The Cost of Vague Patents Estate Law, a System That Has Clear, Surveyed and Publicly Available Land Boundaries

OPINION NATURE|Vol 454|10 July 2008

any assessment of their usefulness or validity geneticists, and for medicine more broadly. contrast, organic chemistry is more than a in a clinical setting. Good guidebooks should point out new century old, so the boundaries of patent claims The omission is notable given that Ed attractions as well as old, and new texts ought are written clearly enough for competitors to McCabe chaired the US Department of to cover contemporary issues as well as the understand what is claimed and what is not. Health and Human Services Advisory historical. Neither the McCabes nor Barash Thus, companies can avoid infringement or Committee on Genetic Testing during its accomplish this — both books are rooted in resolve disputes quickly. Finally, the authors evaluation of genetic testing oversight. This past discourses and ignore current issues of blame judges for expansionist tendencies that committee concluded that government regu- greater public health and policy urgency. ■ lead them to allow patents on “everything lation was inadequate and put forth a series Kathy Hudson is director of the Genetics under the sun made by man”, resulting in a of policy recommendations. Because none and Public Policy Center, Johns Hopkins flood of biotechnology and software patents. of these recommendations was adopted, the University, 1717 Massachusetts Avenue NW, Bessen and Meurer use a lively, assertive issue still looms large — both for genetics and Washington DC 20036, USA. style and are critical of patent-system stake- holders, including federal judges, the USPTO and patent lawyers. Throughout the book, they contrast the patent system’s rules about claim boundaries with the supposed success of real- The cost of vague patents estate law, a system that has clear, surveyed and publicly available land boundaries. Patent Failure: How Judges, Bureaucrats, biotechnology and software patents. In the late 1990s, the authors contend, the and Lawyers Put Innovators at Risk Second, the US Patent and Trademark US patent system failed publicly traded cor- by James Bessen and Michael J. Meurer Office (USPTO) and courts unwisely permit porations. They estimate that the cost to such Princeton University Press: 2008. 352 pp. ‘premature’ patent claims on biotechnology businesses of litigation over chemical and $29.95, £17.95 and software products that have not and pharmaceutical patents was around $4 billion cannot yet be made. For example, Amgen’s in 2000, but this was more than outweighed by patent on a method of making the red-blood- the profits associated with patents of about $15 Adding fuel to the anti-patent fire, James cell protein erythropoietin in hamster cells billion, a questionably low number given the Bessen and Michael Meurer argue in Patent claimed all “non-naturally occurring” erythro- value of blockbuster drugs. But for other indus- Failure that US patents cost more than they poietin, including that made in human cells, tries, litigation costs were about $12 billion and should because their claims are too vague. even though erythropoietin had not yet been the profit was only about $3 billion, also a ques- Patent claims define the scope of a patented made that way. tionably low number, and a net social loss. The invention, and when they are unclear, compet- Third, the courts have allowed patenting authors recognize that owning patents always itors cannot determine whether or not they are of early-stage biotechnology and software provides a competitive advantage for individual infringing the patent and whether they should inventions that remain inchoate and abstract, companies, even if the overall industry would license or litigate. increasing the likelihood of litigation against be better off without them. Bessen and Meurer argue that ‘fuzzy’ claims someone who independently develops an The authors offer several suggestions. Force for abstract inventions such as software, invention that falls within the scope of a pat- inventors to clarify ambiguous claims with the biotechnology and business methods make ent claim. Fourth, patent law is in flux for the USPTO. Convince judges to invalidate claims patents too expensive to society. Chemical new fields of biotechnology and software. By that are not definite and clear. Empower the and pharmaceutical patents, USPTO to give pre-litiga- however, produce net eco- tion opinions on claim scope nomic benefits, as do patents and infringement. Increase obtained by small companies. renewal fees to prune out The authors spend most unused patents. Establish of their energy attacking a prior user defence so that software patents, describ- independent discovery and ing skyrocketing litigation use of a patented invention is costs, increasing uncertainty, not considered infringement. the thousands of patents on Admirably, Bessen and IMAGES VERHAEGEN/AFP/GETTY J.-C. a single product, and other Meurer reject what they call problems that hinder soft- “faith-based policy” based ware innovation. They ask on unsubstantiated beliefs why the system works more about how patents help or poorly for software and hurt different companies and biotechnology companies industries. Instead, they aim than for pharmaceuticals and to provide the “first compre- chemicals. Their research hensive empirical evaluation leads the authors to posit sev- of the patent system’s per- eral explanations. First, claims formance”. They do well with on small molecules are clearer studies of famous patent dis- and more comprehensible Microsoft’s legal chief Brad Smith (bottom left) and lawyers wait for a 2007 decision putes, such as Kodak versus than the abstract claims in at the European Union court that fined the company over expensive patent licences. Polaroid (regarding instant

photography) and NTP versus Research in Motion (regarding the BlackBerry wireless device). Unfortunately, the book’s strength — its reliance on data — is also a weakness. Most of the data are peripheral to traditional methods of patent valuation, such as market value, and date from the 1990s, so are only a trailing indicator of patent activity. The book’s conclusions do not adequately reflect recent developments, including US court decisions that have narrowed patent scope, the open- source software movement and global pres- sures to limit software and medical patents. Patent Failure focuses narrowly on financial value and costs of patents as private-property assets of publicly traded corporations. But patents serve other objectives that deserve greater attention. They are part of a dynamic, global intellectual-property system that drives innovation by balancing the exclusive rights of creators against the ability of oth- A new window on the Victorians ers to access and copy creative works. The social benefits of the patent system, as it has Victorian Glassworlds: Glass Culture and (pictured) that housed London’s Great Exhi- evolved over the centuries, include promot- the Imagination 1830–1880 bition in 1851. The Victorians developed dis- ing publication as an alternative to secrecy, by Isobel Armstrong tinctive responses to this tantalizing material, rewarding investment in research, expand- Oxford University Press: 2008. 400 pp. from the bourgeois consumerism induced by ing international trade, allowing individual $60.00, £30.00 the enticements within shop windows to the freedom and control over creative activities, targeted window-breaking by working-class promoting innovation races, helping innova- political activists. Victorian expansionism tors break into an established market allowing Robert Lucas Chance was a man of unpredict- ensured that such responses extended across well-managed companies to supplant poorly able temper. The method of mass-producing the oceans, safeguarded by lighthouses also managed competitors, and facilitating col- artisan-blown cylinder glass pioneered at his glazed with Chance glass. laboration and technology transfer between factory near Birmingham, UK, in the 1830s Victorian Glassworlds contends that tech- public and private organizations. These ben- was similarly prone to fiery eruptions, with nologies change experience. The widespread efits are undervalued or ignored in the book’s coal firing difficult to control, and flames flash- availability of full-length mirrors, particularly

financial calculations, and they contradict its ing unexpectedly out of the furnace when the the fashionable cheval-glass mirror, altered how LIBRARY & SOCIETY PICTURE SCI. MUS. PICTORIAL/SCIENCE conclusion of patent failure. molten glass was ready to be blown. Chance’s people perceived their bodies and prompted The book uses lively anecdotes and analogies, name became synonymous with glass produc- new ways of thinking about the nature of indi- but this is ironic because the authors criticize tion in the nineteenth century, just as Hoover vidual identity. London’s Royal Coburg Theatre other writers for relying on anecdotal informa- or Dyson are with vacuum cleaners today, and (now The Old Vic) installed a huge array of tion. And they overstate their case that patents was peculiarly apt for the precarious nature of mirrors called a looking-glass curtain behind would work better if they were more like real his business. The residual instability of the its stage in 1822. Audiences spent performances estate or copyright. The recent collapse in the process, a contradictory amalgam of mod- gleefully waving at themselves or ogling their real-estate market suggests that particular sys- ern and archaic working practices, was made superiors in more expensive seats, transform- tem is no panacea. And the authors’ favourable tangible in every sheet of cylinder glass by the ing themselves into performers and inducing an view about the clarity of copyrights in the enter- traces of breath from individual blowers. illusion of social unity. tainment industry ignores frequent disputes Chance’s new processes nonetheless Meanwhile, cylinder glass made possi- over who owns rights to movies and music. increased efficiency, facilitating the mass pro- ble the massive conservatories developed by Patent Failure sets out in the right direction duction of sheet glass and the manufacture of John Claudius Loudon and Joseph Paxton in by comparing the corporate benefits of patents individual panes up to three metres square. the 1830s and 1840s, such as Paxton’s famous to their overall social costs, based on empirical The earlier Crown glass could reach a diam- example at Chatsworth in Derbyshire. They data. And the book’s conclusion may be sound, eter of only half that, and was in a wasteful allowed botanical specimens from across the that the patent system would work better with circular form. Historian Isobel Armstrong expanding British empire to be grown despite clearer boundaries defined by patent claims. argues that Chance helped bring into being “an the inclement weather, and forced more famil- Ultimately, the book raises good questions, but environment of mass transparency … never iar flora to bloom out of season. Paxton’s con- leaves many unanswered. ■ before experienced”. servatory inspired his design for the Crystal Michael Gollin is a partner in the patent group The Victorian age embraced the new pos- Palace. Its success led him to propose placing at Venable LLP, 575 7th Street NW, Washington sibilities of cheap glass. The middle class much of central London under a ten-mile- DC 20004, USA. He is author of Driving developed a craze for popular microscopy, long enclosed glass atrium known as the Great Innovation: Intellectual Property Strategies for a while Chance Brothers and Company glazed Victorian Way. Although it was never realized, Dynamic World. the shimmering, gargantuan Crystal Palace this visionary scheme shows the potential for