Two Good Empirical Works on Patent Law & Policy

Still blogging the WIPIP in Pittsburgh. (By the way, I like this town a lot–the campus is lovely, and there’s a nice “Panera Bread” a minute from the law school!)

We just had Mark Lemley and Mike Meurer presenting some very interesting work based on empirical studies of the patent system. Lemley presented some surprising findings on the effect of the decline of the doctrine of equivalents in patent law. Meurer compared how the patent sytem worked in a number of industries–a chapter in a forthcoming book entitled “Do Patents Work?”

Meurer’s main point was that the key problem with patent law is the lack of “notice” of the scope of patent claims in many key industries. Meurer noted that in “small molecule” pharma, it was relatively easy to give notice of the scope of one’s claims, so the patent system appeared to be working relatively well. In other fields (such as software), a “flood” of patents and ambiguous claims makes it very difficult to know if one is infringing. For example, one e-commerce company estimated it could possibly infringe up to 11,000 patents. And one may need to license thousands of patents simply to build a small digital device, like a cell phone.

Moreover, Meurer noted that there’s no functioning insurance market for companies to “insure against” patent infringement. He estimates that such a market would be at least 20-25 times more expensive than the system of “title insurance” that now protects land purchasers. Meurer also estimates that the patent system has gone from being a 4% subsidy to U.S. R&D (in the 1980s), to a 2% tax by 1999.

I look forward to Meurer’s upcoming book (with Bessen) elaborating these findings. It will join a growing number of commentators calling for reform of the patent system.

By the way, for a much better summary of what was said, be sure to check out Rebecca Tushnet’s account. It’s an astonishingly accurate documentary feat!