Patent law system in upheaval, expert says in annual Law Center IPIL Katz Foundation Fall Lecture 

Nov. 10, 2014 – A leading scholar and blogger on U.S. patent law told attendees of a University of Houston Law Center lecture that the “pendulum” of patent policy is in “mid-swing” after several recent Supreme Court rulings, and it’s still uncertain where it will wind up.

The lecture on Nov. 5 was hosted by the Law Center’s Institute for Intellectual Property & Information Law and underwritten by the Ronald A. Katz Family Foundation Fund. The Institute is consistently ranked in the nation’s Top 10 programs by U.S. News & World Report in its annual survey.

Dennis Crouch, an associate professor at the University of Missouri School of Law and author of the popular patent law blog “Patently-O” (http://patentlyo.com), opened his remarks by noting that when the United States president gives his annual address to Congress, he almost invariably says “the state of our Union is strong.”

“Unfortunately, with the patent system, I can’t make that same remark,” Crouched joked to an audience of approximately 150 intellectual property attorneys and law students at the downtown Four Seasons Hotel. “In a way, the system is a mess, in turmoil. We are in a time of change.”

Crouch said there are more patents in force today – about 2.5 million at last count – than ever before, with another million applications pending at the U.S. Patent & Trademark Office (PTO) and potentially another million applications that will come to the PTO based on foreign patent applications.

“So there’s another two million that you don’t know how to worry about them, but you need to worry about them,” he said. With so many patents or applications out there, he said, many claims are either obviously invalid or are subject to challenge, creating great uncertainty in the marketplace.

“Today the market for patents is what I would call ridiculous, in that it’s all over the place. There’s no way to set a standard valuation for patents except to go through litigation and get some royalty amount from a court,” Crouch said.

Crouch said that with the just-concluded midterm elections, in which Republicans gained control of both the House and the Senate, he expected a new round of patent law reform, focusing on litigation.

“A huge problem in our system is that we have an incentive to write patent claims that obscure the invention.  When you read a patent document, it’s almost impossible to identify what really was the invention. What was invented here, what’s novel? I don’t know, a technical expert doesn’t know, nobody knows,” he said.  Some of these difficulties are due to the way patent claims can use functional language.

“If the IRS closes a loophole, smart tax attorneys say ‘but we still want to save your clients money.’ Likewise, patent attorneys want to ensure that their clients get the best possible protection,” Crouch said, and will try to find some other mechanism to claim functionality broadly.

Crouch discussed how recent Supreme Court decisions have influenced these issues.

Earlier this year, the Supreme Court issued rulings in two cases -- Nautilus v. Biosig and Alice Corp. v.  CLS Bank – concerning separate aspects of patent claim validity.

“We just don’t know at this point whether these cases are big enough to actually transform the marketplace again, and make patent attorneys stop and regroup and think again about how to go forward,” he said.

Another case that the Court heard this year and is expected to rule on next spring, Teva v. Sandoz, has more to do with appellate procedure. Crouch said while he doesn’t know how that case will be decided, its effect might be muted since it has to do with whether a claim is defined at the end of a district court trial or at the end of an appeal.

“In my mind, that’s way too late. We need to have the patent claim defined and understood at the time the patent issues. That’s really the only way you have any solid market understanding of what patent scope is,” he said.

During a question and answer session after the lecture, an attorney asked Crouch if the recent “pendulum swings” in patent law could damage the very system that is designed to encourage innovation. Crouch said that it could.

“The whole system is here so that somebody tomorrow who is trying to decide how to invest their time and money will be encouraged to focus on something that will result in some new invention. That’s the whole focus – we want to incentive tomorrow’s invention. One way we do that is by having the rule of law that says if you do it, you can count on being able to get this benefit,” he said.

“To the extent that the benefit is unpredictable, that it might not be there, it has the real potential for causing harm,” Crouch said.

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