Over the last decade, a growing consensus has emerged: there are too many patents, and they are causing a host of problems. These problems include patent “trolling,” patent “wars,” and other wasteful societal costs. In explaining this patent overabundance, some scholars have pinpointed the United States Patent Office, the governmental body responsible for issuing patents, as the main culprit. Others have blamed patent holders themselves, identifying a number of incentives these parties have to pursue patents even in cases where doing so makes little economic sense. Overall, these analyses thus typically assume a high and relatively uniform demand for patents among inventive parties—one that the United States Patent Office is only too willing to satisfy.

Yet this focus on excessive patenting obscures the reality that parties likely differ significantly in their demand for patents and other forms of intellectual property. In economic parlance, different inventive parties are likely to exhibit different “elasticities,” or sensitivities, in their demand for patents and other types of intellectual property. This Article uses economic principles to disaggregate intellectual property demand by highlighting a number of factors that may affect a party’s demand for patents and other forms of intellectual property. It argues that resource-constrained parties are more likely to exhibit more elastic demand for patents, meaning they are more sensitive to the costs of patenting, both in general and relative to the costs of other intellectual property forms. As a result, rising costs of patenting are more likely to lead resource-constrained parties to forego patenting and rely on alternative, cheaper forms of intellectual property protection when available. Well-capitalized parties, on the other hand, are more likely to exhibit relatively inelastic, high demand for patents, regardless of the costs of other intellectual property types that may otherwise function as substitutes. Thus, well-capitalized parties tend to patent en masse and complement patenting with additional intellectual property protections when available.

The patent system uses exclusion to stimulate innovation. But a mounting body of evidence calls into question the assumption that innovation based on excluding others is the only, or even primary, way that the patent system supports innovation today. Nearly 50 percent of manufacturers got the idea for their most important new product from an outside source that shared it with them, 45–59 percent of patentees acquire patents in order to access the technology of others, and over 2,100 companies, including five of the top ten holders of patents, have committed to sharing their patents with others. But because the essence of a patent is the right to exclude, policymakers have paid relatively less attention to ways in which patents can be used to include and to diffuse technology. This paper focuses on the ways that innovators are modifying the patent system’s exclusionary defaults, employing open source approaches, licenses, pledges, contracts, defensive publication and patenting, and related mechanisms to share innovation—including with their rivals. This Article advocates supporting and encouraging, rather than just tolerating these uses of the patent system, for several reasons. First, as innovation takes place in open and closed modes, the patent system can increase its relevance to all types of innovation. Second, weaknesses in voluntary diffusionary arrangements—for example, the lack of enforceability of patent pledges or open source commitments, the use of patents subject to licensing commitments to seek injunctions, and the use of once-defensive patents for patent assertion —suggest that the policy environment for innovation could be improved. Finally, providing ways for patent holders to take voluntary steps to curtail or limit their rights can offer a more flexible and predictable framework for rebalancing the patent system than measures like imposing limits on patentable subject matter or compulsory licensing.

Inequitable conduct is a unique judicially created doctrine designed to punish patent applicants who behave inequitably toward the public in the course of patent acquisition. Its name alone strikes fear into the hearts of patent prosecutors, and justly so–for when successfully asserted, inequitable conduct can have devastating consequences that reach far beyond a patentee’s case. The need for a systematic empirical study of inequitable conduct jurisprudence has become especially pressing now that the Federal Circuit is reviewing inequitable conduct en banc–in terms so broad as to be unprecedented in the history of the doctrine. This Article reports such a study.

The study reported here provides evidence, inter alia, that the Federal Circuit applies an inequitable conduct standard that is stricter, in other words less favorable to finding inequitable conduct, than that applied by a substantial number of the tribunals it reviews. The Federal Circuit’s stricter standard manifests primarily through the intent to deceive component of the inequitable conduct doctrine. For all intents and purposes, the Federal Circuit has no substantive jurisprudence around the balancing component, and the materiality component is comparatively less impactful than intent to deceive. The court appears to have trouble communicating its stricter standard to lower tribunals. We offer some explanations for why this might be so, and offer some modest suggestions that might advance the inequitable conduct doctrine. In addition, while this Article was in production the Federal Circuit heard argument in and decided Therasense v. Becton, Dickinson & Co., so we have added a brief epilogue addressing some of the implications of the decision that are relevant in view of the findings of this Article.

If even a portion of the rumors surrounding nanotechnology are true, the products and processes brought to market will have the ability to change and advance numerous industries well beyond their current levels. As developers in nanotechnology continue to innovate, they are patenting their discoveries at an ever increasing rate. Nanotechnology represents a new challenge for patent law, and these early patents, if not monitored closely, could effectively lead nanotechnology to a frozen state of development and commercialization before society has had a chance to reap the benefits of this new technology in the form of commercial products and medicinal advances. This Note explores the intellectual property issues surrounding nanotechnology and the societal repercussions of, and possible responses to, the extensive early patenting in this area.

Ever since the Supreme Court pronounced in Diamond v. Chakrabarty that “Congress intended statutory [patentable] subject matter to include anything under the sun that is made by man,” the thrust of subject matter eligibility has been broadly to include all subject matters that are not “laws of nature, physical phenomena, and abstract ideas.” In essence, subject matter is eligible for protection under the patent laws if it is man-made and is ineligible if it is a part of nature. Such a definition of subject matter eligibility is, unfortunately, unhelpful in the biomedical context. A basic discovery involving a new pathological pathway, for example, represents an advancement of both basic knowledge about nature as well as basic know-how in diagnosing and treating human diseases. A successful isolation of a gene, protein, or cell represents a triumph both for our understanding of nature as well as our ability to diagnose and treat human diseases. This Article argues that subject matter eligibility should neither be a mere prohibition against the patenting of nature and abstract ideas, a mere pseudorequirement to enforce other patentability requirements, nor a mere exercise in the statutory interpretation of 35 U.S.C. § 101, but a unique constitutional requirement to ensure that the patenting of eligible subject matter promotes the useful arts. To take into account the cost side of patenting, eligibility may be defined in part as a prohibition of the patenting of “basic tools of scientific and technological work.” To ensure that knowledge that can be provided freely to the public is not unwittingly removed from the public, eligibility may be defined in part by distinguishing “inventions” from “discoveries,” as viewed from a person skilled in the art. To accentuate the role patents play in a nation’s larger Industrial Policy, eligibility may be limited to “industrial applications” and “technology” that are the purview of Industrial Policy. This Article emphasizes the importance of viewing the patent regime not just as a property system, but as part of a larger regulatory regime for promoting innovations.

The American patent system, mired with rising costs and uncertainty, is in need of reform. To address these issues, the United States needs a viable proceeding to challenge the validity of granted patents and a forum specialized in patent matters to hear infringement litigation trials. Rather than implement proposals from legislators and commentators that may be too duplicative, incremental, or heavy-handed to put into practice successfully, the American patent system would be best served by bringing its existing administrative alternatives, with some enhancements, to the forefront as a comprehensive solution for patent reform.

Though largely unnoticed by the public, March 1, 2007, marked the transition from traditional analog television to digital broadcast television (“DTV”), a move some have characterized as the most significant change to the television broadcast industry since color replaced black and white. On that date, Federal Communications Commission (“FCC”) regulations went into effect mandating that all televisions sold in the United States contain a digital tuner capable of receiving DTV broadcast signals. If consumers are unaware of the change now, it will not escape their attention on February 17, 2009, when their old analog sets go dark as broadcasters comply with further FCC regulations mandating the cessation of all analog television broadcasts. Ultimately, the government intends to profit by auctioning off the additional frequency spectrum freed up by the more efficient digital use of the broadcast spectrum.

In 1998, in State Street Bank & Trust Co. v. Signature Financial Group, Inc., the U.S. Court of Appeals for the Federal Circuit rejected the contention that “business methods” are per se unpatentable, and stated that a business process patent can be granted on the same basis as any other patentable invention. The decision fostered a new awareness that business method claims could be patented, and in the wake of State Street Bank, the United States Patent and Trademark Office (“USPTO”) saw an almost six-fold increase from 1998 to 2001 in the number of patent applications for business methods. While some commentators applauded the State Street Bank decision, others maintained that methods of doing business should be an excluded category of invention, articulating that the traditional filters of patent law are not appropriately sized to sieve overly broad business practices from attaining patent protection. Despite those concerns, business methods remain patentable inventions.

One of the many requirements for patentability is that the inventor must disclose the “best mode” of the invention. This requirement is set out in the first paragraph of 35 U.S.C. § 112, which states that the patent’s specification “shall set forth the best mode contemplated by the inventor of carrying out his invention.” Based on the statutory language, the test for whether the best mode has been properly disclosed has a subjective element – whether or not the inventor believed that there was a best way to practice the invention at the time the patent application was filed. If the inventor believed that a certain method of practicing the invention was better than other methods, the inventor had to disclose that mode. If the inventor did not have a preferred method of practicing the invention, then there was no best mode to be disclosed.

At first, the test seems fairly straightforward. An inventor either had a preferred mode at the time of filing, or the inventor did not. The test becomes far more complicated, however, when the involvement of more than one inventor requires the consideration of multiple opinions. For example, what happens if there are two inventors and they disagree as to what is the best mode? Whose view controls and which mode or modes must be disclosed? In a case of joint inventorship where each inventor works on different parts of an invention, what happens when an inventor who did not work on a certain part prefers a best mode for that part, and that preference is not shared by the person who actually invented it? If a joint inventor is accidentally omitted from a patent, and the omitted inventor had a best mode preference that was not disclosed at the time of the application’s filing, should the patent be invalidated for failure to disclose that mode when the omitted inventor is added to the patent later? These are all questions that are critical to best mode analysis, as patent infringers currently are able to use the best mode requirement as a weapon to invalidate patents in litigation. And in order to answer these questions effectively, it is increasingly important to understand how the ease of establishing joint inventorship under the current statutory framework affects best mode analysis. Unfortunately, the Federal Circuit neglected to consider the impact of liberalized joint inventorship principles in Pannu v. Iolab Corp., where, in a footnote in dicta near the end of the opinion, the court appeared to set a standard that required any joint inventor who has a best mode preference for any claim to disclose it.

The increasingly complex technology involved in patent infringement cases has lead many to question the ability of district court judges and jurors in such cases to issue uniform and predictable decisions. In fact, there is evidence that the Federal Circuit Court of Appeals – the appellate court with sole jurisdiction and accumulated expertise in patent law – routinely overrules district court decisions regarding claim construction and prosecution history estoppel under the doctrine of equivalents. Given the frequency with which the Federal Circuit overturns district court decisions, and the fact that nearly every patent infringement case involves a dispute over claim construction or prosecution history estoppel under the doctrine of equivalents, patent infringement cases are typically uncertain until after appeal.

The uncertainty of patent infringement cases until after appeal is highly problematic for several reasons. First, uncertainty at the trial level is inefficient because it stimulates appeals rather than settlements. Second, it “creates doubt about the ability of district court judges to adjudicate complex technical patent [infringement] cases.” Finally, this uncertainty may even have the far-reaching effect of stifling innovation. Thus, the current system of adjudication for patent infringement trials is in need of reform, and a specialized patent trial court combined with a rule of greater deference appears to be the most effective means for bringing needed certainty to patent infringement trials.