State of Innovation

Patents and Innovation Economics

Making Patents Incontestable

This is one the best ideas I have heard for improving our patent system.  It was proposed by Gene Quinn of IPWatchdog.  The idea is that after a certain period of time a patent becomes incontestable, meaning it cannot be challenged on validity grounds.  This idea is similar to the idea of incontestability for trademarks or quite title suits for real property.  Quite title suits recognize that having endless open questions about the title to property reduces its economic value and results in under-investment and under-productivity for that asset.  The same is true for patents.

Incontestability could be part of a package that strengthens inter parties reexamination to allow appeals to the CAFC.  Here is the way I envision it working.  Five years from publication a patent would become incontestable.  This would eliminate the defenses of lack of novelty, obviousness, on-sale bar, inequitable conduct, inventorship, best mode, utility, and statutory subject matter issues.  This would increase the value of the property right.  The evidence associated with these issues is often years old when raised in an infringement suit and not reliable.  All these issues would have to be open for inter parties reexamination.  However, there would have to be safeguards that inter parties reexamination is not just a fishing expedition to increase your competitor’s costs.  As a result, all PTO (Patent Office) and court fees would have to be paid by the challenger.  If a challenge to a patent is unsuccessful the challenger will have to pay the patent holder’s attorney’s fees.  The reverse is not true.  The patent holder has already paid to have the invention examined by the patent office.  This would eliminate a lot of the costs and discover associated with patent lawsuits, which should result in faster, less expensive litigation.  Justice delay is justice denied.

How would this affect the defenses of latches, equitable estoppel, and patent misuse.  Latches should be limited to the statutory timeframes in 35 USC 286.  Equitable estoppel is not appropriate in patent law.  No one should be able to argue that they relied on the patent holder’s representations that are not in writing.  We have many areas of law where agreements (representations) have to be in writing to be enforceable and this should be one of them.  Patent misuse as it pertains to antitrust violations should not be a defense.  All antitrust attacks on patents are based on a misunderstanding (misrepresentation) that patents are a monopoly not a property right.  Exercising a legal property right should never result in an antitrust violation.

Critics may argue that it could be years before a company is confronted with a patent and the potentially infringing company may not even have existed when the five year incontestability period expired.  This may be true, but we do not want companies creating me-too products or reinventing the wheel.  If the company is building on the patent to create a new invention, then they should do their homework and determine if they are likely to infringe a patent.  It is a waste of resources for companies to reinvent a patented invention.  No longer should we reward purposeful ignorance.

Incontestability for patents is based on the same reasons we have for incontestability in trademarks and quite title suits for real property.  It would reduce the number of issues in litigation, making patent litigation quicker and less expensive.


December 8, 2010 Posted by | -Law, -Philosophy, Innovation | 4 Comments



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