The Thirteenth Annual Honorable Helen Wilson Nies Memorial Lecture in Intellectual Property Law: innovation and recovery.

Author:Duffy, John F.
  1. INTRODUCTION II. INNOVATION FOR RECOVERY A. The Diversity of Innovation 1. Economic Innovation 2. Regulatory Innovation 3. Governmental Innovation B. Pragmatic Innovation III. RECOVERY AND INNOVATION A. Claim Interpretation B. The Paper Patent Doctrine C. Diversity of Innovation and Accommodation of Pioneers D. Patentable Subject Matter IV. CONCLUSION I. INTRODUCTION

    I would like to thank Dean Joseph Kearney and Professor Kali Murray, who invited me to give this lecture, and also the faculty of Marquette Law School for hosting me these few days.

    I especially appreciate being given the chance to deliver a lecture named in honor of Judge Helen Nies, as I am a great fan of her work in the patent area. (1) Indeed, a recent article (2) of mine traces the Supreme Court's reengagement in the patent area to the Court's grant of certiorari in American Airlines v. Lockwood, (3) in which Judge Nies wrote a marvelous dissenting opinion at the Court of Appeals. Her dissent reads very much like a thoughtful and considered brief that was trying to attract Supreme Court review. She focused on a split in circuit authority on the issue in the case and articulated with great expertise the reasons why the issue was important. (4) In a subsequent law review article, Judge Nies explicitly stated her belief that dissents from Federal Circuit opinions could "provide[] an impetus for Supreme Court review," as "[j]udges disputing a point more likely will pique the Court's interest than lawyers disputing a point." (5) She also defended the value of dissenting opinions, stating her conviction that "a judge who disagrees with the majority must make the effort to write a dissent, especially here at the Federal Circuit where dissents are virtually the sole means by which contradicting positions on the law are presented fully and without personal bias to the Supreme Court." (6)

    Judge Nies's dissent in Lockwood was a signal moment in modern patent law, as it marked a watershed in the Federal Circuit's relationship to the Supreme Court. The Court's decision in 1994 to grant certiorari in Lockwood ushered in a period of renewed interest by the high court on patent law issues. In the first twelve years after the creation of the Federal Circuit (1982-1994), the Supreme Court heard only five patent cases, and those cases were only tangentially related to substantive patent issues. (7) Starting in 1994 and continuing to the present day, the Supreme Court has considered, on average, at least one patent law case per term, with the majority of the cases involving core matters of patent policy. (8)

    I have devoted attention to Judge Nies's dissent in Lockwood not merely because it is appropriate to recall the great jurist after whom this lecture was named, but also because my lecture today may be viewed as a dissent to some of the current approaches in modern patent law. Like Judge Nies, I too believe in the inherent value of dissent. While agreement can be signified with mere silence, disagreement imposes a responsibility to speak and to write, for only then can "contradicting positions" be fully and carefully presented.

    The title for my lecture today is "Innovation and Recovery." The lecture is premised on the undeniable fact that our nation has recently suffered a recession. We now hope for recovery. (9) Yet despite all the difficulties imposed by a recession, and despite our strongest desires to have it retreat into history, a recession also has great value to society. This value goes beyond mere cliched paraphrases of the famous advice attributed to Nicolo Machiavelli, "Never waste the opportunities offered by a good crisis." (10) The opportunities afforded by a recession are not merely the chance to seize power or to achieve other political objectives. Recession provides the chance to learn and to change. Most importantly, recession provides a lesson in the fallibility of human knowledge and in the need for continued improvement.

    Recession is failure. It is a failure of existing ways of doing things. Regulatory structures fail; businesses fail; and individuals fail to maintain their productivity and to meet their responsibilities. Precisely because existing practices have failed, the way out of a recession is the new, the changed, the innovative. Recovery from recession demands new practices and new organizations for governments, businesses, and individuals, and those reorganizations and reemployments are often quite different from what came before. Recovery thus demands innovation to rebuild society--to rebuild it a little bit better and, hopefully, a little bit more carefully.

    Innovation is therefore a natural response to a crisis. (11) In good times, it makes sense to follow worn paths. If current methods are yielding good results, it makes perfect sense to continue in those ways. Not so in times of crisis. The innovation necessary for an economic recovery is, to be sure, not just the innovation that goes on inside a laboratory or a research facility. It can be bigger and more dramatic--like the reorganization of an entire industry's business and regulatory practices. It can be smaller and more incremental, as when a single individual decides to change careers or to open a new business.

    Examining the innovation necessary for recovery yields two important insights into the nature of innovation. First, innovation is wildly diverse; it spans the full breadth of human activities and human creativity. Second, innovation--or at least the innovation most ardently sought as the path for recovery--is intensely practical. My thesis in this lecture is that these two insights, though derived from our broader experience, are essential in obtaining recovery for our chief legal mechanism that is designed to foster innovation, the patent system.


    Many patented innovations are incremental advances that build on pre-existing technologies in relatively standard ways. Recognizing this truth does not denigrate the value of those innovations and certainly does not suggest that they should be denied patent protection. Even on the forefront of scientific research, "normal science" usually dominates, with valuable but incremental additions to existing structures. (12) The most innovative of advances--changes that are truly "outside the box" in the sense that they reject pre-existing notions--are rare and episodic. Yet it is precisely those sorts of transformative changes, both large and small, that are the most necessary to generate a recovery from economic failure. The crisis of economic failure makes complete rejection of old ways easier, and the desire for recovery spurs creation of the boldly new.

    The period during which recession turns to recovery is thus an optimal time to reconsider the nature and desirability of innovation, and great insight can be won by considering the types of innovations sought in time of crisis. These innovations are distinguished by their diversity but unified by their practicality. These two qualities--diversity and practicality--will provide my overarching themes.

    1. The Diversity of Innovation

      Recession and recovery remind us of the extreme diversity among innovations. That diversity spans much more than advances in engines, semi-conductor chips, chemicals, pharmaceuticals and computer software. Such industrial diversity may be a common proxy for representing the diversity of innovation, (13) but it covers only a part of innovation. Innovation extends beyond the research laboratory; it ranges from the individual home, to the corporate boardroom, and, yes, even to inside the Beltway. Here, I will consider three types of innovation that are often neglected in discussions about innovation but yet are vital parts of the innovation needed for recovery.

      1. Economic Innovation

        First, let us consider the full scope of economic innovation. As I have suggested, economic failure is an invitation to innovate. Failed businesses recover through reorganizations of assets. (14) Indeed, modern corporate bankruptcy law is often not called bankruptcy, but corporate reorganization. (15) That name is accurate precisely because business failure creates the opportunity to take assets being used in one way, which was unproductive, and put them to a new and hopefully productive use. (16) Such a common and seemingly trivial change demands innovation in the sense that at least those specific assets are put to a use that is new.

        Innovation is present not only in any corporate reorganization, but also in any individual's search for reemployment. For the unemployed in a recession, especially the newly unemployed, the job market often seems bleak. Yet the lesson of a foreboding job market--and it is no doubt a hard lesson on a personal level--is a lesson in the essential need for innovation. When traditional career paths are no longer open and promising, job seekers must be more creative. They must consider new ways to work. They must search for new opportunities because the old opportunities are diminished or gone altogether. It is common in our society to admire the innovator and the entrepreneur. Yet the unemployed share a common bond with innovators. For both, creativity is essential, but the path is as difficult and fraught with failure as it is essential.

        Finally, any discussion of economic innovation is incomplete without also considering those who are not bankrupt or unemployed, but who instead have assets or capital despite the recession. It might seem at first blush that these individuals and corporations should shun risk during recessionary times; they should "play it safe." But this is not so. For those with assets, a recession is also a challenge, and a challenge to innovate. For the well-off, recession also brings opportunity. Corporate reorganizations bring the opportunity to purchase properties at substantial discounts. Unemployment brings the opportunity to hire previously unavailable talent that is now...

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