Patent defendants aren’t copycats. So who’s the real inventor here?

Great post by Joe Mullin from a couple years back:

Patent defendants aren’t copycats. So who’s the real inventor here?

First, the basics. One big difference between patents and other kinds of intellectual property, like copyrights and trademarks, is that patent-holders who want to sue someone for infringement don’t have to show that their patents or their products were actually copied by the defendant. In fact, the issue of copying is legally irrelevant when determining whether or not someone infringed a patent. (It is relevant to willfulness—more on that below.) The flip side of that rule is that a defendant company can have a really nice story about they did their own research, invention, and development—but it doesn’t matter one bit, legally speaking. Such “independent invention” stories are no defense.

“No one seems to know whether patent infringement defendants are in fact unscrupulous copyists or independent developers,” writes Lemley. So he and his partner went on a hunt looking for copycats in patent disputes. How much copying did they find? Not much at all.

The researchers studied 193 patent cases and found only 21 of them—that’s 10.9 percent—that contained even an allegation of any copying, whether that’s copying from a patent or from a patent-holder’s commercial product.

And here’s the kicker: more than half of the copying allegations they did find were from pharmaceutical and chemical cases. Remember that a big chunk of patent litigation involves branded drug companies fighting generic drug makers to determine when generic drugs can be marketed—and generic drug companies, of course, are legally required to make exact copies of a branded drug. So there’s good reason to consider pharma/chemical cases separately.

Once you set aside life sciences, copying in patent law goes from rare to almost nonexistent. Of the 193 cases analyzed, 76 were disputes over non-software computer related patents: only two of those cases included allegations of copying. Software patents were litigated in 67 lawsuits: again, only two plaintiffs alleged copying. To put it another way, in computers and software, less than 3% of the patent lawsuits studied involved allegations of copying, and less than 1% involved proof of copying. (see charts by industry on pages 27-28 of the paper.)

Maybe the allegations didn’t show up in the documents they checked? Possible, but not too likely.  Plaintiffs have good reasons to put any copying allegations or evidence they have on the record. Such evidence makes defendants look bad and can get plaintiffs enhanced damages for willfulness, even though it is not relevant to whether or not infringement took place.

But Americans tend to believe that patent lawsuits are about copying—and they believe there’s a whole lot of copying going on. These beliefs persist, even though most defendants aren’t copying—and aren’t even accused of copying—and often have never heard of the patent-holder or his alleged inventions.

Those who favor strong patent rights often wave the banner of the “independent inventor.” I’ve heard many patent holders—and many patent lawyers—praise strong patents as needed to protect inventors’ rights. But when we look at the litigation landscape—the public record of how patents are actually used—we find strong evidence that nearly all accused infringers developed their technology on their own.

So, who are the nation’s “independent inventors?” Are they patent-holders busy denouncing patent reform? Or are they the people and companies who must defend themselves against lawsuits brought by those patent-holders?

If independent invention was a defense against a patent infringement allegation, the data suggests we would see a sharp drop in patent litigation. Would it be a 90 percent drop-off? That’s not an unreasonable guess, but it’s tough to know for sure. As Lemley pointed out to me, such a change could encourage some to file on more dubious claims, or could lead to more licensing as opposed to litigation.

Now, about willfulness: While copying is irrelevant to proving infringement, it is relevant to proving willfulness, and a finding of willfulness can result in triple damages for a patent-holder. So patent plaintiffs have a very strong incentive to put any copying evidence they find on the record. (That incentive lends more weight to the study’s findings; if anything, they may have overstated the frequency of copying in patent disputes.)

But willfull infringement is not the same as copying. A patent-holder merely has to give notice of a patent to allege willfullness; so a willfulness accusation isn’t so much a patent-holder saying “You copied me!” as it is: “You knew that I had a valid patent and you were infringing it.” We can also imagine a scenario where copying is alleged but willfulness is not—for example, a defendant who deliberately copied someone else’s product, but didn’t know that it was patented. Willfulness allegations, unlike copying allegations, are very common, and willfulness was alleged in 81 percent of the cases in this study.

Some of Lemley and Cotropia’s conclusions:

• The use of terms like “theft” and even “piracy” is wholly unjustified in the patent debate. Calling patent defendants “copyists” or thieves “is simply inaccurate,” write the researchers.
• Courts are awarding greater and greater sums as a “reasonable royalty,” in part to deter future patent infringement. But that makes little sense. We can’t have deterrence when “the overwhelming majority of defendants are independent developers who were unaware of the existence of the patent when they made their product design decisions.”
• Not all patent licenses are just payouts to avoid or end litigation: some patent licensing does involve the actual giving of technology. But modern patent litigation, by and large, isn’t about “policing failed efforts at technology transfer.” It’s about patent owners trying “to enforce their right of exclusivity or to collect revenue from independent creators.”

More interesting findings:

• The public notice function that patents are supposed to serve? Doesn’t really exist. Lemley writes: “A variety of evidence already suggests that scientists in most industries rarely read patents, and that even if they did those patents aren’t a particularly good means of conveying technical information.” (Lemley’s 2007 paper “Ignoring Patents” has more on that.)
• Nearly 70% of plaintiffs don’t even claim the defendant knew about the patent before the lawsuit. (The day you gave a defendant notice of your patent is the day willfullness damages start accruing—so again, it’s possible, but unlikely, that these facts are missing from court records.)
• Did plaintiffs find copying after discovery? Very few did. Lemley & Cotropia analyzed 98 amended complaints from their dataset; only two of the amended complaints added a copying allegation; only three of were amended to add a willfullness allegation.
• Very few cases included non-patent allegations that might indicate copying. Of the 193 cases, only ten (5.2%) had complaints that mentioned a prior business relationship between the parties; only five (2.6%) included an allegation of misappropriating trade secrets; and only two cases (1%) involved an allegation of infringement by departing employees.
• Lemley & Cotropia found similar results with other methods. For example, they also analyzed judge’s opinions in 1,871 patent cases. Within that, they looked specifically at 226 of those opinions in which a judge ruled on willfullness (where plaintiffs have a strong incentive to bring up any copying evidence.)  Copying was only mentioned or implied in 40 of those cases (17.7%).

To be sure, this study won’t be the final word on copying in patent law, and I’m certainly interested in doing more reporting in this area. And I’ve started making questions about copying—or the lack thereof—part of my standard questions when reporting on patent disputes.

Note to readers: Thanks for your patience during my radio silence the past few weeks! Lots of changes are underway for IPLB’s web site and that has kept me very busy, but I now blog onwards.

Photo via wikimedia: “Bell speaking into telephone,” 1876.