The PTO and the market for influence in patent law.

Author:Long, Clarisa
Position:U.S. Patent and Trademark Office

INTRODUCTION I. PATENT LAW'S SUPPLY SIDE II. THE PTO'S ATTEMPTS TO INCREASE ITS INFLUENCE A. Legal Influence 1. The MPA and Executive Branch Agency Status 2. Judicial Deference 3. The Scope of Rulemaking Authority B. Funding III. THE UPSHOT A. Transparency B. Capture and Institutional Bias CONCLUSION APPENDIX INTRODUCTION

As statutory schemes go, the patent statute has been relatively stable from 1952 to the present. In contrast to copyright law, where Congress has taken a close--indeed at times intense--interest in the details of the statutory scheme, (1) legislative intervention into the patent statute, when it has occurred, has been more limited and narrower in scope. (2) For many reasons, however, patent law has been disequilibrating over time, and calls for patent reform have been increasing in intensity. One of the many factors contributing to this disequilibration in recent years has been the ongoing emergence of the U.S. Patent and Trademark Office (PTO) as a more robust institutional player actively seeking to influence patent policy. The more prominent role played by the PTO is both a cause and an effect of dissatisfaction with the state of patent law.

In order to better understand some of the forces behind the moves toward patent reform, we should examine not just who is demanding legal change, but which institutions are able and willing to supply legal rules and norms. Since 1952, Congress has left much of the market for supply-side influence in patent law to the federal courts and, to a lesser degree, to the PTO. In 1982, Congress consolidated appellate jurisdiction over patent cases in one court, the U.S. Court of Appeals for the Federal Circuit. Since then, lacking institutional competition from other courts, the Federal Circuit has strengthened patent law. In the process, the court has made this a more attractive area for institutions to wield legal and policy influence.

This development has not been lost on the PTO. For a while now, the PTO has been vying to gain more influence in the market for supplying legal rules and norms. The PTO is on both the demand side and the supply side in patent law evolution, functioning as a demander of some changes to patent policy and as a supplier of others. (3) In the process, it has appealed to the inventive community for support.

In this Article, I examine some of the ways in which the PTO has maneuvered since the early 1990s to occupy a more central position in making patent law and policy. I tell a slightly different story from the one often told, in which regulatory agencies are passive targets of attempts at capture by their constituencies. Whereas the literature on the origin of attempts to influence the regulatory process focuses mostly on the demand side, in this Article I focus on the supply side. (4) One of the weaknesses of the capture theory as it is often presented is that it assumes that only the regulated constituency takes the initiative. This implies that interest groups are the instigators of attempts at regulatory entanglement, an assumption that is questionable in the case of the PTO. I argue that while we often think of agency entanglement with the community it is supposed to regulate as an unalloyed bad, there have been some positive results from the PTO's attempts to increase its influence. Whether this state of affairs will continue, however, remains to be seen.

In Part I of this Article, I argue that the supply side of patent law has long been dominated if not monopolized by the Court of Appeals for the Federal Circuit. With patent law having increased in importance in the past few decades, the PTO, facing few competitors in the patent policymaking field, has had an incentive to emerge as a stronger player in the market for legal influence over patent law by increasing its own influence. In Part II, I describe two major types of moves in which the PTO has engaged, and continues to engage, in order to accomplish this. One set of moves has given the PTO slightly more legal power. The results are more important for their symbolic value than for influencing legal outcomes. The other maneuver by the PTO is more subtle but more substantively important: appeals for support by the PTO to the constituency--inventors--with which it is supposed to have an adversarial relationship. (I do not maintain, however, that the PTO has been captured by the inventive community.) The resulting benefits to the PTO--such as a larger budget, new facilities, and more control over its finances--have been measurable. In Part III of this Article, I argue that so far, the PTO's attempts to increase its influence have had some social benefits. PTO attempts to appeal to the inventive community have resulted in greater institutional transparency and more rigorous debate about the faults and flaws of the patent system. At the same time, expanding the PTO's power presents dangers. In the long run, it is unclear whether the benefits will outweigh the costs.

There are a few caveats: First, let me emphasize once again that I'm not saying the PTO has been captured. Certainly the PTO has in recent years displayed a sensitivity to the views of the inventive community that it previously lacked, and it has attempted to enlist the inventive community in its efforts to expand its influence and budget, but this is not the same as saying that the PTO has become controlled by the inventive community. (5) Second, I'm being deliberately reductionist in this Article. I'm not trying to set out all the subtleties of the complex institution that is the PTO. Rather, I'm seeking to capture some essential features of the PTO's relative positioning throughout the past two decades, and to distill some key moves that the PTO has made in order to illustrate how it has maneuvered itself. Doing that means I'm deliberately excluding other forces that have shaped the fortunes of the PTO. In addition, throughout this Article my intent is not to take a normative position on the legal or budgetary issues on which the PTO has taken an advocacy position. Rather, it is to argue that each of these events has resulted in the PTO having more influence and more wherewithal to increase its influence.


    Courts are the primary locus of the evolution of patent law. Since 1952, Congress has not taken much interest in amending the patent code, leaving the bulk of legal evolution to the courts. Starting in 1982, that meant delegating the evolution of patent law to the U.S. Court of Appeals for the Federal Circuit. Congress's lack of interest has been longstanding; it was relatively indifferent even before the creation of the Federal Circuit. On the few occasions that significant amendments to the patent statute have been successful, they have often pertained to procedural or administrative matters--such as better funding for the PTO--on which all participants agree. (6)

    Why hasn't Congress taken a closer interest in patent law? The broad standards that comprise most of the patent code indicate that Congress has delegated patent policy to the courts, particularly to the Federal Circuit, but whether this is a cause or an effect of Congress's indifference--or indeed if there is any causal link--remains unclear. Given that Congress outsourced the writing of the 1952 Patent Act and passed it without floor debate, (7) it's not clear that any legislative intent can be attributed to members of Congress regarding the Act. (8) Recent criticism of the Federal Circuit (much of it vituperative) coming from the patent community may tempt us to forget that widespread dissatisfaction with the court is a new phenomenon. (9) From the time of its creation until relatively recently, commentators generally believed the Federal Circuit was doing a good job in its various subject areas. (10) Congress may have felt no great need to intervene in an area it perceived as complex and technical. Probably all of these reasons play a part to varying degrees in explaining Congress's reticence to pass new patent legislation.

    If Congress hasn't been an institution active in patent law, then who has? Not the Supreme Court. It doesn't enter the lists often enough, even in recent years, to have a wide impact on the field. Since its creation in 1982, (11) the Federal Circuit has been the main locus of patent law evolution. When it was created, the Federal Circuit was tasked with bringing consistency to patent law. Many commentators would argue that it has accomplished this task well, although most would also say that it has become a pro-patent court (although that depends to some degree on one's baseline). Adam Jaffe and Josh Lerner, for instance, show that the Federal Circuit has been more likely to find patents valid and infringed than did the appellate courts before 1982. (12) While this does demonstrate that expectation baselines about the enforceability of patents have changed, without more, it doesn't prove that the Federal Circuit has been captured. For one thing, we need to know whether the validity determinations made by appellate courts before the Federal Circuit were accurate. Perhaps courts were previously too quick to invalidate patents.

    Two stories could be told about the Federal Circuit making patents more enforceable. One is a public interest story. On this view, patent enforcement had become too weak, and declaring more patents valid increased social welfare. It has long been known that patent cases are unpopular with many members of the judiciary. Prior to the creation of the Federal Circuit, the fastest way a district court judge could make a patent case go away for good was to declare the patent invalid. By midcentury, antipatent sentiment ran so high that Justice Jackson famously lamented that the Supreme Court had developed such a "strong passion" for striking down patents that the only valid patents left were ones the "Court ha[d] not been able to get its hands on." (13) And as Adam...

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