Private ordering is in vogue in legal scholarship. Nowhere is this clearer than on the Internet. ... more Private ordering is in vogue in legal scholarship. Nowhere is this clearer than on the Internet. Legal scholars who study the Internet talk freely about new forms of governance tailored to the specific needs of the Net. Only rarely are these "governance" models ones that involve a significant role for government as classically envisioned.
I. THE CURIOUS PRACTICE OF CONTINUING PATENT APPLICATIONS ....... 66 A . How the System Works ...... more I. THE CURIOUS PRACTICE OF CONTINUING PATENT APPLICATIONS ....... 66 A . How the System Works ............................................................... ... B. The Use of Continuation Practice .............................................. 69 II. THE PROBLEMS WITH CONTINUATION APPLICATIONS ...
Patents are big business. Individuals and companies are obtaining far more patents today than eve... more Patents are big business. Individuals and companies are obtaining far more patents today than ever before. 4 Some simple calculations make it clear that companies are spending well over $5 billion a year obtaining patents in the U.S. -to say nothing of the costs of obtaining patents elsewhere, and of licensing and enforcing the patents. 5 There are a number of reasons why patenting is on the rise -p rimary among them a booming economy and a shift away from manufacturing and capital-intensive industries towards companies with primarily intellectual assets. But whatever the reason, it is evident that many companies consider patents important.
Page 1. THE GROWING COMPLEXITY OF THE UNITED STATES PATENT SYSTEM JOHN R.ALLISON* AND MARK A. LEM... more Page 1. THE GROWING COMPLEXITY OF THE UNITED STATES PATENT SYSTEM JOHN R.ALLISON* AND MARK A. LEMLEY** ... 7 John R. Allison & Mark A. Lemley, Who's Patenting What? An Empirical Exploration of Patent Prosecution, 53 VAND. L. REV. ...
The overwhelming majority of intellectual property lawsuits settle before trial. These settlement... more The overwhelming majority of intellectual property lawsuits settle before trial. These settlements involve agreements between the patentee and the accused infringer, parties who are often competitors before the lawsuit. Because these competitors may agree to stop competing, to regulate the price each charges, and to exchange information about products and prices, settlements of intellectual property disputes naturally raise antitrust concerns. In this paper, we suggest a way to reconcile the interests of intellectual property law and antitrust law in evaluating intellectual property settlements. In Part I, we provide background on the issue. Part II argues that in most cases courts can determine the legality of a settlement agreement without inquiring into the merits of the intellectual property dispute being settled, either because the settlement would be legal even if the patent were invalid or not infringed, or because the settlement would be illegal even if the patent were valid and infringed. Only in a narrow class of cases will the merits of the intellectual property dispute matter. In Part II, we argue that in that narrow middle set of cases antitrust's ru1e of reason is unlikely to be helpful. Rather, courts must inquire into the validity, enforceability, and infringement issues in the underlying case, with particular sensitivity to both the type of intellectual property right at issue and the industrial context of the dispute. In Part IV, we apply our framework to a number of common settlement terms, most notably the use of exclusion payments to settle pharmaceutical patent disputes. We argue that exclusion payments that exceed litigation costs should be deemed illegal per se. There is no legitimate reason for such payments, and the most likely reason to permit the patentee to exclude competition that would likely have occurred absent the payment -isanticompetitive. Further, legitimate patent disputes can be settled in other ways than with an exclusion payment for example, by licensing the defendant or by agreeing to delay entry.
Economic scholarship has recently focused a great deal of attention on the phenomenon of network ... more Economic scholarship has recently focused a great deal of attention on the phenomenon of network externalities, or network effects: markets in which the value that consumers place on a good increases as others buy the good. Though the economic theory of network effects is less than fifteen years old, and is still not thoroughly understood, network effects are increasingly playing a role in legal argument. Judges, litigators, and scholars have suggested that antitrust law, intellectual property law, telecommunications law, Internet law, corporate law, and contract law need to be modified to take account of network effects. Their arguments reflect a wide range of views about what network effects are and how courts should react to them. In this Article, we explore the application of network economic theory in each of these contexts. We suggest ways in which particular legal rules should-and should not-be modified to take account of network effects. We also attempt to draw some general conclusions about the role of network economic the- * ory in the legal enterprise and about the way in which courts should revise legal doctrines in response to theories from fields outside the law.
It is common to assert that the Patent and Trademark Office does a bad job of examining patents, ... more 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.
For many reasons, payment systems are subject to strong network effects; one of those is the nece... more For many reasons, payment systems are subject to strong network effects; one of those is the necessity of interoperability among participants. This is often accomplished via standardsetting organizations. The goal of the Single European Payments Area (SEPA) is to establish modern cross-boarder consumer payment systems for Europe. This too will require a standard-setting arrangement. But patents are also becoming an important feature of electronic payment systems and thus standard setting under SEPA should incorporate a policy to address the ownership and licensing of essential intellectual property. Using examples from the experience of European mobile telephony and financial patenting in the United States, we argue that the lack of a well-developed IP policy creates significant risks for participants in the new SEPA payment systems.
RECONCEIVING PATENTS IN THE AGE OF VENTURE CAPITAL by Mark A. Lemley* The past decade has seen un... more RECONCEIVING PATENTS IN THE AGE OF VENTURE CAPITAL by Mark A. Lemley* The past decade has seen unprecedented growth in patent issuance and litigation. In the midst of great changes in the ways technology is financed, the author ques- tions the classical model of ...
Patent law is our primary policy tool to promote innovation, encourage the development of new tec... more Patent law is our primary policy tool to promote innovation, encourage the development of new technologies, and increase the fund of human knowledge. To accomplish this end, the patent statute creates a *
Private ordering is in vogue in legal scholarship. Nowhere is this clearer than on the Internet. ... more Private ordering is in vogue in legal scholarship. Nowhere is this clearer than on the Internet. Legal scholars who study the Internet talk freely about new forms of governance tailored to the specific needs of the Net. Only rarely are these "governance" models ones that involve a significant role for government as classically envisioned.
I. THE CURIOUS PRACTICE OF CONTINUING PATENT APPLICATIONS ....... 66 A . How the System Works ...... more I. THE CURIOUS PRACTICE OF CONTINUING PATENT APPLICATIONS ....... 66 A . How the System Works ............................................................... ... B. The Use of Continuation Practice .............................................. 69 II. THE PROBLEMS WITH CONTINUATION APPLICATIONS ...
Patents are big business. Individuals and companies are obtaining far more patents today than eve... more Patents are big business. Individuals and companies are obtaining far more patents today than ever before. 4 Some simple calculations make it clear that companies are spending well over $5 billion a year obtaining patents in the U.S. -to say nothing of the costs of obtaining patents elsewhere, and of licensing and enforcing the patents. 5 There are a number of reasons why patenting is on the rise -p rimary among them a booming economy and a shift away from manufacturing and capital-intensive industries towards companies with primarily intellectual assets. But whatever the reason, it is evident that many companies consider patents important.
Page 1. THE GROWING COMPLEXITY OF THE UNITED STATES PATENT SYSTEM JOHN R.ALLISON* AND MARK A. LEM... more Page 1. THE GROWING COMPLEXITY OF THE UNITED STATES PATENT SYSTEM JOHN R.ALLISON* AND MARK A. LEMLEY** ... 7 John R. Allison & Mark A. Lemley, Who's Patenting What? An Empirical Exploration of Patent Prosecution, 53 VAND. L. REV. ...
The overwhelming majority of intellectual property lawsuits settle before trial. These settlement... more The overwhelming majority of intellectual property lawsuits settle before trial. These settlements involve agreements between the patentee and the accused infringer, parties who are often competitors before the lawsuit. Because these competitors may agree to stop competing, to regulate the price each charges, and to exchange information about products and prices, settlements of intellectual property disputes naturally raise antitrust concerns. In this paper, we suggest a way to reconcile the interests of intellectual property law and antitrust law in evaluating intellectual property settlements. In Part I, we provide background on the issue. Part II argues that in most cases courts can determine the legality of a settlement agreement without inquiring into the merits of the intellectual property dispute being settled, either because the settlement would be legal even if the patent were invalid or not infringed, or because the settlement would be illegal even if the patent were valid and infringed. Only in a narrow class of cases will the merits of the intellectual property dispute matter. In Part II, we argue that in that narrow middle set of cases antitrust's ru1e of reason is unlikely to be helpful. Rather, courts must inquire into the validity, enforceability, and infringement issues in the underlying case, with particular sensitivity to both the type of intellectual property right at issue and the industrial context of the dispute. In Part IV, we apply our framework to a number of common settlement terms, most notably the use of exclusion payments to settle pharmaceutical patent disputes. We argue that exclusion payments that exceed litigation costs should be deemed illegal per se. There is no legitimate reason for such payments, and the most likely reason to permit the patentee to exclude competition that would likely have occurred absent the payment -isanticompetitive. Further, legitimate patent disputes can be settled in other ways than with an exclusion payment for example, by licensing the defendant or by agreeing to delay entry.
Economic scholarship has recently focused a great deal of attention on the phenomenon of network ... more Economic scholarship has recently focused a great deal of attention on the phenomenon of network externalities, or network effects: markets in which the value that consumers place on a good increases as others buy the good. Though the economic theory of network effects is less than fifteen years old, and is still not thoroughly understood, network effects are increasingly playing a role in legal argument. Judges, litigators, and scholars have suggested that antitrust law, intellectual property law, telecommunications law, Internet law, corporate law, and contract law need to be modified to take account of network effects. Their arguments reflect a wide range of views about what network effects are and how courts should react to them. In this Article, we explore the application of network economic theory in each of these contexts. We suggest ways in which particular legal rules should-and should not-be modified to take account of network effects. We also attempt to draw some general conclusions about the role of network economic the- * ory in the legal enterprise and about the way in which courts should revise legal doctrines in response to theories from fields outside the law.
It is common to assert that the Patent and Trademark Office does a bad job of examining patents, ... more 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.
For many reasons, payment systems are subject to strong network effects; one of those is the nece... more For many reasons, payment systems are subject to strong network effects; one of those is the necessity of interoperability among participants. This is often accomplished via standardsetting organizations. The goal of the Single European Payments Area (SEPA) is to establish modern cross-boarder consumer payment systems for Europe. This too will require a standard-setting arrangement. But patents are also becoming an important feature of electronic payment systems and thus standard setting under SEPA should incorporate a policy to address the ownership and licensing of essential intellectual property. Using examples from the experience of European mobile telephony and financial patenting in the United States, we argue that the lack of a well-developed IP policy creates significant risks for participants in the new SEPA payment systems.
RECONCEIVING PATENTS IN THE AGE OF VENTURE CAPITAL by Mark A. Lemley* The past decade has seen un... more RECONCEIVING PATENTS IN THE AGE OF VENTURE CAPITAL by Mark A. Lemley* The past decade has seen unprecedented growth in patent issuance and litigation. In the midst of great changes in the ways technology is financed, the author ques- tions the classical model of ...
Patent law is our primary policy tool to promote innovation, encourage the development of new tec... more Patent law is our primary policy tool to promote innovation, encourage the development of new technologies, and increase the fund of human knowledge. To accomplish this end, the patent statute creates a *
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