On the Record with Mark Lemley: The Presumption of Validity
|Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course Posted: September 29, 2010 @ 9:15 pm
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On Friday, September 17, 2010, I had the opportunity to chat with Professor Mark Lemley, who is the William H. Neukom Professor at Stanford Law School and partner in the San Francisco law firm Durie Tangri LLP. Lemley is well known both in the academic community and the practice community. In fact, he is one of only a select few that have managed to simultaneously have a stellar career both in academia and in private practice. I chat with Lemley via e-mail from time to time on various matters, and we have talked about an interview for some time. Then a draft of a amicus brief Lemly filed today with the United States Supreme Court arrived in my inbox and I knew this was the issue that would make for an excellent interview. Lemley is leading the charge for 36 law, business and economics professors who are asking the Supreme Court to review i4i v. Microsoft and address the presumption of validity enjoyed by an issued patent. Lemley et al would tie the presumption of validity to those references considered by the patent examiner during prosecution.
Those familiar with IPWatchdog.com know that I personally think it is ridiculous to presume patents are valid in light of the fact that patent examiners get inadequate amounts of time to examine patents, and there is definitely a clear ring of intellectual honesty when Lemley says that it makes no sense for the presumption to attach to prior art never considered. As you will read, however, Lemley has far greater faith in the Supreme Court than I do. In fact, it is fair to say that I believe the Supreme Court should leave well enough alone from patent issues because, in my opinion, they just don’t know what they are talking about when they decide a patent issue. Notwithstanding our divergent views on the Supreme Court, our conversation was fun, lively and quite interesting, at least for those who enjoy talking patents, policy and the law.
What appears below is Part 1 of my interview with Mark Lemley. In Part 2 we discuss reverse pharma payments and In re Ciproflaxacin, the Stanford Patent Prize, patent misuse, patent trolls and the usual fun questions with a heavy emphasis on science fiction. So stay tuned!
Without further ado, here is Part 1 of my interview with Mark Lemley.
QUINN: First I want to thank you very much, Mark, for taking the time to chat with me today.
LEMLEY: Sure, no problem.
QUINN: And I know you’re working on a brief to the Supreme Court regarding the presumption of validity. So I thought maybe you might want to tell us a little bit about that. What your thoughts are, what you’re trying to accomplish and then we can go from there.
LEMLEY: Sure. This is the i4i vs. Microsoft case, which, as it turns out, presented a bunch of interesting legal issues. Microsoft filed its cert petition focused on just one of those issues, which is whether the clean and convincing evidence presumption of validity was appropriate as applied to art that wasn’t before the patent office when the examiner issued the patent. I am filing an amicus brief on behalf of a group of law, economics, and business professors suggesting that the Court take the case. The basic points we make in the brief are that the patent office operates under significant time and resource constraints. They aren’t going to look at everything. Some things aren’t submitted to them, some things they’re just not likely to find. Even the things they look at, some they pay more attention to than others. And we think the strength of the validity presumption ought to reflect how much actual attention was paid to particular prior art. So we’re encouraging the Court to take the case to move the Federal Circuit away from the kind of rigid one-size-fits-all presumption of validity towards something which gives a stronger presumption where the patent office has actually considered something and a weaker presumption of validity where they haven’t.
QUINN: And I agree and myself I’ve written a number of times over the last several years that it’s almost ridiculous to pretend that there is this hard-core presumption of validity knowing the time constraints of the patent office, or the patent examiners get on a case and knowing that not all of the information is going to be made known. I just wonder whether the Supreme Court is the right entity to be taking this case to. What would you say to the patent attorneys, I think there’s a lot of them, that think that the Supreme Court ought to leave well enough alone in the patent arena?
LEMLEY: Well, I think the answer is that by and large the Supreme Court’s interventions in the patent area have been good ones rather than bad ones. I think it’s right to say the Federal Circuit needs a fair degree of freedom to operate in setting rules and practice for patent law. But I don’t think that means they ought to have carte blanche. Particularly where, as here, the Federal Circuit has changed the universal rule that operated in the regional circuits before 1982, and replaced it with one that just doesn’t seem to make a lot of sense. I am sensitive to the concern that a Supreme Court opinion that’s ill-considered can do a lot of damage. I actually spent a great deal of effort in the Bilski case trying to talk the Supreme Court out of imposing substantial restrictions on patentable subject matter, for example. But I think here the Court is likely if it takes the case to do something which is probably good policy: to move us from a uniform presumption that doesn’t pay any attention to what happened in the patent office towards one that actually pays more attention to the realities of the examination process.
And I guess I’d say one other thing. My personal view on this comes out of work I did ten years ago on the rational ignorance of the patent office. And since that time I’ve been trying in a variety of forums to encourage mechanisms to improve review in the patent office for the most important patents: to try to give the PTO the ability to focus more attention on the patents that are likely to matter the most. And coupled with that I think should be in appropriate circumstances a stronger presumption of validity where a patent has really survived a rigorous analysis process. So this is not just a question of should we weaken the patent right. It’s really to me a question of should we modulate the strength of the presumption making it stronger in some cases and weaker in others.
QUINN: Before I pick up on that, I’m familiar with your rational ignorance work. For those who maybe have not read that article or are familiar with your thinking along that line, could you summarize what that is all about?
LEMLEY: Sure. I published a paper in 2001 called Rational Ignorance at the Patent Office. And what I argued was that the calls to spend more money to improve patent examination might be misguided because the vast majority of the patents that issue from the PTO are never heard from again. They don’t show up in litigation, they aren’t really licensed for money. Either they just sit on a shelf and die, as more than half of them do for failure to pay maintenance fees. Or even if the maintenance fees are paid, their validity doesn’t matter. So rather than devoting a lot of money to try to weed out the silly sorts of patents that people identify in the press — you know, the painting with a baby’s bottom, or twisting a swing or whatever else — what we ought to do is use the patent office as a screen to weed out some claims, perhaps to kind of narrow some over-broad claiming. But then we need to focus more attention after the fact on the patents that are identified as the most important ones. I think the ways to do that are in litigation or in some kind of reexamination or post-grant opposition procedure.
I’ve also suggested that patent applicants who know they’ve got an important invention ought to have an opportunity to try to get enhanced review in the patent office in the first instance and ought to come out of that enhanced review with a strong presumption of validity.
QUINN: There are two thoughts that I want to pursue. One is it seems like you’ve got a much broader based view of how to bring this type of a change about, which I tend to think is the right approach to it. Again, I’m not 100% sure that going to the Supreme Court and asking for help is the right way. But before we go down that path, because I think that’ll start to get us into the weeds a bit, what is your thought on the fact that we’ve been operating with the presumption now for quite a while. If the presumption were changed, and that change would be retroactive, to capture all the patents that are currently issued and in force. What would you say to that being a diminution in the value of those assets that was simply not envisioned at the time investments were made?
LEMLEY: I think that’s a concern. But I think it’s a concern every time legal rules change. Had the Supreme Court shifted by just one vote in Bilski, there are probably a couple hundred thousand patents out there that would just suddenly have become invalid altogether. And even after Bilski was decided, in the wake of it courts seem like they’re applying the machine or transformation test in a way that disadvantages anybody who wrote a software patent in the ten years between 1998 and 2008 because they didn’t know that was going to be the rule. So it’s definitely a concern. On the other hand, it’s a concern in any area of law, and it causes us to be cautious about changing the law willy-nilly, but I don’t think it should prevent us from ever making a change in the law. And I guess I’d say that was particularly true for something like the clear and convincing evidence presumption because, A, it’s a judicial construct in the first place. The patent statute says patents are presumed valid, but it doesn’t tell you anything about what the right standard is. And, B, because all of the regional circuits before 1982 had a different rule. They had essentially the rule that I’m advocating for, which is that the presumption should vary in strength depending on whether or not the art was actually considered. So the Federal Circuit has changed the rule in one direction, and I think courts can change it back.
QUINN: And I totally understand that, and thinking out loud I understand what you’re saying about a clear and convincing standard and it’s an evidentiary standard. But it strikes me as if it would strike at the heart of the right itself. And any time when you’re dealing with property, and the closest analogies would be real property law, there’s always a great hesitance in courts to make changes that are retroactive because people ordered their affairs based on the settled understanding of what was going to be. And I know that the transition from real property to intellectual property is maybe not a clean one, but intellectual property still has the hallmarks of property because of the legislature saying it is property.
QUINN: So I am just concerned, and maybe want to get your thoughts generally, not necessarily in this context, but generally I am concerned with what I see as a continuing re-jiggering of the patent laws in ways that do affect rights that are already obtained under different regimes. Bilski’s a perfect example of that, and I’m afraid something like this would be as well.
LEMLEY: Yeah, I think so. I think it’s a fair concern. And it is right to say that in the real property context we’re hesitant to do it. We’ve got a takings doctrine that prevents the government from taking real property entirely. And that doctrine applies as well to intellectual property. Though that doctrine coexists with another rule which says, while we can’t take your property over completely, in most circumstances we can impose burdens or regulations on you in the use of your property, and those are much less likely to amount to takings. I think there’s a real concern there. On the other hand, I think there’s another concern in the opposite direction. From a policymaking perspective I don’t think we want patent rights to be a one-way ratchet. So I’d be concerned if the effect of saying, well, this is a property right and there are settled investments is that we can expand patent law, we can expand patentable subject matter, we can expand the scope of the rights, we can strengthen the presumption. But once we go that direction we can never go back. I think part of my concern about that is that there are settled investments on both sides of this equation. A lot of companies are building products based on the state of the world. And they end up being defendants in patent lawsuits. And while that’s probably not a property interest in the same sense, from a policy-making perspective you’d like to take account of both sides of the problem.
QUINN: Yeah. I understand what you’re saying. And I’ve got to tell you, I read an early draft of your brief, and I think it’s excellent. It’s written clearly to gain the Supreme Court’s interest with all of the magic touch phrases and issues, discussing the presumption as a hard and fast rule, which the Supreme Court hates. But a presumption of validity is clearly something that I think the Supreme Court will believe they can understand and wrap their heads around, maybe not in the same way where they wouldn’t be quite so quick to take a complicated double patenting issue or something like that.
QUINN: So I think that there is a good chance that they are going to wind up taking the case. Now, let me ask you this. And if you want to not answer it I totally understand. But is part of what you’re thinking here is that if the Supreme Court does take this case, and they do come out with a rule that says what you want, that the presumption is based upon the art that was submitted and/or maybe reviewed or some combination of that, such a ruling will force the Congress to get off the stick and actually do something about, A, the Patent Office, B, inequitable conduct, and then, C, give the Patent Office the means to be able to really force attorneys to cooperatively engage in the prosecution in a way that they don’t do now?
LEMLEY: Yes. You had asked earlier: why the Supreme Court? And I do think it’s right to say this is a complex problem and it probably has to have a coordinated group of solutions, in part from the courts, in part from Congress, in part from the PTO. So for example, one of the things one might expect if the rule were that only art that was before the Patent Office gets a strong presumption of validity, is that people submit more art to the Patent Office. Maybe they’re more likely to do a search, maybe they’re more likely at the margins to turn things in, to try to take advantage of that presumption. So that in turn might improve the prosecution process. But it will improve the prosecution process only if we’ve got some reason to believe the Patent Office is actually going to pay attention to that stuff, and that it’s not just being kind of lobbed over the wall with the understanding that everybody’s going to ignore it. Bhaven Sampat and Chris Cotropia and I have a recent study in which we find that patent examiners overwhelmingly focus their attention on art they find themselves in their own search and not on art that’s submitted by the applicant. And that seems to be true not just as to art that maybe the examiner says, well, the applicant knew about this so they drafted around it. But it seems to be true even of things like EPO search reports that are submitted during prosecution that you would think the examiner would consider to be highly relevant. In an ideal world I think what we’d really do is pay attention to what was actually said about this art in prosecution by the applicant, by the examiner. I’d like to see a world in which, rather than flooding the office, we had real discussions about the most relevant art. But one of the things that causes people to avoid that is inequitable conduct. They’re afraid whenever they say something characterizing the art that they submit that they’re going to get themselves in trouble because a defense counsel could later say, well, that was a mischaracterization or a misrepresentation of the important part of this prior art. So it might be that part of what we want to do is fix inequitable conduct to try to get the examiners and the applicants in line with the interest of actually submitting and discussing the most relevant art in front of the Patent Office so that you can then get a presumption over it. But it also is bound up with other kinds of PTO reform processes. Should we have some sort of enhanced examination that allowed people to focus more attention and get a stronger presumption? That probably–maybe it could be done by the PTO. It might require legislative action. I think post-grant opposition or inter parts reexamination, if you survive them, ought to justify a strong presumption of validity. But post-grant reexamination definitely requires congressional action.
So all of these things are bound up together in a way that makes policymaking really complex because there are different actors. But the presumption of validity piece in particular, I think, is one that is a judicially created issue. It’s not clear how Congress could solve the problem even if it wanted to because Congress didn’t write the clear and convincing evidence presumption into the law in the first place.
QUINN: Right. It strikes me that Congress is the exact right place to be making these type of changes. And it frustrates me to no end that they seem completely unwilling as an entire entity to take up these important issues of patent reform. And that even when they do, the reform doesn’t have the reforms that really are necessary in order to make the system and process better. Sure, the patent reform that’s pending whether it gets enacted or not is still in question. But it would have been great to have some inequitable conduct discussion there. And it would have also been, I think, much better to have a discussion about what resources the Patent Office ought to have and how they ought to be operating in order to fulfill their constitutional objective.
LEMLEY: I agree with that. So then we get into another problem of legislative dynamics which Dan Burk and I have done some talking about. Different industries end up approaching the patent system and particularly the legislative reform process from such radically different perspectives that I think the folks in Congress eventually threw up their hands and said, we can’t please everybody and this is just not something that’s important enough to enough of the people in Congress that they’re willing to upset a large constituency on one side or the other. They’ve been looking for a compromise, and it may be that there isn’t one to be found.
QUINN: I think that’s exactly right. This is not a Republican versus Democratic issue, but much more of a where do you live, what’s your home district, what’s your geography, and who are the players in that district. It does present a lot of challenges for Congress, particularly those who are watching the dollar signs of donations rather than trying to maybe do the best job that they could. I won’t ask you to comment on that. You’re more than happy to, but, I mean that’s–
LEMLEY: Well, one of the reasons Dan and I in our book, The Patent Crisis, and How the Courts Can Solve It, end up turning towards the courts is the worry that Congress is too often going to be sidetracked by concerns like that. And in an ideal world that wouldn’t be true, but I think it’s part of the nature of our modern democracy, and we just have to understand that that’s a constraint.
QUINN: Yeah. Now one of the things that I have done some writing about, and while I think it’s fair to say has gained little or no traction, at least yet, but I’m going to keep pushing it, I think, is this idea that if a patent is valuable enough for it to be sued upon, perhaps there is a role for the Patent Office to play at that point, to then go and review that patent in greater detail. Go back to the Patent Office and seek something akin to a right to sue letter that you would get from the EEOC to institute a discrimination case.
QUINN: And I come to that because I do believe you make excellent points in your Rational Ignorance piece which it just doesn’t make sense to do a no stone unturned search at a point in time when the statistics suggest that 95 to 98% of the patents are going to really just languish and sit there and do very little or nothing. So if you want to talk about expending resources where they could be best spent, it would seem to me to be doing it at that point in time just before litigation. What are your thoughts on something like that?
LEMLEY: I think conceptually, at least, it’s a good idea. And of course it’s going to be bound up with how good a job the Patent Office does at that point. I know inter partes reexamination hasn’t been used that often, in part, I think, because defendants were concerned that they were not really going to get a full hearing and a fair shake and they’d rather save their ammunition for court. Europe — for example, Germany — divides the validity and the infringement questions. If you file a lawsuit and there’s a validity question Germany actually takes it back to the patent office, to the technical boards rather than to the court. So essentially if you wanted to challenge the validity of a patent as a defendant you’d have to go back to the patent office there. And I think that could work. And to make it work we’d just want to make sure everybody was comfortable that the examination that was going to happen in the patent office was a sufficiently thorough one, and that there was enough opportunity in discovery or whatever else to make sure we had the relevant prior art that then could make that determination. But then you could imagine either making that determination conclusive — validity could only be determined there — or at the least if we made it an option you could then tie it to a very strong presumption of validity. If there was something that was argued in front of the patent office in that analysis maybe you shouldn’t be able to reargue that same art in front of the court.
QUINN: My thinking is, is you went back to the patent office at that point in time, and then again it would have to be expedited, it couldn’t be this three year reexamination process. That, would be a non-starter. But if it really could be condensed, and it was in some respects a final determination that would be appealable to the Federal Circuit, then before there is ever a litigation using some of these patents that are characterized by the defendants as specious, before those could ever be litigated they would have to go back to the Patent Office and ultimately, I think, go through the Federal Circuit before litigation could be brought. Now, I know in a lot of the cases that the defendants say that the patents are ridiculous and crazy. And it turns out they lose on them probably for a very simple reason, is that they were actually infringing, and the claims really were valid.
QUINN: But it seems to me that there’s a great number of folks out there that are just saying, I have a patent, I’m going to splatter the market with these letters saying that you have to take a license and it may or may not have anything or very little to do with what the alleged defendant or would-be defendant is doing. So this would seem to maybe kill a couple birds with one stone, I’m thinking.
LEMLEY: Yeah, that’s right. You ought to have to make some investment in the quality of your patent before you file a lawsuit to prevent some of the nuisance lawsuits. But then in an ideal world we would be better off with a relatively quick, but also fairly comprehensive analysis by the patent office as opposed to handing the validity questions to a jury, which is a dicey prospect.
LEMLEY: I’m attracted to that idea. The other thing I think it’s bound up with is the question of deferred examination in the patent office. So if we were going to require something like this before you could enforce a patent, then we might be more comfortable saying, well, we can actually defer a lot of substantive examination in the patent office in the first instance because we’re going to come back and look at this before it becomes something that could shut somebody’s business down.
QUINN: Right. And I would hope that a process like that would allow for a quicker review at the front end and let the Patent Office process a lot more and dig into this incredibly crazy backlog.
LEMLEY: Right, exactly.
Continue reading part 2 —> Mark Lemely Part 2: In re Cipro, Patent Misuse, Fun Stuff- - - - - - - - - -
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About the Author
Gene Quinn is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.