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Prophetic Patents Prophetic Patents Janet Freilich* In most contexts, making up data is forbidden — considered fraudulent or even immoral. Not so in patents. Patents often contain experimental data and it is perfectly acceptable for these experiments to be entirely fictional. These so-called “prophetic examples” are not only explicitly permitted by both the Patent and Trademark Office and federal courts, but are considered almost equivalent to factual data in patent doctrine. Though prophetic examples are thought to be common, there are no studies of these experiments, no explanation for why fictional data are allowed in patents, and no evaluation of the practice. Here, I provide the first historical, theoretical, and empirical analysis of prophetic examples. I collect and analyze a novel dataset of over 2 million U.S. patents and applications from the biological and chemical industries. I find that at least 17% of experiments in this population are fictional. Through both empirical and theoretical analyses, I assess the potential costs and benefits of prophetic examples. Prophetic examples are likely beneficial to individual patentees, but I find that on a population level, there are serious costs. Prophetic examples may hinder innovation because they prevent others from conducting their own experiments — even after the patent has expired and even if the prophetic example is incorrect. Prophetic * Copyright © 2019 Janet Freilich. Associate Professor, Fordham Law School. I thank David Abrams, Yonathan Arbel, Clark Asay, Jonathan Ashtor, Michael Burstein, Christopher Cotropia, Nestor Davidson, Deborah Denno, Jeanne Fromer, Damon Gupta, Yaniv Heled, Clare Huntington, Dmitry Karshtedt, Joseph Kupferman, Ethan Leib, Lisa Larrimore Ouellette, Nicholson Price, Joel Reidenberg, Jocelyn Sagherian, David Schwartz, Kathryn Spier, Richard Squire, Andrew Torrance, Haris Tabakovic, Polk Wagner, Melissa Wasserman, and participants at the NBER Summer Institute, Harvard Business School Entrepreneurial Management Seminar, 5th Annual Empirical Patent Law Conference, 2nd Annual BioIP Faculty Workshop, Project on the Foundations of Private Law Workshop, Tri-State Region IP Workshop, Intellectual Property Junior Scholars Workshop, the 2018 Works-in-Progress Intellectual Property Colloquium, the University of Pennsylvania Law School Center for Technology, Innovation and Competition Workshop, and Boston University Law School’s Intellectual Property Workshop. For excellent research assistance, I thank Mallory Chandler, Magdalena Christophorou, and Douglas Crockatt. 663 664 University of California, Davis [Vol. 53:663 examples also hopelessly confuse scientists — 99% of scientific articles that cite to prophetic examples incorrectly cite them as if they contained factual information — which means that made-up results from patents may contaminate the scientific literature. I argue for a shift from prophesies to more clearly delimited hypotheses — roadmaps for future research, but nothing more — preserving what value there is in speculation while mitigating the clear harms of the practice. Beyond these concrete policy recommendations, my findings also have rich implications for theoretical debates about the physicality of invention, when and to whom patents should be granted, how patents transmit information, and, ultimately, how best to incentivize innovation. TABLE OF CONTENTS INTRODUCTION ................................................................................... 665 I. PROPHETIC EXAMPLES .............................................................. 671 A. Introduction to Prophetic Examples ................................... 671 B. History of Prophetic Examples ........................................... 675 1. Early History ............................................................... 675 2. Prophetic Examples Become PTO Policy ................... 677 II. THE CASE FOR PROPHETIC EXAMPLES ....................................... 681 A. Potential Benefits ............................................................... 682 1. Earlier-Filed, Broader Patents .................................... 682 2. Special Situations ........................................................ 684 B. Potential Costs ................................................................... 687 1. Chilling Downstream Research .................................. 687 2. Inaccurate and Misleading ......................................... 691 III. THE EMPIRICS OF PROPHETIC EXAMPLES: A NOVEL STUDY ....... 692 A. Study Design ..................................................................... 692 1. Populations ................................................................. 692 2. Identifying Prophetic Examples ................................. 693 3. Selecting Industries .................................................... 695 B. The Prevalence of Prophetic Examples ............................... 697 C. The Case Against Prophetic Examples ............................... 698 1. Prophetic Examples Mislead Scientists ...................... 698 2. Prophetic Examples Are Inaccurate ........................... 700 a. The Unpredictable Arts .......................................... 700 b. High Abandonment Rates ....................................... 700 c. The Role of the Examiner ....................................... 701 d. Use of Results ........................................................ 701 D. Considering Defenses of Prophetic Examples ..................... 704 1. Special Situations ........................................................ 704 a. Small Entities ........................................................ 705 2019] Prophetic Patents 665 b. Human Data .......................................................... 706 2. Prophetic Examples and Patent Value ....................... 707 IV. EFFECTS OF PROPHETIC EXAMPLES: IMPLICATIONS AND POLICY ..................................................................................... 711 A. Do Prophetic Examples Harm Readers? ............................. 711 B. Do Prophetic Examples Help Patentees?............................. 713 1. Proposed Mechanisms ................................................ 714 2. Implications ................................................................ 715 a. Prophetic Examples May Encourage Weaker Patents .................................................................. 715 b. Rationales for Early Filing Do Not Fit with Prophetic Examples ............................................... 716 c. Why Aren’t All Examples Prophetic? ..................... 718 C. Reforming Prophetic Examples: From Prophecies to Hypotheses ........................................................................ 721 CONCLUSION....................................................................................... 726 APPENDIX 1. SUMMARY STATISTICS — CHEMISTRY & BIOLOGY GRANTED PATENTS ................................................................... 727 APPENDIX 2. SUMMARY STATISTICS — CHEMISTRY & BIOLOGY PATENT APPLICATIONS ............................................................. 728 APPENDIX 3. REGRESSIONS — CHEMISTRY & BIOLOGY GRANTED PATENTS ................................................................................... 729 APPENDIX 4. REGRESSIONS — CHEMISTRY & BIOLOGY PATENT APPLICATIONS .......................................................................... 731 INTRODUCTION In May of 2005, a team of scientists made headlines after the prestigious journal Science published a report that they had cloned human embryos.1 Only a few months later, the team was making headlines for a different reason: the data in the paper had been faked; Science retracted the paper and the team’s leader, Dr. Hwang Woo-Suk, was fired and spent two years in prison for violating bioethics rules.2 Almost ten years after the retraction, Dr. Hwang received a U.S. patent on his discredited technique.3 Other scientists were “shocked” by the 1 See Gina Kolata, Koreans Report Ease in Cloning for Stem Cells, N.Y. TIMES (May 20, 2005), https://www.nytimes.com/2005/05/20/science/koreans-report-ease-in-cloning-for- stem-cells.html. 2 See Andrew Pollack, Disgraced Scientist Granted U.S. Patent for Work Found to Be Fraudulent, N.Y. TIMES (Feb. 14, 2014), https://www.nytimes.com/2014/02/15/science/ disgraced-scientist-granted-us-patent-for-work-found-to-be-fraudulent.html. 3 See id. The patent in question is U.S. Patent No. 8,647,872 (issued Feb. 11, 2014). 666 University of California, Davis [Vol. 53:663 news that Dr. Hwang obtained a patent for falsified data.4 The New York Times quoted Dr. Jeanne Loring, a stem cell scientist at Scripps Research Institute, saying that her first reaction was, “You can’t patent something that doesn’t exist.”5 Dr. Loring’s reaction is common, sensible, and intuitive — but wrong. The Patent and Trademark Office (“PTO”) and the courts explicitly permit made-up experiments and fictional data in patents.6 Far from fraudulent, fictional data are instead treated as equivalent to factual data.7 To illustrate, the fictional experiment below was published in a recently granted patent: A 67-year-old male has pancreatic cancer. He is provided with A. paucinervis pomel extract [the patented invention] for three years. This patient is examined later, and . [h]is tumor is reduced in mass.8 The supposed ability of the patented compound to cure cancer borders on miraculous — yet it is also highly improbable, as real experiments have found the compound to be extremely toxic.9 There is little scholarship on these fictional
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