This guest post is based upon Professor Vishnubhakat’s innovative new paper applying antitrust concepts to patent law, which is now published in the Seton Hall Law Review: “The Antitrusting of Patentability”
Courts facing difficult questions of patent validity are increasingly turning to a form of decision-making that has long been familiar to antitrust lawyers: using per se analysis rather than the rule of reason. In this post, I will discuss the analytical origins of this trend, fresh empirical data on how it is emerging, and some thoughts for improvement.
The Patent-Antitrust Interface
To begin, it is worth noting the very fact that antitrust law and patent law are intersecting so directly. The complexity and specialization of these fields can often stand in the way of dialogue between them, though the need for such dialogue is plain. One of antitrust law’s main concerns is fostering competition and promoting economic efficiency. Meanwhile, patent rights by design restrict competition and efficiency in the short run. A patent owner can exclude others from quintessentially economic activities: making, using, selling, offering, and importing the patented invention.
This is meant to produce gains for inventor and society alike, but on different timelines. Market power and the ability to charge higher prices are today’s reward for the patent owner in return for developing the invention in the first place. Society’s reward comes tomorrow, when the patent expires and the technical know-how becomes freely available to make and sell, to use in follow-on innovation, and so on. Another important reward to society is the credible incentive to future would-be innovators that their efforts, too, will enjoy a similar benefit.
Theoretically, this tradeoff between static current losses to competition and efficiency in favor of dynamic future gains could be made entirely within patent law itself. However, antitrust has much to say on these systemic choices, too, and the proper treatment of so-called “patent monopolies” has been a source of perennial debate and even tension in the law since the 19th century.
The Origins of Per Se Analysis in Patent Law
In this longstanding debate, the use of per se-style analysis in patent law is a recent development aimed at solving a specific problem. Inventions are evaluated, and patents are granted, by Patent Office examiners with expertise in the relevant technology. Federal judges and juries who later confront these patents in litigation generally have no such expertise, but they must frequently decide whether a patent is valid. In doing so, they must pass judgment on whether an expert agency—one that deals every day with the law and the science of patents—got it wrong.
Under the best of circumstances, this is intimidating. Making this decision accurately is costly and time-consuming, even with compelling stories from attorneys and authoritative opinions from expert witnesses. If one could dispense with the thorny question of patent validity early in litigation, things would be simpler.
One straightforward way to front-loading an issue, of course, is to decide it as a matter of law without delving much into idiosyncratic facts. This is where per se analysis of patent validity begins. Of the major requirements for a patent to be granted—and for a granted patent to be found valid—most require a good deal of factual detail about the state of the art and what people trained in that art knew at the time of the invention. But one does not: the threshold question of the invention is even patent-eligible subject matter. This is primarily a legal question, and so the subject matter eligibility doctrine is a good candidate for reducing the decision costs associated with determining patent validity.
How the Per Se Analysis of Patent Validity Actually Works
The way it works, in essence, is that a court applies the subject matter eligibility doctrine to find a patent invalid rather than reaching the same conclusion through other, more fact-intensive doctrines. Patent lawyers tend to think of the different patentability requirements as separate hurdles to be cleared, but it turns out that these requirements reflect similar, overlapping concerns.
To be patentable, an invention must be useful and new as compared to the prior state of knowledge. It must be nonobvious, which means it must embody more than trivial combinations or extensions of existing inventions or pieces of knowledge. These requirements are intended to ensure that an invention is innovative enough to merit a patent.