Patent reform efforts are a mish-mash of patchwork fixes that are not all that effective. Loser pays? Ever heard of loser pays insurance? You can buy it today before you file! Disclose the real party in interest and allow counterclaims against them? This is not going to impact the typical NPE. Better pleading standards? These proposals in effect just take what is already in the local patent rules of several districts and make them mandatory country-wide. Plus, the FTC Report is not going to impact patent reform in the way many companies want it to – the FTC and the Department of Justice deal with collusion among competitors and monopolists who operate outside the law – they are not tasked to deal with a little company that files a lawsuit on a niche patent (except perhaps for standards patents). The AIA has had little practical impact on patent lawsuits (except to make more of them).
The problem is that patent law is no longer a coherent body of law. It is fundamentally flawed and requires foundational work – not patchwork.
- What is patentable subject matter? After the Federal Circuit’s en banc decision in CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed. Cir. 2013), no one, for the most part, really knows.
How do we know what the patent covers? Most people “in the art” can read the specification of a patent and tell you what the invention is, but if they then walk through each claim, they get lost on a twisted path that often leads away from what they thought the invention was from its description. Claim construction opinions are said to be panel dependent. Yet the statute says the claims are part of the specification.
Here’s the thing: If my tenth grader writes a paper on John F. Kennedy, and at the end of the paper writes a conclusion that says, “this is a great man”, we all know she is referring to John F. Kennedy. If I read the conclusion first and it says, “this is a great man”, I have no idea what is going on. It is only after reading the paper and putting the conclusion in context that I can define the subject of this reference. Yet in patent law, we are told to look at the conclusion first, then look at the paper for context, but not limit the conclusion to what was discussed in the paper. Who does this in real life?
- “Reasonable royalty” is based on a fourteen factor test formulated decades ago, some of which is comprehensible (comparable licenses), and some of which is not (contribution of the invention to the infringing instrumentality). We then have twelve people who have never been exposed to patents before decide what hypothetically would have happened if the parties had decided to negotiate, not litigate – but obviously, we know what actually happened – they couldn’t agree. Often, the decision has to be made on the “say so” of two paid experts.
What happens if you drop me off at the Detroit Auto Show and you ask me to tell you how much a new, innovative, model car will be leased for? I don’t buy cars often, and I don’t follow car prices. Frankly, I don’t know anything about cars and am not particularly interested, so long as my car works. I would probably use my smart phone to search for prices for other cars that seem comparable to the new one. I might also search for the company’s press release describing how much better and different the new model is from anything else – and, I might read a consumer report saying the opposite. I could look at the specifications, but beyond “air conditioning”, I wouldn’t understand most of them. I know different people care about different things in a car, and I have no idea how to price that into the equation. (My older daughter thinks her car is a giant iPhone that takes her places). So in the end, after a couple of hours, I take a guess. Now, what if the automaker was required by law to use my guess as the lease price?
As I have written in the past, reasonable royalty was an equitable remedy developed by U.S. courts when damages at law could not be proven – juries did not decide the question, a special master typically did. But since juries do decide the issue, wouldn’t it make sense to get a court expert to chime in? Or give better guidance than “balance these fourteen factors” and decide what would have happened hypothetically in a better world years ago? If you read cases in other areas of law, generally you will see them say damages cannot be hypothetical or speculative. Our damages system is fundamentally flawed.
We are the only country in the world that asks twelve people off the street to decide complex questions of technology to decide infringement and validity. I would hate to be put in this position as a juror. I have been on juries and they work hard to do the right thing. What information do they get? 12 hours per side? 20 hours per side? From advocates, who according to their defined role and due to time-constraints, selectively present information? Paid experts who each seem very qualified but can’t agree on anything?
And once the claims are construed, is the only reason we have a trial because paid experts create conflicting facts with their testimony? For example, if you mass produce computers or phones or anything else, they all have to be identical and work the same way. Is the factual conflict really a legal issue of whether the claim construction is clear enough that when you compare the claim to the item, you still have to decide if it falls under the claim? That’s a question of the construction of the claim.
- The PTO is also a source of question and concern. Any litigator can tell you about the case she had where for years the examiner rejected the patent, but then a new examiner took over the file and the claims issued. Look at the priority information on the front of every patent – how many continuations? The pattern I have seen is that the first patent issued is often fairly concrete, but then over a couple of “generations” of continuation applications, the claims become more vague, broader, and much more numerous. Often it is a continuation patent that issued on which a lawsuit is filed, not the original patent.
Patchwork “fixes” by politicians who need to raise campaign money won’t help. (How many technology companies and patent owners are in Vermont anyway?). It is not the job of courts to legislate repairs to the foundation – and experience tells us that judges don’t have consensus views on even basic issues.
We need foundation repair.