Giant Slaying and Patent Reform

Last week, I attended a local seminar on the America Invents Act. Much of the discussion at the seminar was centered on arguments supporting the nature of the changes made. There were recitals of “what was wrong” with the old U.S. patent code, and so forth; then arguments were advanced justifying the principal changes (although the presenters almost implied these might be “principle” changes!).Without getting into a detailed discussion on the virtues or failings of the AIA (such as “first to file” and whether this will hurt, or help, any particular party) the gist of the seminar was that the U.S. patent system was unbalanced and no longer served the original purpose of protecting “inventions” in a coherent fashion.

Following the AIA seminar, I was doing some online research, to support drafting of some funding proposals. Since I like to slip in the occasional “true confession” here, I confess that in the course of such research I often follow a wild goose “link” and wind up reading interesting bits of history or trivia. Thus, I came across a discussion of AIA on another blog, from the Hoover Institution at Stanford University–Patently Bad Policy by F. Scott Kieff. Toward the end of the post, Kieff writes: “To paraphrase Judge Jerome Frank writing in the 1942 case of Picard v. United Aircraft: predictable enforcement of patents helps give the Davids the vital slingshots they need to take on the Goliaths.”

I felt compelled to search out this reference and read exactly what Judge Frank had written. So, I wound up reading some case law –OK, I don’t get out much. I was amused to find a somewhat familiar discussion of the problems inherent in the patent system (and enforcement of patents). The opinion in this case (Picard v. United Aircraft Corporation, 128 F. 2d 632 – Circuit Court of Appeals, 2nd Circuit 1942) was written by Judge Learned Hand, with Judge Frank writing to concur. As I understood the ruling, two key claims of the patent were held to be invalid, but otherwise a prior opinion was upheld.

Judge Frank does agree with the opinion of Judge Hand in this case, but is not entirely comfortable. He took the time to discuss how some of the patent claims might “seem” valid until you looked closely. But in the end, the subject matter was a mere “improvement” not rising to the level of “patent worthiness.” He summarizes, quoting an earlier ruling from Judge Hand:

Nothing is an invention which is the product of “the slow but inevitable progress…through trial and error” and of “the exercise of persistent and intelligent search for improvement.”

Nevertheless, he seems to feel that the patent disclosed something of value and that the patent system wasn’t able to capture or protect this properly. He is concerned that all “modern” research (back in 1942) is conducted such that “trial and error” is the name of the game, and that the “exercise of persistent and intelligent search for improvement” will result in many ideas being “unpatentable.”

If that means that every kind of patent system is outworn, the idea is disturbing. For, as I see it, there seems still to be room for some kind of patent monopoly which, through hope of rewards to be gained through such a monopoly, will induce venturesome investors to risk large sums needed to bring to the commercially useful stage those new ideas which require immense expenditures for that purpose.

Obviously, since patent law is expressly intended to offer incentive and rewards to inventors, not investors, Judge Frank goes on to suggest that we “may not need patents as rewards to inventors” since:

Modern industrialism owes much to the ideas of Faraday, who cared nothing for money. Kaempffert writes: “To be sure, inventors long for wealth. So do poets. But the patent laws are no more responsible for great inventions than are copyright laws for great poems. Watt was no more impelled by the desire to make money when he invented the separate condenser than Milton was impelled to earn the equivalent of twenty-five dollars by writing Paradise Lost.”

He also suggests that what might be needed is something “patent like” to protect investment in research and development:

And so patent monopolies may still be socially useful; they may, indeed, as I have said, foster competition. The David Co. v. Goliath, Inc. kind of competition is dependent on investment in David Co. — the small new competitor. And few men will invest in such a competitor unless they think it has a potential patent monopoly as a slingshot.

It seems to me that this is at the heart of all the hand wringing about patents today—and even about similar difficulties facing copyright law. Thus, there are those who honestly believe that certain advancements in technology are not proper candidates for patent protection(such as software) or that there are too many examples of “incremental improvements” being passed off as inventions (as for many biotech patents). Likewise, there are those who see no reason to limit patentable subject unduly, since their primary goal is to offer incentive for investment in the development of products.

Many times in a meeting with faculty I’ve observed that while we certainly can file a patent application to protect software they have developed, it might not be the best way to protect it. Then again, I can’t say that copyright law is a very satisfying alternative, and I’ve always wondered why someone can’t come up with an innovative mechanism that allows for proper protection of this sort of work. Obviously there are many people who agree that these were NOT intended to be included in the realm of patentable inventions. Further, modern business practices essentially defeat the intended purpose of a patent. If software is going to obsolete in 3-5 years, of what possible use is a 20 year “limited monopoly”?

In the end I agree with Judge Frank when he states that “[the] problem is not whether there should be monopolies, but, rather, what monopolies there should be, and whether and how much they should be regulated.” How many “slingshots” should be put into the hands of how many “Davids”? Which “Davids” should get a particular slingshot?  And don’t giants get to have slingshots too? Remember, Goliath can’t have been too happy about the outcome of that mythical encounter with his David. But then, if the slingshot was used effectively, maybe it would deter a modern Goliath from interfering in the business of the David holding it, and there would be no cause to actually slay any giants, just back them off a bit!

For now it seems, the only answer to the problem is offered by the current AIA legislation, about sixty years after Judge Frank’s comments. Only experience will prove whether AIA achieves some of the desired goals, but hopefully, it is a move in the right direction.