Foresight bias in patent law.

• Author: Seymore, Sean B.

ABSTRACT

Much of patent reform has focused on efforts to make it harder to obtain and enforce low-quality patents. The most straightforward way to achieve this goal is to raise the substantive standards of patentability. What is often ignored in discussions about raising patentability standards is that high-quality inventions can slip through the cracks. What is more troubling is that sometimes this happens because of bias. This Article draws attention to foresight bias, which occurs when a decision-maker lets over-pessimism and an oversimplified view of the future influence the patentability determination. Foresight bias leads to a patent denial regardless of the invention's technical merit. Particularly susceptible are inventions emerging from "unpredictable" fields like chemistry and biotechnology--things like chemical compounds and DNA fragments. If the invention's principal purpose is to serve as a "building block" for something else, it is unpatentable. The fear is that a patent could create a monopoly of knowledge and impede future research. Empirical studies, however, suggest that these fears have largely not materialized. More importantly, the patent denial costs the inventor, society, and the patent system.

This Article offers a solution to this problem. It proposes a new paradigm that gauges the patentability of building block inventions in unpredictable fields objectively without reliance on the utility requirement--the principal conduit for foresight bias. Its implementation will promote disclosure, foster more creative activity, reduce wasteful duplicative research efforts, and promote technological progress--all important objectives of the patent system. Eliminating the bias will also reconnect the patent system to many of the technical communities that it serves.

INTRODUCTION

Patent reform has been the subject of much scholarship and debate over the past decade. (1) Calls for reform have been prompted by concerns that the U.S. Patent and Trademark Office (Patent Office) routinely grants poor-quality patents (2) and that such patents are too easy to obtain and enforce. (3) Congress took a step toward addressing these concerns through its recent passage of the America Invents Act. (4)

Much attention in the patent reform debate has focused on the substantive standards for patentability. (5) Many commentators have long argued that the standards are too low, thereby diminishing their gatekeeping function. (6) This argument deserves attention because adjusting these standards is considered the principal tool for modulating the scope, number, and quality of issued patents. (7) Indeed, tightening the standards of patentability has been a major goal of judicial efforts at patent reform. (8) Scholars and policymakers all seem to believe that raising the standards could do much to ameliorate many problems afflicting the patent system. (9) For instance, if the standards are sufficiently high, patents would be harder to obtain and easier to invalidate. (10)

There is, however, another side to the story. What is often ignored in discussions about raising patentability standards is that meritorious inventions can slip through the cracks. A denial will deprive the inventor of a patent; however, high standards will also reduce the number of applications filed. When this happens, society is deprived of the public disclosure of technical information about the invention that occurs once a patent document publishes. (11) Thus, this paradigm compromises the patent system's primary goal to promote technological progress. (12) Any patentability standard that produces this outcome should give decision-makers considerable pause.

What is more troubling is that sometimes this occurs because of bias in the patentability determination. The type of bias most frequently discussed in patent law is hindsight bias--also known as "Monday morning quarterbacking." (13) Hindsight bias is the cognitive limitation which prevents persons from disregarding their knowledge of an outcome in assessing past events. (14) It can creep into the patentability calculus anytime a retrospective analysis is required. The classic example is nonobviousness, the statutory requirement that prevents the patenting of inventions that are trivial advances over what is already known. (15) The question that must be answered is whether the invention that is now claimed would have been obvious to a person having ordinary skill in the art (PHOSITA) (16) at the time the patent application was filed. (17) Attempting to elucidate what the PHOSITA knew or could have done raises hindsight concerns because "decision-makers unconsciously let knowledge of the invention bias their conclusion concerning whether the invention was obvious in the first instance." (18) As the U.S. Court of Appeals for the Federal Circuit (Federal Circuit (19)) has noted, "'[t]hat which may be made clear and thus 'obvious' [today], with the invention fully diagrammed and aided ...' by experts in the field, 'may have been a breakthrough of substantial dimension when first unveiled.'" (20) Courts are aware of the hindsight effect (21) and try to fight it. (22) Scholars have written extensively about hindsight bias in the nonobviousness realm (23) and in other areas of patent law. (24)

This Article, however, focuses on another type of bias, which has been largely overlooked in the academic literature but has important implications for patent law and policy. It is foresight bias, which occurs (as defined in this Article) when a decision-maker lets over-pessimism and an oversimplified view of the future bias the patentability determination. (25) This is related to the tendency of decision-makers to be risk averse because they overweigh the likelihood of bad outcomes. (26) Foresight bias leads to a patent denial despite the invention's technical merit and ability to further the patent system's primary goals--namely to promote technological progress through the dissemination of knowledge, coordinate the future development of technology, and spur additional inventive activity. What is particularly troubling about foresight bias is that it can lead to predictions about patenting that are simply wrong. (27)

Foresight bias in patent law manifests itself primarily through the utility requirement. (28) It is codified in [section] 101 of the patent statute, which states in relevant part that " [w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter ... may obtain a patent." (29) A requirement for utility appeared in the original Patent Act of 1790 (30) and has remained a part of the statutory scheme. (31)

But what does it mean to be useful? Congress has provided no insight into its meaning. (32) The abstract and imprecise nature of the term invites subjective interpretations because virtually everything can be used by someone for something. (33) The Oxford English Dictionary defines the term simply as "beneficial" (34) or "fitness for some desirable purpose or valuable end." (35) Until the middle of the twentieth century, the standard for utility in patent law was also de minimis. Some beneficial use was sufficient to establish utility unless the invention was inoperable or detrimental to the public interest. (36) It was believed that a low utility threshold promoted knowledge dissemination and the disclosure function of the patent system. (37)

But this changed in the middle of the twentieth century when utility took on an invigorated role in patent law. By this time the invention landscape had changed from primarily mechanical devices to one increasingly populated with chemical and pharmaceutical inventions. (38) How to adapt the utility requirement to accommodate this new landscape led to conflicts among judges on the U.S. Court of Customs and Patent Appeals (C.C.P.A., (39) tension between the C.C.P.A. and the Patent Office, (40) and sharp ideological disagreements among Supreme Court Justices. (41) The end result was a ratcheted-up standard, which now requires that the inventor's assertions be credible (42) and that the invention possess "specific" and "substantial" utility. (43)

The crucial link between foresight bias and utility has largely escaped the attention of legal scholars. This inattention is somewhat understandable because utility--the principal conduit for foresight bias--is often assumed to be a "low bar to patentability" (44) or a "nonexistent" patentability requirement. (45) This statement is inaccurate. The utility requirement is now a powerful gatekeeper that allows the Patent Office and the courts to subjectively decide when or if something can be patented. (46) The lack of objective criteria for utility opens the door for all sorts of mischief in patent law. (47)

Foresight bias is most prominent in assessing the patentability of "building block" inventions from "unpredictable" fields like chemistry and biotechnology. (48) Those seeking to claim things like chemical compounds and DNA fragments can face formidable utility hurdles. (49) If the invention's purpose is to serve as a building block for something else, it cannot be patented because it lacks a specific and substantial utility. (50) The fear is that a patent on these types of building blocks could create a monopoly of knowledge and inhibit future research. (51) By comparison, the utility of other types of building blocks--things like bricks, steel beams, and software modules--is never questioned. (52)

To better understand the problem, consider the following hypothetical. Many pharmaceutical companies have been on a quest to invent a cholesterol-lowering blockbuster drug (53) to match or exceed the success of Lipitor--the best-selling drug of all time. (54) In 2006, scientists discovered that a compound found in dandelions lowers cholesterol in humans without side effects. But the pharmaceutical companies ran into a roadblock when they set out to make compounds...