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Traditional justifications for patents are all based on direct or indirect contribution to the creation of new products. Patents serve the social interest if they provide not just invention, but innovation the world would not otherwise have. Non-practicing entities (“NPEs”) as well as product-producing companies can sometimes provide such innovation, either directly, through working the patent or transferring technology to others who do, or indirectly, when others copy the patented innovation. The available evidence suggests, however, that patent licensing demands and lawsuits from NPEs are normally not cases that involve any of these activities. Some scholars have argued that patents can be valuable even without technology transfer because the ability to exclude others from the market may drive commercialization that would not otherwise occur. We demonstrate that even if various commercialization theories can sometimes justify patent protection, they cannot justify most NPE lawsuits or licensing demands.

In this paper, we show that there are important differences across patent examiners at the U.S. Patent and Trademark Office (USPTO), and that these relate to the most important decision made by the USPTO: whether or not to grant a patent. We find that more experienced examiners, and those who systematically cite less prior art, are more likely to grant patent applications. These results are not encouraging as a matter of public policy. But they do point to human resource policies as potentially important levers in patent system reform. (JEL Keywords: O34 - Intellectual Property Rights; O38 - Government Policy)

This is a review of James Boyle's new book, Shamans, Software and Spleens: Law and the Construction of the Information Society. Boyle's book ranges across the law of information, which he argues should be treated as a unified discipline. Boyle applies his analysis of "romantic authorship" to the law of information, arguing that in copyright and elsewhere, the law gives new works too much protection because it wrongly discounts the sources on which those works necessarily build. In this review, I suggest that whatever its merits as legal argument, "romantic authorship" does not explain very much about the features of copyright law, nor why copyright protection is expanding over time. I suggest an alternative explanation: that a particular strand of law and economics scholarship that endorses strong property rights is pushing for the "propertization" of all valuable information.

The patent systems lack logic. These postulates something phenomenon called ‘invention’, but in fact no satisfactory legal definition of ‘invention’ has ever appeared, and the courts, in their search for guiding rules, have produced an almost incredible tangle of conflicting doctrines and the needful decisions are often made by the help of case law. Aaron X. Fellmeth, professor of Law (USA, 2012) has accentuated this situation especially pointedly: “After 220 years of progressively developed patent statutes and jurisprudence, the concept of invention, so central and fundamental to patent law, has become one of the most misunderstood”. Honestly, majority patent systems, including large ones as USA, Germany, United Kingdom, etc. and international agreements and conventions - TRIPS, PCT, EPC have not been able to this day to define the basic concepts of patent law - ‘invention’ and its derivation - ‘patentable one’. It should be also patent practitioners concern who are preparing for Unitary Patent and Unified Patent Court nowadays. In this connection professor of law Lemley, Mark A. (USA, 2012) has mentioned thought-provokingly in his scholarly paper ‘Point of Novelty’: “We award patents to inventors because we hope to encourage new ideas. For this reason, the fundamental requirement for getting a patent is that you have invented something new. It is curious, then, that patent law itself purports to pay no attention to which aspects of a patentee’s invention are in fact new. A patented invention is legally defined by its claims - written definitions of the invention. And those written definitions virtually never call out what it is that is new about the patentee’s invention... As that court (United States Court of Appeals - T.T) has put it, there is no legally recognizable . . . ‘gist,’ or ‘heart’ of the invention”. In this paper I dare to point out and once more verify (in addition to my earlier papers) that there is still exists legally recognizable ‘gist’ or ‘heart’ of the invention, namely the novel inventive idea for solving concrete (old or new) technical problem. Therefore in the future we must in addition to the technical features meet in the claim of a patented invention - written definition of the invention - the explicitly formulated concrete technical problem and for solving it n o v e l inventive idea what the patentee actually created, i.e. all in all in fact a new thing (in the case in question - information or knowledge item as the patentable invention) that did not exist before. And as the result of it the updated claim construction will correspond to the legal definition of patentable invention and the claim of concrete patentable invention would successfully and concurrently replace traditional summary of essence of the invention in the patent application as well in the title page of patent document. In order to comprehend the latter it must be first make clear that Patent Law as property one does not create things. Patent Law only provides a structural framework and a set of rules that specify and control the legal relationships between persons and intangible things. Thus inventive idea exists even in the absence of all law. And it can be considered as axiom, that due to the nature of such idea, it cannot be possessed if others know it. In any case the inventive idea, as legally recognizable ‘gist’ or ‘heart’ of the invention must be novel before the invention can be considered as property. It does not also forget that the most general meaning of the notion ‘invention’ in the present context is ‘the act of inventing’.

The traditional theory of IP is that the prospect of future reward provides an ex ante incentive to innovate. An increasingly common justification for longer and more powerful IP rights is ex post - that IP will be "managed" most efficiently if control is consolidated in a single owner. This argument is made, for example, in the prospect and rent dissipation literature in patent law, in justifications for expansive rights of publicity, and in defense of the Bono Copyright Term Extension Act. Taken to an extreme, this argument justifies perpetual protection with no real exceptions. Those who rely on this theory take the idea of IP as "property" too seriously, and reason that since individual pieces of property are perpetually managed, IP should be too. But IP isn't just like real property; indeed, it gives IP owners control over what others do with their real property. The ex post justification is strikingly anti-market. We would never say today that the market for paper clips would be "efficiently managed" if put into the hands of a single firm. We rely on competition to do that for us. But that is exactly what the ex post theory would do. In this paper, I explore the sub rosa development of this ex post theory of IP. I argue that the basis for continued control is the assumption that the value of IP rights will be dissipated if they are used too much. This argument is fundamentally at odds with the public goods nature of information. It stems from a particular sort of myopia about private ordering, in which actions by individual private firms are presumed to be ideal and the traditional role of the market in disciplining errant firms is ignored.

One of the oddest things to an outsider about the United States patent system is that due to continuation practice it is impossible for the U.S. Patent and Trademark Office (PTO) ever to finally reject a patent application. Continuation applications have led to abuse of the patent prosecution process. They serve very little useful purpose, and what benefits they confer may be outweighed by their potential for mischief. In an effort to study the pervasiveness of continuation practice, we compiled an original dataset comprising 2,224,379 patents, every patent issued from 1976 through 2000. We found that while continuations are filed in 23% of all patent applications, patents based on continuation applications represent 52% of all litigated patents. Although continuations are used in a minority of all patents, it is the most important minority because it is the minority most likely to end up in litigation. We examine the efforts undertaken to control the problems associated with continuation patents (changing the patent term, publishing applications, prosecution laches) and find them insufficient. The world would probably be a better place if they were abolished. Recognizing, however, that the abuse of continuation practice is not as pervasive as some might think, we propose a number of means by which Congress and the courts could strengthen existing rules designed to limit their abuse while preserving the practice. At a minimum, the empirical data we present can provide litigants and judges with a baseline for assessing the reasonableness of delay caused by the filing of multiple continuations by the patentee in determining the applicability of equitable remedies such as prosecution laches.

It is common to assert that the Patent and Trademark Office does a bad job of examining patents, and that it should spend more time and money weeding out bad patents. In this article, Professor Lemley challenges that conventional wisdom. Using available data regarding the cost and incidence of patent prosecution, litigation, licensing and other uses of patents, he demonstrates that strengthening the examination process is not cost effective. The core insight is that very few patents are actually litigated or licensed; most simply sit on a shelf unused, or are used only for noncontroversial purposes like financing. Because of this, society would be better off spending its resources in a more searching judicial inquiry into validity in those few cases in which it matters than paying for a more protracted examination of all patents ex ante. In economic terms, the patent office is "rationally ignorant" of the objective validity of the patents it issues.

The role of institutions in mediating the use of intellectual property rights has long been neglected in debates over the economics of intellectual property. In a path-breaking work, Rob Merges studied what he calls "collective rights organizations," industry groups that collect intellectual property rights from owners and license them as a package. Merges finds that these organizations ease some of the tensions created by strong intellectual property rights by allowing industries to bargain from a property rule into a liability rule. Collective rights organizations thus play a valuable role in facilitating transactions in intellectual property rights. There is another sort of organization that mediates between intellectual property owners and users, however. Standard-setting organizations (SSOs) regularly encounter situations in which one or more companies claim to own proprietary rights that cover a proposed industry standard. The industry cannot adopt the standard without the permission of the intellectual property owner (or owners). How SSOs respond to those who assert intellectual property rights is critically important. Whether or not private companies retain intellectual property rights in group standards will determine whether a standard is "open" or "closed." It will determine who can sell compliant products, and it may well influence whether the standard adopted in the market is one chosen by a group or one offered by a single company. SSO rules governing intellectual property rights will also affect how standards change as technology improves. Given the importance of SSO rules governing intellectual property rights, there has been surprisingly little treatment of SSO intellectual property rules in the legal literature. My aim in this article is to fill that void. To do so, I have studied the intellectual property policies of dozens of SSOs, primarily but not exclusively in the computer networking and telecommunications industries. This is no accident; interface standards are much more prevalent in those industries than in other fields. In Part I, I provide some background on SSOs themselves, and discuss the value of group standard setting in network markets. In Part II, I discuss my empirical research, which demonstrates a remarkable diversity among SSOs even within a given industry in how they treat intellectual property. In Part III, I analyze a host of unresolved contract and intellectual property law issues relating to the applicability and enforcement of such intellectual property policies. In Part IV, I consider the constraints the antitrust laws place on SSOs in general, and on their adoption of intellectual property policies in particular. Part V offers a theory of SSO intellectual property rules as a sort of messy private ordering, allowing companies to bargain in the shadow of patent law in those industries in which it is most important that they do so. Finally, in Part VI I offer ideas for how the law can improve the efficiency of this private ordering process. In the end, I hope to convince the reader of four things. First, SSO rules governing intellectual property fundamentally change the way in which we must approach the study of intellectual property. It is not enough to consider IP rights in a vacuum; we must consider them as they are actually used in practice. And that means considering how SSO rules affect IP incentives in different industries. Second, there is a remarkable diversity among SSOs in how they treat IP rights. This diversity is largely accidental, and does not reflect conscious competition between different policies. Third, the law is not well designed to take account of the modern role of SSOs. Antitrust rules may unduly restrict SSOs even when those organizations are serving procompetitive ends. And enforcement of SSO IP rules presents a number of important but unresolved problems of contract and intellectual property law, issues that will need to be resolved if SSO IP rules are to fulfill their promise of solving patent holdup problems. My fourth conclusion is an optimistic one. SSOs are a species of private ordering that may help solve one of the fundamental dilemmas of intellectual property law: the fact that intellectual property rights seem to promote innovation in some industries but harm innovation in others. SSOs may serve to ameliorate the problems of overlapping intellectual property rights in those industries in which IP is most problematic for innovation, particularly in the semiconductor, software, and telecommunications fields. The best thing the government can do is to enforce these private ordering agreements and avoid unduly restricting SSOs by overzealous antitrust scrutiny.