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Patent Law

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Excessive Pricing of Off-Patent Pharmaceuticals: Hatch It or Ratchet?

Jennifer L. Graber

There is growing concern over the pharmaceutical industry’s ability to set and raise drug prices as it sees fit. The price of a drug that has not been protected by a patent for decades can suddenly increase—or “ratchet”—as much as 10,000%. This Note identifies the problem of ratcheting drug prices and considers whether these abrupt changes in drug prices derive from a longstanding problem inherent in the United States’ pharmaceutical regulatory regime. It then considers the most commonly suggested mechanism for countering high drug prices—stimulating competition in the pharmaceutical market—but ultimately concludes that focusing solely on increasing competition constructs an overly simplistic view of ratcheting drug prices. In order to find an effective solution to unexpected increases in drug prices, this Note evaluates a small subset of pharmaceuticals that have recently undergone a sudden price increase and separates the ratcheting events into two categories: (1) those that occur as a result of natural deviations in the market, and (2) those that occur due to business tactics that take advantage of vulnerabilities in the drug market. It concludes that under this categorization, antitrust law may provide an effective solution specifically directed at ratcheting events of the second category— those driven by anticompetitive behavior.

Divided Infringement: Expanding the Extraterritorial Scope of Patent Law

Melissa Feeney Wasserman

Generally, in order to infringe a U.S. patent, the entire patented invention must be practiced within the United States. However, as technology evolves it is becoming harder to contain inventions within national borders. Specifically, the advancement of networking and communications technologies allows for the rapid, cost-efficient dissemination of information across countries’ borders. As a result, the number of inventions that are being practiced in multiple jurisdictions, or the practicing of divided infringement, is on the rise. Potential infringers that commit divided infringement are practicing patented inventions, escaping liability in all jurisdictions, but still reaping the rewards of the American market. Consequently, potential infringers who commit divided infringement are undercutting the incentive to innovate, the primary purpose of the patent system. To solve the problem of divided infringement, this Note proposes expanding the extraterritorial scope of U.S. patent law by adopting a substantial effects test, limited by comity concerns.

Populism and Patents

The Honorable Kimberly A. Moore

Lawyers and other commentators often remark that American courts, and American juries in particular, are prejudiced against large corporate entities. Existing empirical research attempting to confirm this suspicion is contradictory and suffers from a number of shortcomings. In this Article, Judge Moore reexamines the issue by reporting the results of research on an original dataset of over four thousand patent cases and more than one million patents. The results indicate that individuals and corporations are treated differently in jury trials of patent property rights. In jury trials of patent cases between corporations and individuals, individ-uals won 74% of the time, with corporations winning in the remaining 26% of cases. Corporations and individuals won at nearly equal rates in judge trials. Marshaling a range of other evidence, Judge Moore explains that these results are likely to understate the degree of bias.

Moreover, analysis of patent cases permits the exploration of a related phenomenon—the heroic iconization of the American inventor. Just as the injured tort victim is viewed sympathetically, the American inventor is idealized for her ingenuity, productivity, and creativity. The individual inventor puts a face on the corporate entity, humanizing or personalizing it. Hence, even corporation-versus-corporation litigation has an individual component and therefore provides an opportunity for bias to impact decisionmaking.

Intellectual Property for Market Experimentation

Michael Abramowicz, John F. Duffy

Intellectual property protects investments in the production of information, but the relevant literature has largely neglected one type of information that intellectual property might protect: information about the market success of goods and services. A first entrant into a market often cannot prevent other firms from free riding on the information its entry reveals about consumer demand and market feasibility. Despite the existence of some first-mover advantages, the incentives to be the first entrant into a market may sometimes be inefficiently low, thereby giving rise to a net first-mover disadvantage that discourages innovation. Intellectual property may counteract this inefficiency by providing market exclusivity, thus promoting earlier market entry and increasing the level of entrepreneurial activity in the economy. The goal of encouraging market experimentation helps to explain certain puzzling aspects of current intellectual property doctrine and provides a coherent basis for appreciating some of the current criticisms of intellectual property rights.

Patentography

Jeanne C. Fromer

Many critics have noted that patent litigation’s institutional structure is riddled with shortcomings that lead to unjust and inefficient outcomes and decrease public faith in the legal system. This Article relies on theory and empirical data to propose that the patent litigation system can be improved by harnessing patentography—the geography of patent disputes. There are three principal concerns with patent litigation’s institutional structure: widespread forum shopping in district court patent cases, district courts’ typically poor factfinding and lawmaking in these cases, and insufficient deference by the Federal Circuit—the court hearing nearly all patent appeals—to district courts’ factual findings. Harnessing patentography by restricting venue in patent litigation to the principal place of business of one of its defendants will help repair each problem. It will clamp down on forum shopping. Contrary to conventional wisdom, it will also improve district courts’ patent decisionmaking. As industries tend to cluster stably in discrete geographic areas, my proposed rule will tend to cluster patent cases by technology in particular districts, such as software cases in the Northern District of California and pharmaceutical cases in the District of New Jersey. Clustering together large numbers of an industry’s patent cases in a limited number of district courts will develop those courts’ proficiencies in patent law and in the underlying industry-specific facts critical to sound legal determinations. Under my proposal, this clustering will occur in districts in which judges and juries already tend to have background industry knowledge, given the associated industry cluster. An empirical review of patent cases filed in district courts in 2005 confirms that harnessing patentography as I propose would intensify patent litigation clusters. Finally, improving district courts’ decisionmaking ought to encourage the Federal Circuit to defer more appropriately to district courts’ factual findings.

Secondary Considerations in Nonobviousness Analysis: The Use of Objective Indicia Following KSR v. Teleflex

Natalie A. Thomas

One of the basic requirements for patenting an invention is that the invention be
nonobvious. Following the Supreme Court’s decision in Graham v. John Deere,
secondary considerations—also known as objective indicia of nonobviousness—
have been considered when determining whether an invention is nonobvious. Secondary
considerations provide tangible evidence of the economic and motivational
issues relevant to the nonobviousness of an invention. Types of secondaryconsiderations
evidence include commercial success, long-felt but unmet need, and
copying by competitors. For many years, the Federal Circuit’s teaching, suggestion,
or motivation test often eliminated the need for the court to rely on secondary considerations
in the obviousness inquiry. Due to the Federal Circuit’s stringent application
of this test, the obviousness inquiry was generally resolved by examining the
prior art.
In 2007, the Supreme Court decided KSR v. Teleflex, which endorsed a flexible
obviousness analysis and rejected the Federal Circuit’s strict application of the
teaching, suggestion, or motivation test. Following KSR, scholars predicted that
secondary-considerations evidence would provide a critical tool for patentees
seeking to demonstrate the nonobviousness of an invention. Inspired by that prediction,
this Note evaluates how secondary-considerations evidence has been utilized
in the first few years post-KSR. It finds that the Federal Circuit has continued to
impose stringent relevancy requirements on the use of secondary-considerations
evidence, and that it remains difficult for patentees to employ secondary considerations
in favor of a nonobviousness conclusion. Specifically, secondaryconsiderations
evidence has not been used with much success outside of pharmaceutical
patent cases. More often than not, the Federal Circuit has summarily dismissed
secondary-considerations evidence as insufficient in cases involving
mechanical arts patents. This Note concludes by suggesting that the Federal
Circuit’s current practice for using secondary considerations should inform proposals
by scholars for industry-specific tailoring of the patent system and patent
law’s use of secondary considerations, and that the Federal Circuit should continue
to engage with secondary-considerations evidence in order to provide more guidance
to lower courts during the post-KSR transition period.

Innovations on the Cutting Edge of Ariad: Reinventing the Written Description Requirement

Jonathan E. Barbee

For the great majority of its history, the written description requirement was an
often-ignored relic of the patent statute. As technology advanced, the written
description requirement developed teeth as a means for invalidating patent claims
during litigation. Written description doctrine reached its peak in Ariad
Pharmaceuticals, Inc. v. Eli Lilly & Co.
, when the Federal Circuit created a significant
setback for groundbreaking innovation. Ariad demonstrated that the written
description doctrine lacked sufficient recognition of the fundamental policies and
purposes of the patent system and that this could have serious consequences for
innovation. This Note attempts to rectify the written description doctrine by
reorienting the doctrine in innovation policy. To do so, I first apply an alternative
version of the “prospect theory” of patents to conventional patent policy. Based on
this policy calculus, I then devise a reformed hypothetical innovation test that looks
outside of the “four corners” of the patent and considers the larger impact that the
written description has on the patent system. Without such doctrinal reform, the
written description doctrine of Ariad and its legacy risks undermining the incentives
that motivate inventors to undertake cutting-edge technology.

Patent Misjoinder

David O. Taylor

The Leahy-Smith America Invents Act effectively repealed aspects of the Federal Rules of Civil Procedure by creating a new statutory section governing joinder of accused infringers and consolidation of actions for trial in most patent infringement cases. This new law codifies a substantial barrier to joinder and consolidation for trial. In so doing, it frustrates the promotion of liberal standards both for evaluating the sufficiency of pleadings and for evaluating the propriety of joinder of parties—two of the primary policies embraced by the drafters of the Federal Rules of Civil Procedure. Remarkably, Congress adopted the new statutory section despite the absence of any detailed scholarly analysis prior to its enactment regarding these issues, sparse legislative history analyzing perceived problems with the relevant Federal Rules of Civil Procedure, and the lack of any consideration of the new statutory section by the Supreme Court’s Advisory Committee on Civil Rules. This Article provides a comprehensive analysis of the reasons for the enactment of the new statutory section, the competing policies animating the Leahy-Smith America Invents Act and the Federal Rules of Civil Procedure, and the appropriate interpretation and application of the new law. Such analyses have, to date, been absent from the legal conversation.

Expanding Standing in Patent Declaratory Judgment Actions to Better Air Public Policy Considerations

Nicholas D. Walrath

This Note argues that modern-day patent litigation lacks sufficient consideration of public policy concerns. In order to remedy this, I propose three potential solutions that would broaden standing in patent declaratory judgment actions, thereby allowing more plaintiffs who are likely to raise such arguments to have their day in court. First, I discuss expanding standing within the Supreme Court’s MedImmune framework, which requires courts to apply a broad all-the-circumstances test in determining patent declaratory judgment standing. Within this test, I urge courts to consider (1) the degree to which a potential infringer raises important public policy concerns and (2) the extent to which the potential infringer has a unique economic incentive to challenge the patent-at-issue. Second, I consider altering the framework for standing in patent declaratory judgment actions based on a reassessment of the fundamental justifications for standing doctrine generally. Observing that the traditional justifications for a standing requirement—and the separation of powers justification in particular—do not apply in the context of patent declaratory judgment actions, I suggest that the Supreme Court might craft a new standing framework. Third, I explore the extent to which Congress might statutorily expand standing in such cases. I conclude by noting that the post-grant opposition procedure created by the America Invents Act—the patent reform legislation signed into law in September 2011—is insufficient to assuage unease regarding the lack of public policy arguments in patent litigation. Courts might therefore look to standing in order to address this problem.

Is the AIA the End of Grace?

Jordan S. Joachim

Examining the Effect of the America Invents Act on the Patent Grace Period

This Note argues that the U.S. Patent and Trademark Office’s interpretation of the new grace period under the America Invents Act (AIA), 35 U.S.C. § 102(b)(1)(B), is overly narrow and that an alternative interpretation proposing a broader reading of the grace period is more appropriate. Evidence for a broader reading includes the effect of each interpretation on the administrative burden at the Patent and Trademark Office, speed of patent disclosure, innovative activity by specific inventor groups, and inventor behavior in patent races. This analysis shows that a narrow interpretation of the grace period creates greater administrative burdens, discourages disclosure, disfavors small inventors and universities, and may make blocking firms in a patent race virtually costless. In contrast, a broad grace period is simpler to administer, accelerates disclosure, supports innovation by small inventors and universities, and provides firms with a defensive maneuver in patent races.