under the Creation Commons Attribution 4.0 International license, https://creativecommons.org/licenses/by/4.0.
Keywords: patents, intellectual property, federalism, public choice
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