Law Commons^™

A Patent And A Prize, Keith N. Hylton

Faculty Scholarship

This paper examines a simple and old question: should innovators receive a patent or a prize? The answer I provide is equally simple: they should receive both. The literature on patents versus prizes has proceeded mostly under the assumption that there should be a choice between a regime of patents and a regime of prizes in which patents fall into the public domain upon award of the prize. There are significant “public choice costs” under the prize plans. By this I mean there are risks of inappropriate transfers to patentees – that is, looting – and of confiscation of patentees, …

Nonpatentability Of Business Methods: Legal And Economic Analysis, Peter Menell, Michael J. Meurer

Faculty Scholarship

In this brief filed in Bilski vs. Kappos, pending before the U.S. Supreme Court, we argue that the "useful Arts" limitation of the the Intellectual Property Clause of the U.S.Constitution restricts the scope of Congress's patent power to technological advances. Beyond this constitutional limitation, Congress has not extended patent protection to business methods. The subject matter provision of the 1952 Patent Act merely codified existing subject matter categories and limitations, including the exclusion of business methods. The First Inventor Defense Act of 1999 did not alter this limitation on patentable subject matter. It did not amend the subject matter provision. …

Competition And Innovation: The Breakup Of Ig Farben, Felix Poege

Faculty Scholarship

The relationship between competition and innovation is difficult to disentangle, as exogenous variation in market structure is rare. The 1952 breakup of Germany’s leading chemical company, IG Farben, represents such a disruption. After the Second World War, the Allies occupying Germany imposed the breakup because of IG Farben’s importance for the German war economy instead of standard antitrust concerns. In technology areas where the breakup reduced concentration, patenting increased strongly, driven by domestic firms unrelated to IG Farben. An analysis of patent texts shows that an increased propensity to patent does not drive the effect. Descriptively, IG Farben’s successors increased …

Intellectual Property Through A Non-Western Lens: Patents In Islamic Law, Tabrez Y. Ebrahim

Faculty Scholarship

The intersection of secular, Western intellectual property law and Islamic law is undertheorized in legal scholarship. Yet the nascent and developing non-Western law of one form of intellectual property—patents—in Islamic legal systems is profoundly important for transformational innovation and economic development initiatives of Muslim-majority countries that comprise nearly one-fifth of the world’s population.

Recent scholarship highlights the tensions of intellectual property in Islamic law because religious considerations in an Islamic society do not fully align with Western notions of patents. As Islamic legal systems have begun to embrace patents in recent decades, theories of patents have presented conceptual and theological …

The Normative Molecule: Patent Rights And Dna, Saurabh Vishnubhakat

Faculty Scholarship

Throughout the biotechnology age, fears about the distortionary effects of property and other legal institutions upon the health and self-determination of individuals and societies have accompanied more popularly sensational fears about unscrupulous choices within the scientific community itself. Still, for most of that time the prevailing legal regime both in the United States and in Europe remained generally permissive of ownership of, and exclusionary power over, the fruits of much biomedical research, though this leniency took different forms and came about in different ways. In particular, the policy of the United States Patent and Trademark Office to grant patents on …

National Cybersecurity Innovation, Tabrez Y. Ebrahim

Faculty Scholarship

National cybersecurity plays a crucial role in protecting our critical infrastructure, such as telecommunication networks, the electricity grid, and even financial transactions. Most discussions about promoting national cybersecurity focus on governance structures, international relations, and political science. In contrast, this Article proposes a different agenda and one that promotes the use of innovation mechanisms for technological advancement. By promoting inducements for technological developments, such innovation mechanisms encourage the advancement of national cybersecurity solutions. In exploring possible solutions, this Article asks whether the government or markets can provide national cybersecurity innovation. This inquiry is a fragment of a much larger literature …

Data-Centric Technologies: Patent And Copyright Doctrinal Disruptions, Tabrez Y. Ebrahim

Faculty Scholarship

Data-centric technologies create information content that directly controls, modifies, or responds to the physical world. This information content resides in the digital world yet has profound economic and societal impact in the physical world. 3D printing and artificial intelligence are examples of data-centric technologies. 3D printing utilizes digital data for eventual printing of physical goods. Artificial intelligence learns from data sets to make predictions or automated decisions for use in physical applications and systems. 3D printing and artificial intelligence technologies are based on digital foundations, blur the digital and physical divide, and dramatically improve physical goods, objects, products, or systems. …

The Field Of Invention, Saurabh Vishnubhakat

Faculty Scholarship

Federal courts can ill afford to ignore, assume, or improvise a pervasively important administrative power that the Patent Office exercises regularly and effectively: technology classification. This agency-court asymmetry has persisted for decades but has now become unmanageably problematic for two related reasons. First, Supreme Court guidance, patent reform legislation, and academic commentary have all broadly rejected long-standing patent exceptionalism in administrative law, while making the Patent Office a major substitute for federal courts in resolving patent disputes. Still, patent doctrine has been slow to correct, particularly in judicial deference to agency action. Second, criticisms of the patent system are highly …

Software's Copyright Anticommons, Clark D. Asay

Faculty Scholarship

Scholars have long assessed “anticommons” problems in creative and innovative environments. An anticommons develops when an asset has numerous rights holders, each of which has a right to prevent use of the asset, but none of which has a right to use the asset without authorization from the other rights holders. Hence, when any one of those rights holders uses its rights in ways that inhibit use of the common asset, an anticommons may result.

In the software world, scholars have long argued that anticommons problems arise, if at all, because of patent rights. Copyright, on the other hand, has …

Intellectual Property Law Hybridization, Clark D. Asay

Faculty Scholarship

Traditionally, patent and copyright laws have been viewed as separate bodies of law with distinct utilitarian goals. The conventional wisdom holds that patent law aims to incentivize the production of inventive ideas, while copyright focuses on protecting the original expression of ideas, but not the underlying ideas themselves. This customary divide between patent and copyright laws finds some support in the Constitution’s Intellectual Property Clause, and Congress, courts, and scholars have largely perpetuated it in enacting, interpreting, and analyzing copyright and patent laws over time.

In this Article, I argue that it is time to partially breach this traditional divide. …

Copyright's Technological Interdependencies, Clark D. Asay

Faculty Scholarship

Copyright was initially conceptualized as a means to free creative parties from dependency on public and private patrons such as monarchs, churches, and well-to-do private citizens. By achieving independence for creative parties, the theory ran, copyright led to greater production of a more diverse set of creative works.

But this lingering conception of copyright is both inaccurate and harmful. It is inaccurate because, in today’s world, creative parties are increasingly dependent upon “Technological Patronage” from the likes of Google, Amazon, Apple, and others. Thus, rather than being alternatives or adversaries, copyright and Technological Patronage are increasingly interdependent in facilitating both …

Expired Patents, Saurabh Vishnubhakat

Faculty Scholarship

This article presents a comprehensive empirical description of the public domain of technologies that have recently passed out of patent protection. From a new dataset of over 300,000 patents that expired during 2008–2012, the study examines technological, geographical, and procedural traits of newly public inventions as a basis for exploring the social value associated with their competitive use. Moreover, comparing these inventions to inventions newly patented during the same period enables more specific discussion of how the balance of innovation in the United States continues to change.

Promoting Progress: A Qualitative Analysis Of Creative And Innovative Production, Jessica Silbey

Faculty Scholarship

This chapter is based on data collected as part of a larger qualitative empirical study based on face-to-face interviews with artists, scientists, engineers, their lawyers, agents and business partners. Broadly, the project involves the collecting and analysis of these interviews to understand how and why the interviewees create and innovate and to make sense of the intersection between intellectual property law and creative and innovative activity from the ground up. This chapter specifically investigates the concept of “progress” as discussed in the interviews. “Promoting progress” is the ostensible goal of the intellectual property protection in the United States, but what …

The Growing Public Domain In Medicine, Saurabh Vishnubhakat

Faculty Scholarship

This essay describes the growing public domain of inventions associated with drugs and medicine, and geographies associated with identifiable shifts in the balance of innovation that may be especially favorable for promoting wider access to socially useful technologies. To do so, it departs from the largely ex ante perspective that currently informs the intersectional debate regarding human rights and patent rights and, instead, looks backward to inquire what innovations from past patents have already become publicly available in service of the human rights objective of greater access to technology. Ex post analysis of this kind may help public and private …

Brief Of Amici Curiae Law, Business, And Economics Scholars In Alice Corp. V. Cls Bank, No. 13-298, Jason Schultz, Brian Love, James Bessen, Michael J. Meurer

Faculty Scholarship

The Federal Circuit’s expansion of patentable subject matter in the 1990s led to a threefold increase in software patents, many of which contain abstract ideas merely tethered to a general-purpose computer. There is little evidence, however, to suggest this expansion has produced an increase in software innovation. The software industry was highly innovative in the decade immediately prior to this expansion, when the viability of software patentability was unclear and software patents were few. When surveyed, most software developers oppose software patenting, and, in practice, software innovators tend to rely on other tools to capture market share such as first-mover …

Intellectual Property And Public Health – A White Paper, Ryan G. Vacca, James Ming Chen, Jay Dratler Jr., Thomas Folsom, Timothy S. Hall, Yaniv Heled, Frank A. Pasquale, Elizabeth A. Reilly, Jeffery Samuels, Katherine J. Strandburg, Kara W. Swanson, Andrew W. Torrance, Katharine A. Van Tassel

Faculty Scholarship

On October 26, 2012, the University of Akron School of Law’s Center for Intellectual Property and Technology hosted its Sixth Annual IP Scholars Forum. In attendance were thirteen legal scholars with expertise and an interest in IP and public health who met to discuss problems and potential solutions at the intersection of these fields. This report summarizes this discussion by describing the problems raised, areas of agreement and disagreement between the participants, suggestions and solutions made by participants and the subsequent evaluations of these suggestions and solutions. Led by the moderator, participants at the Forum focused generally on three broad …

Certain Patents, Alan C. Marco, Saurabh Vishnubhakat

Faculty Scholarship

This Article presents the first in a series of studies of stock market reactions to the legal outcomes of patent cases. From a sample of patents litigated during a 20-year period, we estimate market reactions to patent litigation decisions and to patent grants. These estimates reveal that the resolution of legal uncertainty over patent validity and patent infringement is, on average, worth as much to a firm as is the initial grant of the patent right. Each is worth about 1.0-1.5% excess returns on investment. There are significant differences between such market reactions before and after the establishment in 1982 …

A Generation Of Software Patents, James Bessen

Faculty Scholarship

This report examines changes in the patenting behavior of the software industry since the 1990s. It finds that most software firms still do not patent, most software patents are obtained by a few large firms in the software industry or in other industries, and the risk of litigation from software patents continues to increase dramatically. Given these findings, it is hard to conclude that software patents have provided a net social benefit in the software industry.

Death From The Public Domain?, Kevin Outterson

Faculty Scholarship

In his recent article in the Texas Law Review, Ben Roin advances the claim that pharmaceutical innovation and the public’s health are harmed by the doctrines of non-obviousness and novelty. He does not mince words, labeling the nonobvious requirement as “perversity” with a “pernicious” effect on drug development. In his view, these standards pose an insurmountable barrier for drug companies seeking to commercialize inventions already in the public domain. He claims that valuable, life-saving drug ideas languish in the public domain because the companies face high barriers to entry from the FDA, but potential free riders are encouraged through the …

Sequential Innovation, Patents, And Imitation, James Bessen, Eric Maskin

Faculty Scholarship

How could such industries as software, semiconductors, and computers have been so innovative despite historically weak patent protection? We argue that if innovation is both sequential and complementary--as it certainly has been in those industries--competition can increase firms' future profits thus offsetting short-term dissipation of rents. A simple model also shows that in such a dynamic industry, patent protection may reduce overall innovation and social welfare. The natural experiment that occurred when patent protection was extended to software in the 1980?s provides a test of this model. Standard arguments would predict that R&D intensity and productivity should have increased among …

An Empirical Look At Software Patents, James Bessen, Robert M. Hunt

Faculty Scholarship

U.S. legal changes have made it easier to obtain patents on inventions that use software. Software patents have grown rapidly and now comprise 15 percent of all patents. They are acquired primarily by large manufacturing firms in industries known for strategic patenting; only 5 percent belong to software publishers. The very large increase in software patent propensity over time is not adequately explained by changes in R&D investments, employment of computer programmers, or productivity growth. The residual increase in patent propensity is consistent with a sizeable rise in the cost effectiveness of software patents during the 1990s. We find evidence …

The Value Of U.S. Patents By Owner And Patent Characteristics, James Bessen

Faculty Scholarship

This paper uses renewal data to estimate the value of U.S. patents, controlling for patent and owner characteristics. Estimates of U.S. patent value are substantially larger than estimates for European patents, however, the ratio of U.S. patent value to R&D for firms is only about 3%. Patents issued to small patentees are much less valuable than those issued to large corporations, perhaps reflecting imperfect markets for technology. Litigated patents are more valuable, as are highly cited patents. However, patent citations explain little variance in value, suggesting limits to their use as a measure of patent quality.

A Comment On 'Do Patents Facilitate Financing In The Software Industry?', James Bessen

Faculty Scholarship

'Do Patents Facilitate Financing in the Software Industry?' by Ronald J. Mann contributes empirical evidence to our understanding of how software startups use patents. However, a close examination of the actual empirical findings in this paper points to rather different conclusions than those that Mann draws, namely: few software startups benefit from software patents and patents are not widely used by software firms to obtain venture financing. Indeed, among other things, the paper reports that 80% of venture-financed software startups had no acquired any patents within four years of receiving financing.

Patent Buy-Outs For Global Disease Innovations For Low- And Middle-Income Countries, Kevin Outterson

Faculty Scholarship

Drug prices are uniquely susceptible to radical price reductions through generic competition. Patented pharmaceuticals may be priced at more than 30 times the marginal cost of production; the excess is the patent rent collected by the drug company while the patent and exclusive marketing periods remain. Patent rents are significant. AIDS drugs which sell for US$10,000 per person per year in the US are sold generically for less than US$200. If patented drugs could be sold at the marginal cost of production, cost effective treatments would become even more attractive, and other interventions would become affordable.

This Article proposes marginal …

Estimates Of Patent Rents From Firm Market Value, James Bessen

Faculty Scholarship

The value of patent rents is an important quantity for policy analysis. However, estimates in the literature based on patent renewals might be understated. Market value regressions could provide validation, but they have not had clear theoretical foundations for estimating patent rents. I develop a simple model to make upper bound estimates of patent rents using regressions on Tobin's Q. I test this on a sample of US firms and find it robust to a variety of considerations. My estimates correspond well with estimates based on patentee behavior outside the pharmaceutical industry, but renewal estimates might be understated for pharmaceuticals.

The Vanishing Public Domain: Antibiotic Resistance, Pharmaceutical Innovation And Global Public Health, Kevin Outterson

Faculty Scholarship

Penicillin and other antibiotics were the original wonder drugs and laid the foundation of the modern pharmaceutical industry. Human health significantly improved with the introduction of antibiotics. By 1967, the US Surgeon General declared victory over infectious diseases in the US. But pride goes before a fall. The evolutionary pressure of antibiotic use selects for resistant strains with the least fitness cost. Effective drugs should be used. But when they are used, no matter how carefully, evolutionary pressure for resistance is created. The problem is not limited to antibiotics. Variants of the human immunodeficiency (AIDS) virus develop resistance to anti-retroviral …

Patents And The Diffusion Of Technical Information, James Bessen

Faculty Scholarship

Does the disclosure requirement of the patent system encourage the diffusion of inventions? This paper builds a simple model where firms choose between patents and trade secrecy to protect inventions. Diffusion is not necessarily more likely with a patent system nor is the market for technology necessarily greater.

Hold-Up And Patent Licensing Of Cumulative Innovations With Private Information, James Bessen

Faculty Scholarship

When innovation is cumulative, early patentees hold claims against later innovators. Then potential hold-up may cause prospective second stage innovators to forego investing in R&D. It is sometimes argued that ex ante licensing (before R&D) avoids hold-up. This paper explores ex ante licensing when information about development cost is private. In this case, contracts may not be written ex ante. Moreover, the socially optimal division of profit occurs with weak patents and ex post licensing. Empirical evidence on licensing conforms to a model with private information. In some innovative industries, little ex ante licensing occurs, suggesting hold-up remains a problem.