Patent Schisms

Author:Clark D. Asay
Position:Associate Professor of Law, BYU Law School. J.D., Stanford. M.Phil, University of Cambridge
Pages:45-92
SUMMARY

Parties frequently obtain patents for one purpose, only to use those patents for another. This Article calls such divergences between parties' initial motivations to obtain patents and those patents' predominant uses later on “patent schisms.” Because traditional patent law theories typically treat the purposes of patents as static, scholars have neglected to explicitly examine patent schisms and ... (see full summary)

 
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Patent Schisms
Clark D. Asay*
ABSTRACT: Parties frequently obtain pa tents for one purpose, only to use
those patents for another. This Article cal ls such divergences between parties’
initial motivations to obtain patent s and those patents’ predominant u ses
later on “patent schisms.”
Because traditional patent law theories typic ally treat the purposes of patents
as static, scholars have neglecte d to explicitly examine patent schisms and the
reasons behind them. This is so despite the pervasiveness of patent schisms in
a variety of important contexts. Those contexts i nclude the patenting
behaviors of early-stage companies, later-stag e companies, so-called “patent
trolls,” and universities. In fact, patent schisms lie at the heart of some of the
most controversial patent law topics, including whether patents should be
considered a form of personal property or, i nstead, as a regulatory right.
This Article examines patent sch isms and adds to the patent literature in three
principal ways. First, it provides an a ccount of the ubiquity of patent schisms
in a variety of important settings. Second, it a rticulates three theories
explaining how and why patent schisms arise. These hy potheses include the
proposition that patenting an invention oft en creates economic and
psychological incentives to ultim ately use that patent in defiance of a pa rty’s
original motivation to obtain the pa tent. Finally, the Article examines the
normative and theoretical impli cations of the pervasiveness of patent schisms
and the explanations behind them. These include briefly assessing whether
treating patents as a form of perso nal property is the correct approach to
ensuring that the patent system serves its constitutional purpose of promoting
the progress of “science and the useful arts .”
I. INTRODUCTION ............................................................................. 46
II. THE PURPOSES AND USES OF PATENTS .......................................... 50
A. WHY PARTIES OBTAIN PATENTS ............................................... 50
B. HOW PARTIES USE PATENTS ..................................................... 52
1. Early-Stage Companies .................................................. 53
* Associate Professor of Law, BYU Law School. J.D., Stanford. M.Phil, University of
Cambridge. Thanks to Stephanie Plamondon Bair and Paul Stancil for hel pful comments on
earlier drafts of this Article .
46 IOWA LAW REVIEW [Vol. 104:45
2. Established Companies .................................................. 55
3. Patent Trolls ................................................................... 57
4. Universities ..................................................................... 59
III. EXPLAINING PATENT SCHISMS ....................................................... 66
A. UNDER PRESSURE .................................................................... 66
1. Economic Pressure ........................................................ 66
2. Psychological Pressure ................................................... 70
B. CHANGING CIRCUMSTANCES ..................................................... 73
C. INTRA-ORGANIZATION HETEROGENEITY .................................... 78
IV. IMPLICATIONS ............................................................................... 81
A. PATENT DYNAMISM ................................................................. 82
B. EMPIRICAL WORK ON THE PURPOSES BEHIND PATENTING ........... 89
V. CONCLUSION ................................................................................ 91
I. INTRODUCTION
Why parties pursue patents and how parties ultimately use those patents
are often treated as two sides of the same coin. For example, when Apple
recently asserted several of its mobile-device patents against Samsung in high-
stakes patent litigation,1 one might view that assertion as evidence that Apple
initially obtained the patents in order to fend off purported copyists such as
Samsung.2 Or, when high-tech companies use patents defensively to deter
patent assertions against them, scholars might ascribe the party’s motives for
pursuing such patents as simply that: to better protect their freedom to
operate.3
Yet while the reasons parties pursue patents and the ultimate uses of
those patents may often be in sync, in many other cases they are not. A start-
up company, for instance, may obtain patents primarily in order to attract
venture capital funding. 4 But later on, if the start-up becomes a public
company, that company may view its patents primarily as assets t o be
monetized through licensing or litigation.5 As another example, a large
1. For some partial history of this case, see Adam Liptak & Vindu Goel, Supreme Court Gives
Samsung a Reprieve in Apple Patent Case, N.Y. TIMES (Dec. 6, 2016), https:/ /www.nytimes.com/
2016/12/06/technology/samsung-apple-smartpho ne-patent-supreme-court.html.
2. See, e.g., Jeanne C. Fromer, Expressive Incentives in Intellectual Property, 98 VA. L. REV. 1745,
175052 (2012) (describing predominant p atent law theory articulating this view).
3. Colleen V. Chien, From Arms Race to Marketplace: The Complex Patent Ecosystem and Its
Implications for the Patent System, 62 HASTINGS L.J. 297, 30310 (2010) (describing the development
of defensive uses of patents).
4. Clarisa Long, Patent Signals, 69 U. CHI. L. REV. 625, 64445 (2002).
5. IBM is a good example of a company that has signific antly repurposed many of its patents
for monetization as it changed its IP strategy. See John C. Dvorak, IBM Is the World’s Biggest Patent
2018] PATENT SCHISMS 47
public company may churn out patents primarily in order to build a large
defensive patent portfolio, but later on decide that the best use for many of
those patents lies in aggressive patent monetization efforts.6
Hence, why parties obtain patents and how they ultimately use those
patents are distinct events with often differing motivations. Yet despite the
likely frequency of such schisms in purpose, scholars have devoted little
explicit attention to analyzing why and how such schisms develop.7 Scholars
have spent considerable time proposing a number of distinct theoretical
purposes that patents may serve.8 In doing so, scholars have recognized one
aspect of the patent system’s dynamism.9 But scholars up till now have
neglected to explicitly focus on another important dimension of that
dynamism: that patent owners frequently toggle between heterogeneous uses
of the same patent throughout its roughly twenty-year lif ecycle.10 This Article
takes up that task.
Scholars have also spent considerable time analyzing discrepancies
between patent law’s purported purposes and patent law as implemented,
including ways in which patents are used in defiance of those purposes.11 But
this Article, rather than focusing on discrepancies between patent law’s
purposes and whether patents are currently serving those purposes, instead
homes in on schisms between a patent owner’s own motivation in pursuing a
patent and how the patent is ultimately used. Furthermore and importantly,
it seeks to explain how and why these discrepancies arise, which questions
scholars have, at most, only implicitly addressed.
These questions are important for at least three reasons. First, as Part II
will explore, discrepancies between t he purposes for which parties obtain
patents and the ultimate uses of those patentswhat I will hereafter refer to
as “patent schisms”appear to be pervasive in a variety of important settings.
Troll, PCMAG (May 4, 2016, 8:00 AM), http://www.pcmag.com/ar ticle2/0,2817,2493155,00.asp
(describing the transition of IBM from a product producer to a patent lice nsing outfit).
6. See generally Jeremy W. Bock, Patent Quantity, 38 U. HAW. L. REV. 287 (2016) (discussing
the propensity of large firms to engage in “patent harvesting”).
7. For an example of scholarship that comes close, see generally Jeanne C. Fromer, Should
the Law Care Why Intellectual Property Rights Have Been Asserted?, 53 HOUS. L. REV. 549 (2015)
(assessing discrepancies between the purposes of patent law and how some parties actually use
their patents).
8. See infra Section II.A.
9. See generally, e.g., Colleen V. Chien, Opening the Patent System: Diffusionary Levers in Patent
Law, 89 S. CAL. L. REV. 793 (2016) (explori ng ways by which to make the pate nt system more
conducive to dynamic uses of pa tents).
10. Id. at 815–17.
11. See generally, e.g., JAMES BE SSEN & MICHA EL J. MEURER , PATENT FAILURE: HOW JUDGES,
BUREAUCRATS, AND LAWYERS PUT INNOVATORS AT RISK (2008) (arguing that patent law as
implemented threatens the very purposes for which patents are intended and proposing judicial
solutions to this crisis); DAN L. BURK & MARK A. LEMLEY, THE PATENT CRISIS AND HOW THE COURTS
CAN SOLVE IT (2009) (describing how patents often fail to promote innovation except in a few
industries); Fromer, supra note 7.

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