Drake IP Scholars, Panel 7

Unfortunately I had to leave before the last panel, but as usual Peter Yu brought a really interesting group together.

Panel 7: Patents and Empirical Studies

Donna M. Gitter, Baruch College ―Should the United States Designate Specialist Patent Trial Judges? An Empirical Analysis of H.R. 34 in Light of the U.K. Experience and the Work of Professor Moore

Federal Circuit currently reverses 1/3 to ½ of claim constructions by district courts. Congress is considering a pilot program for specialized federal district court judges handling patent matters.

England as a comparator: there, the criteria are similar; they use PHOSITA; they have similar discovery; claim construction is a matter for the judge; claim construction is typically outcome determinative. However, there is a specialized patent court. A typical patent judge in England hears 5-7 patent cases a year, plus motions, whereas in the US a district judge typically has one patent case every 7 years. Her data suggest, depending on how you count, individual claim construction is reversed on appeal in England at a rate of 14.7% or 15.7%. If you consider cases in which reversal of claim construction resulted in reversal of the whole case, the gap narrows: 29.7% in the US, and 25.6/25.9% in England. Between 11.6% and 19.8% of individual claim terms construed at the appellate level are reversed by that court each year.

Is it something other than specialization? The overall appelate reversal rate in the US for all civil matters is less than 9% for all civil matters, 13% for the Federal Circuit; 41.9% is the reversal rate for English courts.

Katherine Linton, U.S. International Trade Commission ―Patenting Trends and Innovation in Industrial Biotechnology (with Jeremy Wise and Philip Stone)

Two recent studies on industiral biotech: chemical and biofuel industries. Industrial biotech = using enzymes or microorganisms to convert raw materials into industrially useful products. Economic and environmental benefits may result. Biofuels: corn and cellulosic ethanol; bio-based plastics. Surveyed firms; 559 reported industrial biotech production or R&D.

Their research found 1975-2007 nearly 20,000 patents total that may be related to industrial biotech, but the classifications are somewhat unclear. Big peak around 1999. University patents are about 13%. New owners (people/entities without previous patents) also increased along with everything else. Patents used in producing cellulosic ethanol: 63% held by foreign corporations, 15% domestic, 8% US universities.

Common threads: patents involve collaborations between firms, universities and government to move from R&D to commercialization. Patents are not concentrated in just a few places. Small firms hold strong foundational patent portfolios based on discoveries from a university setting; use patent portfolio to attract investment. Big players claim that patent portfolios are key to success and that patents aren’t a significant barrier to commercialization. IP activities are on the rise, especially in trademark.

David Schwartz, John Marshall Law School ―Confusing Construction or Constructing Confusion? An Empirical Study of Patent Claim Construction Reversal Rates Across Technologies

Lemley & Burk argue that patent law empirically treats different tech differently. Biotech and software: software has higher requirements for obviousness, but lower for written description and enablement. Burk & Lemley think this is a good thing: gives policy levers. Do claim construction reversal rates differ by technology?

Database: Markman-end of 2007, about 1354 patents (fewer cases). Current patent classifications are not strong for software patents. Does see different claim construction reversal rates.

Possibility: Different PHOSITAs. Maybe biotech/pharm/chem has more common vocabulary than software/business methods; if people in the field can agree more, then judges will also find it easier to agree. Software patents are simply harder to construe (making chem/pharma etc. patents more valuable). “Hypermedia distributed environment” is a term from software, and it doesn’t have a non-patent meaning; he thinks this is less common in biotech etc. So: different levels of indeterminacy in the claims, simply from lack of shared vocabulary, may drive higher reversal rate.

Another explanation: courts actually construe claims differently. District courts see the parties for several years and may use claim construction to reach the right result. Software involves more NPEs, less sympathetic; perhaps district courts factor in more equities. And the Federal Circuit just gets a cold record and doesn’t do the same.

Ted Sichelman, Boalt Hall School of Law, University of California at Berkeley ―Why Entrepreneurs Patent: An Empirical Study of Startup Company Patenting (with Stuart J.H. Graham)

Biggest reason startups endorse for patenting: preventing other people from copying; obtaining licensing revenues is less important than other reasons; signalling (reputation, increasing chances of acquisition/IPO) are somewhere in the middle, as is strategic (protection against others’ patent claims). The number one reason they don’t patent: cost, which was about $38,000—more than big firms spend on their patents, which tends to be $10,000 or even lower for really big firms like IBM with in-house counsel. Cost of enforcing, ease of inventing around are also somewhat important; very few said that they had no need for legal protection.

Discussants: Edmund J. Sease, Partner, McKee, Voorhees & Sease, PLC

Note: He worries when he hears people talk about teaching theory because what he wants from newly fledged lawyers is understanding of the law: novelty, obviousness, etc. Markman is not a good decision; the problem isn’t the courts but the standard they’re expected to apply. Words have more than one meaning; people in the business should be the ones determining what they mean; judges are not better than juries.