For ‘Patent Wars’ Alarmists, Time to Make Peace with the Empirical Data
To hear it from some critics, the U.S. patent system is buckling under the weight of frenzied and unprecedented patent litigation. The explosion in disputes—so the narrative goes—greatly increases transaction costs and significantly depresses innovation. A scary story indeed. But the empirical data paints a very different picture.
Critics who claim that “patent wars” have brought the system to the brink misplace focus on a single, flawed metric: the raw number of lawsuits. In the first place, patent litigation is not increasing. When examining patent litigation by any meaningful measure, there has actually been a slight decrease in recent years, with long-term trends revealing a markedly steady rate of patent litigation. Any perceived increases are illusory and attributable to the 2011 Leahy-Smith America Invents Act (AIA), which increased the raw number of lawsuits by making the joinder of defendants more difficult. The AIA precluded the joinder of multiple defendants in a single patent lawsuit solely on the basis that all defendants infringe the same patents. As a result, as of 2011 patent owners had to file separate cases against each defendant, creating an artificial inflation of patent lawsuits counted based on filings.1
But even putting aside the fact that patent litigation is not truly increasing, there is a fundamental flaw in the very logic of “more is bad.” This reductive premise ignores that the core purpose of the patent system is to provide a mechanism for the exercise of proprietary rights. In an age where innovation is increasing and more patents are being granted, some increase in litigation is a sign not that the system is failing, but rather that it is working.
Patent litigation historically has increased after periods of disruptive innovation. It is often a marker of a healthy innovation ecosystem, in which competitors jockey for position in a developing marketplace. From sewing machines and telephones to semiconductors and now smartphones, so-called patent wars (a phrase dating back at least to the 1850s) have hardly slowed the pace of American innovation.
Making sense of patent litigation data—rather than merely making a political point—requires normalization of data. Controlling for the AIA joinder provision, which resulted in a significant increase of the raw number of lawsuits, the rate of patent litigation has remained relatively unchanged over the last five decades and has actually decreased in recent years. Critics will continue to focus on raw numbers when it bolsters their sky-is-falling narrative and then, after particularly sleepy periods, shift toward headline-grabbing percent increases (having conveniently remained quiet during the preceding valleys setting up those conspicuous peaks). The key to deriving any meaningful understanding from the data is to measure changes over relevant periods of time and to account for context that can eliminate aberrations that belie the narrative told by raw numbers.
The early twenty-first century has been a period of intense technological innovation. With the advent of artificial intelligence, mobile communications, quantum computing, and other game-changing technologies, the United States is in a period of unprecedented technological disruption. Accordingly, economic competitors have engaged in patent litigation. Put in its proper context, this current period of American innovation is no more prone to patent litigation than earlier periods of significant technological change. The sky is not falling; the system is not broken. The empirical data demonstrate that, when it comes to bombastic calls for peacemaking intervention into so-called patent wars, discretion is most certainly the better part of valor.
David Kappos is a partner at Cravath Swaine and Moore and was the undersecretary of commerce for intellectual property and director of the U.S. Patent and Trademark Office from 2009 to 2013. Kirti Gupta is a senior adviser at the Center for Strategic and International Studies in Washington, D.C., and the chief economist at Qualcomm.
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