Innovation and Its Discontents: How our Broken Patent System Is Endangering Innovation and Progress, and What to Do about It, by Adam B. Jaffe and Josh Lerner. Princeton, NJ: Princeton University Press. 2006. Paperback: ISBN 0 691 12794 8, $17.95. 256 pages.
Innovation and Its Discontents offers a practical critique of the contemporary United States patent system. It is argued that the current structure of this important institution now functions more to hinder than to promote innovation. In terms of scope, however, and in contrast to Freud's work from which the title is ostensibly drawn, the authors' arguments cannot be considered any more ambitious than demonstrating, and proposing remedies for, the ill effects of a few seemingly innocuous changes to the Patent and Trademark Office (PTO) and the judicial process in which patent-related disputes are adjudicated.
The authors argue that the patent system has, since the 1980s, become twisted so that standards of novelty and non-obviousness are no longer appropriately applied prior to the granting of a patent. Furthermore, when questions of patent infringement and/or validity come before the court, the patent holder now finds his/herself in an unduly favored position. The problems began in 1982 with the centralization of the appeals process for patents into a single Court of Appeals for the Federal Circuit (CAFC). Prior to the establishment of the CAFC, patent-related disputes were appealed in the (regional) circuit courts with each party to a suit seeking to be heard in the court most likely to decide in its favor. While centralization may have effectively ended such forum shopping and the uncertainty associated with the varying opinions of circuit judges, changes in the judicial wing of the patent system were not yet finished. Subsequent CAFC rulings have increased the legal power afforded the patent holder and eased restrictions on patentability. Thus, for instance, a firm holding a patent for a business method that may previously have been of doubtful validity per se, now enjoys greater confidence not only in that the CAFC would uphold the patent's validity, but also in that the CAFC will issue a preliminary injunction against an accused infringer.
Moreover, funding and management of the PTO, the office in which patent applications are reviewed and patents granted, has created a filing process in which patent reviewers have greater incentive to grant rather than deny a patent. As might be expected,...