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Is the Patent System Broken

Posted by: In: Uncategorized 23 May 2013 Comments: 0

Last week, the Federalist Society hosted an event titled “Is the Patent System Working or Broken?” The panel consisted of Hon. Arthur Gajarsa, a former Judge on the Federal Circuit; Hon. Paul Michel, former Chief Judge of the Federal Circuit; Hon. Richard Posner, a Judge on the Seventh Circuit; and moderated by Hon. Douglas Ginsburg, a Senior Circuit Judge on the D.C. Circuit. As you would imagine, the debate was robust and spirited, but a simple “yes or no” answer to the proposed question was never reached.

Of course, no one expects a simple answer to this question. It is very complex and there are so many factors that affect the patent system and its efficiency that it is impossible to provide an easy answer. But, it seems that everyone agrees that the patent system isn’t working to its full potential. Although the panelists disagreed on several points, they all presented interesting ideas for reform.

Judge Posner recommended having variable patent terms based on the type of technology claimed. For example, a new drug might retain the current 20-year term while a software patent might receive only a 3-year term. Judge Gajarsa agreed with variable terms, however, Chief Judge Michel raised a key barrier in changing patent terms. The U.S. is bound by several treaties that require a 20-year patent term. He also cautioned that patent terms could become a political ploy, with Congress changing patent terms based on the lobbyists’ desires. This would lead to great uncertainty as to the value of a patent.

All three panelists agreed that litigation is too expensive and takes too long. Judge Gajarsa believes that Post-Grant Review, a new system provided by the America Invents Act, will help to reduce litigation time and costs by providing another way of challenging a patent’s validity. The panel also discussed the Patent Pilot Program, which is a ten-year program designed to enhance the district courts’ expertise in patent cases. Chief Judge Michel applauded policies that Judge Posner has implemented in patent cases he had tried that also were successful, such as keeping tight deadlines for discovery. The panel seemed to agree that discovery is the main reason that litigation is so expensive.

But, the panel was not completely in agreement on many issues. For example, Judge Posner is not a fan of patent “trolls”, stating that they are an “unmitigated disaster” and provide no social good to the system. Judge Posner is very uncomfortable with the fact that 60% of cases are brought by non-practicing entities. However, Chief Judge Michel is comfortable with that statistic, saying that a patent is a property right. Judge Posner believes that we have too many software patents (about 400,000 are currently in effect) and the software covered likely would have been created even without a patent system. But, Chief Judge Michel stated that we have no way of knowing this and Judge Gajarsa raised as an example the Google patent, which created an entirely new industry.

Although the panelists disagreed on many issues, there are areas of common ground that would be a great starting point for reforming the patent system. Overall, the key place of agreement is that the patent system is not completely broken. The system does provide incentives for some innovations and a degree of certainty in many cases. However, it can always be improved. New programs, like Post-Grant Review and the Patent Pilot Program, will hopefully bring efficiencies and positive change to the system.

The webcast of the Federalist Society’s panel can be found here:

– Suzy Fitzgerald

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