Fixing patent boundaries.

• Author: Chiang, Tun-Jen

The claims of a patent are its boundaries, defining the scope of exclusion. This boundary function of claims is undermined by the fact that claims can be changed throughout the life of the patent, thereby moving the patent boundary. A boundary that can be moved at-will is one that the public cannot rely upon.

This Article explores the problems of malleable patent boundaries. If a claim can be amended to permit a patentee to capture something he did not foresee when filing the patent application, the amendment confers an unexpected windfall that did not contribute to incentives to invent before filing, if a claim is amended so that a patentee can capture something he did foresee but mistakenly failed to claim initially, the amendment allows the patentee to shift the loss of his own mistake to third parties. Either way, the amendment is inefficient.

This Article proposes that patent boundaries should be fixed upon patent issuance, and postissuance claim amendment disallowed. Because claims before issuance do not create public reliance, preissuance amendment should be retained. Nonetheless, the possibility of inefficient windfalls requires that preissuance amendment not be given retroactive priority in order to limit the ability to capture later developments.

TABLE OF CONTENTS INTRODUCTION I. THE PATENT CLAIM AS A BOUNDARY A. The Basics of Patent Claims B. Constantly Shifting Patent Boundaries 1. Preissuance Amendment 2. Postissuance Amendment C. Limits on Claims and the True Patent Boundary II. THE ECONOMICS OF CHANGING CLAIMS A. The Functions of Written Claims 1. A History of Claiming 2. The Notice Function 3. The Definitional Function B. The Definition Function and Patentee Incentives 1. Unequal Discounting and Patent Incentives Versus Cost 2. The Problem as Applied to Narrowing Amendments C. Risk of Drafting Mistakes and Efficient Allocation 1. Avoidable Mistakes 2. Unavoidable Mistakes 3. Harmless Mistakes III. SOME POLICY PROPOSALS A. Preissuance Amendment Without Retroactive Priority Against Third-Party Insights B. End Postissuance Claim Amendments IV. CONSIDERING OBJECTIONS A. The Sky Has Not Fallen B. Maintaining Patentee Incentives C. The Efficiencies of Delayed Adjudication D. Less Drastic Alternatives 1. Prior User Rights 2. Intervening Rights 3. Limiting the Number of Continuations E. Perverse Incentives and Patentee Adaptations 1. Vague Claims as Substitutes for Changeable Claims 2. Delayed Initial Filing as an Alternative to Amendment CONCLUSION INTRODUCTION

Ask any patent lawyer what the most important part of a patent is, and the answer will invariably be "the claims." (1) Claims are supposed to act as a patent's boundaries, defining the patentee's monopoly. (2) As a boundary, the claim should "inform the public during the life of the patent of the limits of the monopoly asserted, so that it may be known which features may be safely used or manufactured without a license and which may not." (3)

The normal story of patent law's boundary problems is that claim language is too vague. (4) My goal in this Article is to discuss another--much more problematic--reason that claims fail to act as meaningful patent boundaries. Simply put, claims can be explicitly changed throughout the patent's lifetime, thereby moving the patent boundary. A redrawn boundary is much worse than a vague boundary. A fence that is vague and has gaps is not ideal for telling people where not to trespass, but is better than no fence at all; a fence that will be redrawn after the fact is entirely useless. The literature on clarifying claim language thus misses much of the problem: having crystal clear claim language will not provide a patent boundary if that clear language can be changed by the patentee whenever he wants.

Imagine a real property system where your neighbor is permitted to move his fence to encompass your new house. Moreover, he then sues you for trespassing and evicts you from the house. A real property system with such constantly moving fences would quickly break down, as people move fences in self-serving ways, litigate evictions, and stop building houses.

In comparison, a patentee is permitted to change his claims throughout the life of the patent, generally at-will with few substantive limits. The amended claim then retroacts upon competitors, forcing them to stop manufacturing, akin to evicting them from their factories. Similar to the prediction in real property, this lack of stable boundaries causes constant attempts to amend claims in self-serving ways, has sparked an explosion in patent litigation, (5) and acts as a deterrent to productive investment in manufacturing, research, and innovation. (6) A particularly successful example was Jerome Lemelson, who perfected the technique of filing vague patent applications that were kept secret until a mature industry developed a similar idea, and then extracted high tolls from that industry. (7) Lemelson extracted billions of dollars from various industries. (8) Other historical examples abound. (9)

The fact that patent boundaries can be moved, at any time and within broad substantive limits, is one of the oddest and most problematic features of the patent system. Such ex post claiming is commonly defended on two grounds: (1) flexibility in defining the patented invention is necessary to allow patentees to benefit from later developments, unforeseen at the time of initial claim drafting; (10) and (2) flexibility is necessary to permit the cure of any inadvertent mistakes by the patentee when drawing up the patent boundaries. (11) Neither is a compelling defense.

First, permitting patentees to change claims in order to capture unforeseen developments is, by definition, to confer a windfall upon them after the fact. (12) The ability to capture such windfalls contributes very little to the patentee's incentive when he is investing in research and development, since the windfall is unforeseen at that time. Conferring unforeseen windfalls upon patentees therefore creates monopoly cost without corresponding gains in incentives to invent or disclose. This contradicts the basic purpose of the patent system.

Second, the ability to amend claims allows patentees to cure any mistakes they make in drafting them. But this happens by shifting the cost of the mistake to competitors, by making these competitors pay royalties based on the amended claim. Patentees thus profiting from their own mistakes have no incentive to avoid them, and indeed have a perverse incentive to deliberately commit such mistakes. Because patentees are the least-cost avoider of claim-drafting mistakes, this shifting of loss is inefficient.

I propose in this Article that issued patents should not be amended. This fixes the boundary of a patent upon its issuance, permitting claims to create a binding and meaningful boundary. Before the issuance of a patent, amending claims to fix mistakes is useful, since before issuance such mistakes are harmless. To prevent inefficient windfalls, however, even preissuance amendment should not be permitted to capture later developments. This can be accomplished by denying amended claims retroactive priority against third-party activities.

Part I describes the basic doctrine of patent claims and procedures for changing them. Part II analyzes the functions of written claims and why claim amendment undermines these functions. Part III proposes several reforms, namely to end postissuance claim amendment and to deny retroactive priority to preissuance amendments. Part IV considers some objections and alternatives to my proposals. A brief conclusion follows.

1. THE PATENT CLAIM AS A BOUNDARY

   1. The Basics of Patent Claims

      The process of obtaining a patent begins with filing an application in the United States Patent and Trademark Office ("PTO"). This application contains several things, but the two most important are the specification and the original claims." The specification is a detailed disclosure of the invention. For example, a specification describing a table will describe what it looks like (is it square or round); what it is made of (wood or plastic); how to make it (using nails or screws); and what it is used for (dining tables or reading desks). By contrast, the original claims--an application usually has several--are each a single sentence describing the invention in more general terms. For example, a claim over a table might read, "An apparatus comprising a flat surface and four legs."

      Each claim is then scrutinized by a PTO examiner to see if the invention claimed meets the patentability criteria of novelty, usefulness, and nonobviousness; as well as whether the claim corresponds to something disclosed by the specification. (14) If the patent examiner finds the claims satisfy the statutory criteria, the patent is issued with the specification and the approved claims. (15)

      Once issued, the claims are supposed to define the scope of infringement. (16) With minor exceptions, (17) the rule of patent law is that anything that is literally described by a claim, infringes; and that which is not literally described by a claim does not infringe. (18) Because patent claims define infringement, they are generally regarded as the boundary of a patent, (19) much as the boundaries of real property define trespass and the right of exclusion. Thus, it is commonly said in patent law that "the name of the game is the claim." (20)

      A simple example demonstrates how claims work. A claim over a table might be written as: "An apparatus comprising a flat surface and four legs." Written this way, a triangular table with three legs would not be covered, while a four-legged table would. Moreover, it does not matter for infringement that an infringing product has additional features, as long as it had the minimum feature set specified. For example, a table with a set of drawers attached or wheels at the bottom still infringes, as long as it also had a flat top and four legs.

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