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Patent
University of Iowa School of Law
Rantanen, Jason A.

          I.            Patents, generally
a.       Primacy of the patent document
                                               i.            Short title of invention, grant to patentee (and successors), right to exclude others from making, using, selling, the invention
                                              ii.            It is only a right to exclude others' use of the invention, not a right to utilize that invention
1.       Example: inventor 1 invents, patents a chair; inventor 2 invents, patents an improvement on that chair – but neither can make the other's product because it would infringe on their patent.
a.       This may lead to a license for the use of each other's patent – in given markets, etc.
                                            iii.            Patents are limited to what is claimed – that is the “invention” which is excluded from use by others
                                            iv.            Often involve technical subject matter; but they recently have come to include business methods
                                             v.            Largely a common law area – the statutes (35 USC SS 101) are very basic and leave a lot open for statutory interpretation
                                            vi.            Has many interrelated doctrines
        II.            Structure of the class
a.       Role and Function of patent system
b.       Structure of the patent system and the patent
c.        Elements of a valid patent
                                               i.            Subject matter and utility
                                              ii.            Disclosure obligations
                                            iii.            Novelty
                                            iv.            Nonobviousness
d.       The claim and its interpretation
e.        Infringement
                                               i.            Direct, “literal” infringement
                                              ii.            Doctrine of equivalents
                                            iii.            Indirect infringement
f.        Obtaining a patent
g.        Litigating a patent
h.       Inventorship and assignments
i.         Defenses to infringement
j.         Remedies for infringement
k.       Changes of the America Invents Act
l.         Interactions between patent law and other IP rules
     III.            Basis for Patent Law
a.       Constitutional – Art. I, SS 8, Cl. 8:
                                               i.            The Congress shall have power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
1.       Discoveries has been used meaning – things that are human created (not literal discovery)
                                              ii.            Historical Acts
1.       1790 – 1st Patent law implemented (req'd exam by 3-person board)
2.       1793 – shift to registration system (did away with exam, just had to submit and it was approved)
3.       1836 – reintroduction of examination (created modern exam system)
4.       1870 – Rise of peripheral claiming (req'd patentee to “distinctly claim”) instead of central claiming
5.       1952 – modern patent law statute enacted
a.       S.Ct. had been against Patents since the 30s – so Congress passed the '52 law to prevent the court from disfavoring patents – written by patent lawyers (Giles Rich)
6.       1982 – creation of the Federal Circuit
a.       Patents were routinely invalidated, and the circuit courts had great variation – led to forum shopping to get best rulings. Federal Circuit had favorable view of patents.
b.       Strength is unity – weaknesses is loss of emphasis on diversity, competition, and incremental innovation
c.        But then the Supreme Court takes these cases and has been overturning a lot of them – Fed Circuit is a true appellate court
7.       1999 – American Inventor's Protection Act – reformed a few small things, don't effect court documents
8.       2011 – America Invents Act??? – we have pending congressional action
b.       Statutes
                                               i.            SS 100 – definitions
                                              ii.            SS 101 – Inventions patentable
                                            iii.            SS 102 – Conditions for patentability; novelty and loss of right to patent
                                            iv.            SS 103 – obviousness
                                             v.            SS 112 – basic elements of what you put into a patent
                                            vi.            SS 154 – contents and term of patent
                                          vii.            SS 271(a) – direct (literal) infringement
                                         viii.            SS 271(b-c) – indirect infringement
                                            ix.            SS 283 – remedies – injunction
                                             x.            SS 284 – remedies – damages (reasonable; or lost profits)
      IV.            What is a Patent?
a.       An exclusionary right over an idea (invention or innovation) for a period of time, with information that is made public in exchange for the exclusionary right
        V.            THEORY OF INVENTION
a.       Policy & Theory's role in Patent Law
                                               i.            Policy and theory > the constitution > statutes > judicial opinions > arguments in cases and counsel to clients
                                              ii.            Arguments in cases and counsel to clients > judicial opinions > statutes
b.       The different Theories
                                               i.            Utilitarian/Consequentialist Theory
1.       We don't care how the invention came about (accidental, intentional, etc.), we simply care that we now have access to it
                                              ii.            Natural Rights view
1.       One should be entitled to the fruits of their labor (it's a labor theory)
2.       Not concerned with the best result for society, it's a reward system for invention
                                            iii.            Typically, the utilitarian theory is the one most of patent law is concerned with – the benefit to society
c.        What motivates invention?
                                               i.            Reputation
                                              ii.            Personal fulfillment/curiosity
                                            iii.            Economic gain
                                            iv.            Market gain
                                             v.            First-mover advantage – the first mover into a market can have a significant market advantage over others
1.       In the case of pharmaceuticals
a.       Entrance Barrier (research & development costs) is very high, so if only the first entrant can recoup cost, no competitors will enter afterward
b.       After legislation, the barrier of entry could no longer protect pharmaceuticals, so patents became necessary and lowered entrance costs
d.       Incentive to invent
                                               i.            Incentive to Invent – patent system encourages creation of new invention
                                              ii.            Disclosure – in return for patent, patentee must share how the invention works (disclose enough so one of ordinary skill in the art could understand)
1.       Typically inventors don't learn from patents – too vaguely written
                                            iii.            Commercialize – by granting exclusive right over particular invention, give them opportunity to make money off of it
1.       Allows inventors a chance to sit on the original invention
                                            iv.            Prospect Theory – centralized coordination of research in a particular technological field; but it promotes the first to find these technologies and then not improve upon them
1.       Original inventor might not be best person to invest in this invention
e.        Public Goods (ex: 1 boat pays for lighthouse)
                                               i.            Nonrivalrous – consumption by one person does not preclude consumption by others
                                              ii.            Nonexcludable – others' use cannot easily be excluded by the owner/creator
                                            iii.            Patents solve the excludability problem
f.        Arrow's Paradox
                                               i.            In a world without patents, how does an inventor license a new invention without disclosing the technological underpinnings that make it valuable?
1.       Contract law
a.       But a breach by manufacturer in sharing with others leaves inventor without remedy against others using invention
g.        Reasons for a patent system
                                               i.            Marginal Costs vs. Fixed Costs
1.       Fixed cost: resources necessary to create the first good of a type
a.       Borne only by inventor
2.       Marginal cost: incremental cost associated with creation of each unit of the good
                                              ii.            Free-riding problem
1.       Inventor must pay fixed and marginal costs
2.       Copiers need only pay marginal costs
                                            iii.            Solutions to free-riding
1.       Supracompetitive pricing – producer can charge a lot more for having this great invention
2.       Licensing – give the right to produce the good at the supracompetitive price
h.       Quid Pro Quo (favor for a favor)
                                               i.            Inventor creates Kevlar; she exchanges a disclosure of the invention for the exclusionary right (patent)
1.       Society gets the benefit of the technology and the inventor gets the exclusive rights
                                              ii.            Balance of Patents
1.       Inventor benefits and Costs of the patent system vs. the Public gain
i.         Problems with incentive theories
                                               i.            Tradeoffs
1.       Deadweight loss (see graph on right) – as price goes up, number of units sold goes down, and as price goes down, number of units sold goes up
a.       With 2 sellers, they'll be forced to sell at a more competitive price
b.       We generally want to encourage a competitive market because there's a high social value (many more consumers are better off)
                                                                                                     i.            Competitive price = consumer surplus
                                                                                                    ii.            Supracompetitive pricing – creates deadweight loss (graph to the right – the triangle as a whole represents the market for the good)
1.       When one person can control prices and costs, this is what happens
                                              ii.            Administrative Costs
1.       Social costs (society bears)
a.       The Patent Office (and filing fees, etc.)
b.       The Litigation system – US Fed Circ of Appeals
2.       Individual costs (borne by individuals)
a.       Cost of document preparation by the lawyers
b.       Transaction costs – the deadweight loss (but not a true admin cost)
                                            iii.            Patents encourage rent-seeking behavior
1.       Inventors hire good lawyers – going after the “rents” (to get that surplus)
a.       Patent troll – people who get patents on an invention, don't use it, and wait to sue someone who does prod

of matter” – 2 or more substances
e.        Court says “include anything under the sun that is made by man”…
                                                                                                     i.            Except: laws of nature, physical phenomena, and abstract ideas (E=MC2)
1.       None of these 3 describe D's invention
f.        Problem here is the Funk Bros. case – which held that combining 2 bacterium in a plant to produce more nitrogen (it's an obviousness case, not a subject-matter case – so the case is off-point here)
                                                                                                     i.            But in that case, it was just a simple mixture of 2 organisms resulting in no new individual kinds of bacteria; but in this case, we have a new bacteria altogether that could not have been produced by nature
5.       P's arguments
a.       Since 1930 (as evidenced by Plant Patent Act), congress has taken view that no living thing is patentable
b.       Micro-organisms can't be patentable subject matter under 101 until Congress expressly authorizes it
6.       Dissent
a.       Prior acts indicate an intent to exclude living organisms from patentability (Plant Patent Act), and also that generally, living organisms don't fit one of the 4 categories of patentability of SS 101
b.       Also says that Congress had in its view a set of technology, didn't intend to cover lifeforms
                                            iii.            The “oncomouse” – Canada said a mouse, genetically altered to be susceptible to cancer, using a viral infection, is not patentable because it's alive
                                            iv.            Myriad – a patent of DNA is what Myriad has. These patents had been issued for years but not subject to a good challenge.
1.       ISSUE: is a single strand of DNA (a chemical molecule existent in all living things, code for characteristics of life forms) a patentable thing?
a.       DNA is a long chain in a molecule, that is made up of nucleotides (like inches to a foot), and a gene is contained on the strand and codes protein to carry out the work to establish the characteristics of the life form.
b.       In this case, we have the BRCA1&2 genes which are just 1 nucleotide of the DNA – they required cleaving the isolated DNA from its covalent bonds
2.       Argument is that the covalent bond is something so strong that the cleaving is required to make the DNA exist, and couldn't do so in nature on its own
a.       Court says the structure of the DNA in the chain and independent of are 2 different structures
3.       Concurring opinion says – it has a change in structure and it has a different and new utility
4.       Dissent – the only change that occurs is the change that is inevitable for extraction – just like removing minerals from quarries, etc.
a.       This is focused on the information that is extracted, not the structure – which is completely unchanged
                                             v.            Business Methods – Process Patentability
1.       Bilski v. Kappos – the inventor here is claiming a “risk hedging” method as his invention.
a.       ISSUE: is this a section 101 patentable subject matter?
b.       HOLDING: it fails the machine-transformation test because it is an abstract idea, and is thus not patentable
                                                                                                     i.            What is a “machine”? A physical machine or apparatus, a useful physically or digitally present device
c.        RULE: Machine or Transformation Test:
                                                                                                     i.            Is it tied to a particular machine or apparatus, OR
                                                                                                    ii.            Transforms a particular article into a different state or thing
d.       The Supreme Court agrees that this test is useful, but they also say that it should not be the only test.  There should be other things that are looked at.  However, they don't really give any other test that can be used.
                                                                                                     i.            Don't want to say business method patents in general are not patentable because there may be something in the future that is a business method and passes all of the patentable limits.  They say that they don't want to exclude future technologies that have not yet been developed.
                                                                                                    ii.            Also, Section 273 seems to explicitly allow business method patents, so long as they pass all of the other rules.