Patent Law

The Standard for Patent Invalidity Under the Prospect Theory

By Dennis Crouch

By Dennis Crouch

In 1888, the US Supreme Court plainly held that patent rights granted by the US government could only be overcome with clear and convincing evidence:

The presumption attending the patent, even when directly assailed, that it was issued upon sufficient evidence that the law had been complied with by the officers of the government . . . can only be overcome by clear and convincing proof.

U.S. v. Iron Silver Min. Co., 128 U.S. 673 (1888). Of course, Iron Silver does not concern invention rights. Rather, the case is about patents for placer mineral rights that were granted to Iron Silver based on the company's claim that it had discovered valuable minerals on the surface of US public land near Leadville, Colorado. Under the law at the time, discovery of surface minerals on public lands allowed a prospector to stake a legal claim that extended to mineral rights under the surface.

Still, the court's holdings on land-patent rights may have some relevance to Microsoft's current challenge to the clear and convincing standard. As Professor Ed Kitch noted in his seminal 1977 article titled The Nature and Function of the Patent System that introduces the "prospect theory of patents," there are many similarities between the mineral claiming patent system and the utility patent system. The prospect theory suggests that patent rights are useful in channeling and coordinating post-invention development activities. The core idea that Kitch recognized is that a business is more likely to pursue post-invention investment and development of a product that falls within its own sphere of patent exclusivity. "The patent system achieves these ends by awarding exclusive and publicly recorded ownership of a prospect shortly after its discovery. The patent system so viewed is closely analogous to the American mineral claim system for public lands. For expositional convenience, this view of the patent system will be called the prospect theory."

Although Kitch does not expressly discuss the legal standards for invalidation, his theory would suggest strong rights tend to better-serve the prospect-role of patents.

Full post as published by Patently Obvious on October 04, 2010 (boomark / email).