“Peer to Patent”: A Proposal for Community Peer Review of Patents
Beth Simone Noveck[1]
Table of Contents
Part IV: Why It Will Work: Responding to Objections
In this Section, we flesh out the details of the draft proposal by responding to anticipated critiques.
This proposal is too radical. How can we put the fate of innovators and national competitiveness in the hands of the public?
The peer to patent system does not eliminate the Patent Office nor does it alter the substantive, statutory standards we use for reviewing inventions. It preserves the same scheme we have had in place since 1952.[1] It merely combines with that system the “radical” invention of the jury that we have used since the 12th century and which we zealously guard as a non-expert institution.[2] Furthermore, this is not merely public participation but participation by mutually self-rating experts committed to a minimum level of participation. We rely on such mechanisms for selecting Academy Awards and Nobel Prizes. We even use them in government, such as the National Science Foundation which claims to operate from the “bottom up,” using peer experts to keep track of research “around the United States and the world, maintaining constant contact with the research community to identify ever-moving horizons of inquiry, monitoring which areas are most likely to result in spectacular progress and choosing the most promising people to conduct the research.”[3]
Participants will game the system. How can you ensure that people with conflicts of interest won’t place speed bumps and stumbling blocks in the path of their competitors?
Absolutely! Competition will drive more information into the process. So long as people make valid arguments as rated by their peers, their personal agenda is irrelevant. Having many participants in the process dilutes the effect of any bad apples or unconstructive participants. Within any social reputation system, norms evolve to safeguard the quality of participation and we can expect something similar here. It is also standard and unproblematic to require participants to sign an affidavit representing that they do not have a conflict of interest. The affidavit can include a disclosure of the expert’s last two employers and areas of current commercial research. Direct competitors might be prevented from rating a particular invention. The National Science Foundation, the National Research Council and the National Institutes of Health both have well-established regulations and disclosure requirements to weed out conflicts among peer-review participants.[4]
Giving decisionmaking authority to non-governmental persons degrades impartiality in the system. Wouldn’t this be a violation of the non-delegation doctrine prohibiting delegation of authority to unauthorized bodies?
You couldn’t have more discretion than what is currently exercised now by the lone patent examiner who rules on innovation without significant oversight or review. The “wisdom of the crowd” is more accurate and more objective than the judgment of one, uninformed so-called expert.[5] At the same time, ultimate decision making authority continues to rest with the Patent Office and courts will still fulfill the function of judicial review. Under Chevron,[6] agencies have the right to consult and solicit outside information. Under the Administrative Procedure Act[7] agencies are required to solicit outside information from the public when conducting informal rulemaking. While we can imagine the system evolving someday into a mechanism to alleviate the burden by alleviating the examiner through shared burden, that is not the initial proposal which aims to be practical and doable. Where a disagreement arises between the public panel and the examiner, this disagreement can give rise to a reviewable question.
Competitors will steal information and use this system to misappropriate confidential business information. How do we ensure that this doesn’t become a hunting ground for foreign competitors to pillage American innovation?
At present, patents are published after 18 months, whether or not they have been granted.[8] The presumption in our system (and every other patent system) is in favor of information disclosure. As the Supreme Court has stated, "[T]he pressure for secrecy is easily exaggerated, for if the inventor of a process cannot himself ascertain a "use" for that which his process yields, he has every incentive to make his invention known to those able to do so. Finally, how likely is disclosure of a patented process to spur research by others into the uses to which the product may be put? To the extent that the patentee has power to enforce his patent, there is little incentive for others to undertake a search for uses."[9] The inventor is taking some risk by disclosing but that risk is that of foregoing trade secret protection, nothing more. This is a small cost to impose on the inventor for the cost imposed on the public from the patent monopoly. If the patentee does not want to forego secrecy or does not feel that the patent is meritorious enough to receive protection, he should not be filing for a patent. Since patent protection applies retroactively to the date of invention (or filing in the case of other jurisdictions), the inventor will be able to pursue anyone who misuses information learned in the process. If and when the patentee receives the patent, he then has the right to go after those who abused the process with a big stick. We can imagine enacting statutory treble damages and other penalties for those who would abuse information learned during the process. The peer to patent system speeds up the disclosure and helps to realize the bargain between the inventor and the public to make information about the invention public.
Inventions will be excessively scrutinized. Won’t the level of patenting decrease?
Hopefully, yes. We grant too many patents already.
Since it is scientists, innovators and inventors who themselves rely on patents participating in the system, there is not an undue incentive for Schadenfreude and defeating every patent.
This system might also be used as a way for the community to award prizes and accolades for particularly meritorious inventions. The Community Patent Prize could become a lucrative and coveted prize to be won.
There are too many patents. Won’t the workload be too great for non-professional participants?
What may be hard work for the inexperienced patent examiner or the lay person, is not for the expert in a given field. The expert already knows the answer. It is easy for him to identify prior art. It is simple for him to assess how innovative and non-obvious and invention is. He is familiar enough with the subject matter to assess whether it has been enabled. If we can optimize the design of the system to “chunk” the work into minimal participation then each patent only requires a short time to review either novelty or obviousness or enablement. The novelty and prior art review is deliberately designed to be a quick process with many participants and only a few people at a time are taxed with the more onerous job of reviewing obviousness and enablement. Furthermore, there are plenty of scientists, engineers, economists, consultants and other professionals eligible to participate. If NSF can tap over 50,000 natural scientists to review grant applications, the patent office should be able to solicit the participation of a vastly wider network of experts. Finally, not all inventors will opt for the open process. There are those who, faced with a choice, will go for the closed review process and the resulting five year grant of rights.
There will be procedural hurdles. Would the Federal Advisory Committee Act (FACA) prohibit Peer to Patent?
FACA was enacted[10] to protect against closed-door cabals[11] leading to regulatory capture. But all information in the peer to patent system will be open, on-line and available. With an increase in the use of juries ex post to review patent validity in infringement cases, why not use juries a priori? We are simply moving up the jury review in the process but without imposing any added cost on the investor for that review. If this constitutes a contravention of FACA, we’ll amend FACA.
Won’t Peer to Patent decrease certainty and stability in the system?
To the contrary, patents that undergo this process will be much less likely to be challenged subsequently. They will enjoy a presumption of validity and incontestability. This reduces the risk of legal challenge and the burden to innovation from enormous patent damage awards.[12]
Rational ignorance is intentionally built into the patent system. According to Mark Lemley, since most patents are never litigated or even licensed, spending too much time and money on initial review is a waste and “decisions can be made much more efficiently in litigation.” Why invest in process review?
When Lemley wrote this[13] he contemplated the choice between imposing the cost on inventors upfront or after the fact and deemed it more cost effective to impose the costs of review on those who are invested enough in their patents to justify litigation. But it is no longer a choice between imposing costs on those seeking to litigate versus prosecute. The Community Peer review system does not impose any additional cost burden on the inventor and, at the same time, it reduces the costs of litigation. It also does not impose the costs of an inter partes interference proceeding,[14] which must be borne by the inventor. Lemley does not measure the significant costs and chilling effects that the overhang of uncertain patents subject to challenge creates in the industry. Furthermore, it ignores the Supreme Court’s clear statement that “primary responsibility for sifting out unpatentable material lies in the patent office. To await litigation is – for all practical purposes – to debilitate the patent system.”[15]
Isn’t there a lack of incentive to participate?
We need to build the incentives for participation into the system. First, the social reputation software creates an incentive to join the network of experts. We appeal to status and vanity to induce participation. Second, the system “chunks” the work so that assignments are modular and participation can be accomplished without an undue imposition on time. Third, more participation creates a feedback score which increases one’s standing in the community that is beneficial when the participant himself becomes an inventor filing for a patent. Standing in the community can only encourage serious and focused review by other members of the group. Finally, corporate managers have an incentive to encourage participation to learn more about the state of the art in the industry and to raise the standing of its scientists and experts in the innovation process.
There will be too few participants. How will you recruit?
Those seeking to file a patent will be recruited as participants. They will want to increase their karma within the community.
The peer to patent system will solicit participation from large industry, universities, and academic tech transfer offices. Interest groups and industry media can also be used to recruit participants.
Upper level graduate students will want to participate to raise their standing and become known in the community.
Google keywords and ad words can be used to advertise participation.
For the same reasons that many people create the 18 million blogs currently on-line in the United States, namely to put their name out there as the “go-to” person on a given industry and issue, experts from a wide array of innovating professions will want to participate in this network.
It will be hard to coordinate all these people. How will it be managed?
Yes, coordination is hard which is why we need a well-designed system that allows participants to see clearly the community of which they are a part, to understand their role within the group, to participate simply and easily in the process and to see the outcome. If eBay can coordinate a million[16] auctions each year, then this system can be built.
Doesn’t big business stand to lose from this process? Won’t it want to preserve the status quo?
Even the biggest patent holders like IBM recognize the desperate need for patent reform. No one wins when patent grants become meaningless, uncertain and subject to expensive legal challenges. The largest companies with the deepest pockets are the ripest targets for patent trolls.
Don’t small inventors stand to suffer from this process?
Small inventions get equal consideration in this system and the work of even unknown inventors get brought to the fore. With large numbers of eyeballs reviewing prior art, there is minimal risk of large players “stacking” the deck and rigging the jury. With a wide-ranging review system, we increase competition among the players and improve quality for everyone.
Will we pay people to participate in the process?
While we can imagine using the system to generate revenue from patent licenses that can be redistributed back to the examiners, this conservative proposal does not propose to “corrupt” the peer review process with payments. The idea is to create more not less impartiality. We can imagine using the process to set aside downstream revenues to benefit social causes and develop a market in venture philanthropy where companies dedicate a portion of proceeds or licenses to civic and developing world causes.
Can this process be privatized? Could a consortium of companies run this system? Can we “do patents” with contract law?
Yes and no. The “peer to patent” system addresses how to reform bureaucratic expertise and the way legal grants of monopoly power are doled out. The patent right is a right to exclude that can only be conferred by the state under the color of law. Third parties cannot be bound to the strictures of the patent by contract. However, we can imagine a supplemental scheme for using peer review to examine and rule on innovation privately to strengthen the market for licenses in those technologies. With an independent panel of experts reviewing an invention, its currency goes up and it achieves higher standing in the scientific community and in the marketplace.
We can imagine companies self-regulating and agreeing to engage in peer review as a condition precedent to approaching the patent office.
These are both private alternatives that could be explored, hopefully in addition to, not instead of peer to patent.
If we change the process what happens to the prosecution history and file wrapper estoppel? How will a record be created for appeal?
The peer to patent process is far more transparent than what exists currently. With the entire process being conducted online, it will be recorded and archived in entirety. We will be better able to see the reasoning that went into a patent determination. This creates a stronger, more robust and more informed record for review. Court currently defer to examiners’ determinations of patentability.[17] Examiners are entitled to a presumption of correctness. Similarly, in the absence of indicia of fraud or abuse, the examiner should defer to the peer jury. Courts can then scrutinize discrepancies between the determinations of the examiner and the public, giving deference to the determinations of the peer review system.
Public criticism of the invention will depress the price. Won’t this system shine too much light on an invention and hurt the market for innovation?
Only for unqualified inventions undeserving of a patent will this depress the price but not necessarily dry up the market. First, it will significantly increase the price for successful inventions because these inventions will, effectively, be endorsed by a community of experts. Second, we can use the same system to conduct a market for licenses before the patent determination is made, thereby creating a market for both successful and unsuccessful applicants.
What about the current library of patents?
The peer to patent system would not affect the validity of existing patents. It would be phased in over time and apply to patent applications on a going forward basis. The corpus of existing patents will be mined to create maps of the landscape of innovation and make it easier for experts to compare applications with prior art.
This doesn’t solve the problem of AIDS drugs in Africa or reduce the cost of Cipro when Anthrax breaks out, does it?
No, it doesn’t. We still need the reform-minded proposals like those of Jamie Love at CPT, who is proposing to create a fund to compensate innovators when they bring new pharmaceuticals to the market to encourage the donation of those drugs to the public domain.
At the same time, the peer to patent system pushes the conversation about invention and innovation to the forefront and makes more information available to the social activist community interested in these issues.
Doesn’t this system diverge from international norms? What about comity?
The United States by adopting a first-to-invent instead of a first-to-file rule already diverges from international norms. Whereas in that case we’re likely to adopt the universal rule with regard to peer to patent, we’re just going to have to change the world.
The European, Japanese and other patent offices in parallel should ideally, run pilot implementations of peer to patent to reform the patent system worldwide and to generate more information about scientific innovation while, at the same time, building the community of scientific experts.
[1] Patent Act of 1952, as amended, 35 U.S.C. 1 et seq. (1994).
[2] The Magna Carta of 1215 contains the genesis of the modern jury system. See, e.g., Maximus Lesser, The Historical development of the Jury System (1894).
[3] National Science Foundation, How We Work (Jul 15, 2005) at http://www.nsf.gov/about/how.jsp (last visted Sept. 30, 2005).
[4] See, e.g., The National Academies Press, Peer Review in Environmental Technology Development Programs, http://www.nap.edu/books/0309063388/html (follow “Executive Summary” hyperlink) (last visited September 30, 2005) (A peer is “a person having technical expertise in the subject matter to be reviewed (or a subset of the subject matter to be reviewed) to a degree at least equivalent to that needed for the original work.”).
[5] James Surowiecki, The Wisdom of Crowds (2004).
[6] Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843 (1984) (“If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.”)
[7] The Administrative Procedure Act ("APA"), 5 U.S.C. § 553 (provides that legislative or substantive rules must be preceded by public notice and an opportunity for public comment).
[8] 37 CFR 1.211 (2005). Publication is required for most non-provisional applications (other than for a design patent filed under 35 U.S.C. 171 and reissue applications filed under 35 U.S.C. 251) filed on or after November 29, 2000. Exceptions to publication are set forth in 35 U.S.C. 122(b)(2) and 37 CFR 1.211. An applicant may find publication of an application to be a desirable alternative to requesting a SIR since publication of the application is achieved without any waiver of patent rights. See MPEP § 1120 et seq. for more information pertaining to eighteen month publication rule.
[9] Brenner v. Mason, 383 U.S. 519, 534 (1966).
[10] Federal Advisory Committee Act, 5 U.S.C. App. 1, Pub. L. 92-463, Oct. 6, 1972.
[11] Public Citizen v. U.S. Dept. of Justice, 491 U.S. 440, 442 (1989) (legislative history shows that Congress sought only to endorse compliance with FACA's more stringent requirements by advisory committees already covered by Order and Presidential advisory committees, and that the statute's "or utilized" phrase was intended to clarify that FACA applies to committees "established . . . by" the Government in a generous sense of that term, encompassing groups formed indirectly by quasi-public organizations "for" public agencies as well as "by" such agencies themselves).
[12] Patent Reform Act of 2005, H.R.2795, 109th Cong. (2005) (among other reforms the Patent Reform Act of 2005 would limit damages to the inventive contribution rather than calculating damages on the selling price of an entire product; it would limit damages for willfulness).
[13] Mark Lemley, Rational Ignorance at the Patent Office, UC Berkeley Law School Research Paper No. 46, 95 NW. U. L. Rev. 1495 (2001) (“The strong implication of these numbers is that society ought to resign itself to the fact that bad patents will issue, and attempt to deal with the problem ex post, when the patent is asserted in litigation. This result is admittedly counterintuitive. It depends crucially on the fact that very few patents are ever the subject of litigation, or even licensing. Because of this, money spent improving the PTO examination procedures will largely be wasted on examining the ninety-five percent of patents that will either never be used, or will be used in circumstances that don’t crucially rely on the determination of validity”).
[14] Inter Partes Proceeding 37 C.F.R. § 2609.
[15] Graham v. John Deere Co., 379 U.S. 956, 85 S. Ct. 652 (1965)
[16] eBay: The Company at http://pages.ebay.com/aboutebay/thecompany/companyoverview.html (last visited September 30, 2005) (EBay has 100 million registered users).
[17] Dickinson v. Zurko, 527 U.S. 150 (1999) (Supreme Court reversed the Federal Circuit's decision and held that the Federal Circuit should apply the standard of review set forth in the Administrative Procedure Act (APA) (arbitrary, capricious, or an abuse of discretion, or unsupported by substantial evidence in a case subject to 5 U.S.C.S. §§ 556, 557, or otherwise reviewed on the record of an agency hearing provided by statute) to review of the Patent and Trademark Office's findings of fact because, at the time of the APA's adoption, the Federal Circuit's predecessor court did not apply the stricter "clearly erroneous" standard.)
Next: Part V: Conclusion