An Organizational Approach to the Design of Patent Law

6 VERTINSKY FINAL_JAD (DO NOT DELETE) 2/27/2012 2:20 PM
2012] AN ORGANIZATIONAL APPROACH 265
sarily incomplete or information is imperfect. 233 The potential
for costly opportunism is particularly severe where assetspecific
or relationship-specific investments are required in the
face of imperfect information and high transaction costs. Patent
laws should therefore be designed to reduce situations of incomplete,
particularly asymmetric, information, and to reduce
the cost and uncertainty of establishing the boundaries of patent
rights. A number of patent reform proposals that have received
attention by commentators and policy-makers can be explained
and justified in light of this approach.
For example, the organizational approach provides a justification
for Lemley’s and Kimberly A. Moore’s proposal to restrict
the ability to file continuation patent applications, which
allow patent applicants to abandon and re-file applications or
to keep applications on file while pursuing related applications
on the same invention. 234 Continuations can create problems
such as introducing delay and uncertainty for competitors because
they must guess about pending claims, obtaining broader
patents due to persistence rather than merit, and using of strategic
practices of drafting claims that cover competitor products
or surprising established producers who are unaware of the
pending application.
The organizational approach similarly supports James
Bessen’s and Michael J. Meurer’s call for improving the notice
function of patents by increasing the transparency of the patent
process and the predictability and visibility of patent boundaries.
235 These efforts help to increase the information that economic
actors have before they make project-specific or relationship-specific
investments and improve the ability of patents to
perform effectively as property.
The organizational approach is of particular assistance in
guiding responses to patent trolling, since the practice involves
233. See Williamson, Transaction Cost Economics, supra note 144, at 30–
31.
234. Mark A. Lemley & Kimberly A. Moore, Ending Abuse of Patent Continuations,
84 B.U. L. REV. 63, 64–66 (2004) (describing the harm caused by
abuse of continuations practice and proposing restricting, or even abolishing,
continuation practice).
235. BESSEN & MEURER, supra note 22, at 7 (“The economic effectiveness of
any property system depends not just on what it sets out to do, but also on the
laws, regulations, institutions, and norms that implement the system.”).
Bessen and Meurer also argue that an effective property system must improve
the implementation of patent laws in a way that satisfies the notice requirement
of property rights. Id. at 235–36.