A study of Patent Thickets (1.31Mb) - UK Intellectual Property Office

A Study of Patent Thickets 19
staff relative to the workload. Before the USPTO was able to grant a patent, the invention was
already obsolete, especially in fast growing high technology sectors (Jaffe, 2000).
In order to overcome this problem the U. S. Congress passed a series of laws that strengthened
and modernized the patent office. Most importantly, Congress passed the Federal Court
Improvement Act in 1982. This law created the centralized Court of Appeals for the Federal
Circuit (CAFC). The CAFC has exclusive jurisdiction over appeals in cases involving patents and
claims against the federal government in a variety of subject matters. This court was created
mainly for two reasons: to bring greater uniformity in patent law enforcement, and to reduce the
case-load crisis in the federal courts of appeals (Jaffe, 2000).
In a series of studies based partly on practitioner interviews (Hall and Ziedonis, 2001; Ziedonis
and Hall, 2001; Ziedonis, 2004), Hall and Ziedonis show that one consequence of the creation
of CAFC and the greater willingness of that court to grant injunctions was to increase the holdup
threat to defendants in patent litigation and that this led to an increase in defensive patenting
in the semi-conductor industry. The practice of “patent portfolio” racing for defensive purposes
soon spread to other parts of the ICT industry (Hall, 2005) and to other jurisdictions (Harhoff et
al., 2007).
Galasso and Schankerman (2010) study how the fragmentation of patent rights and the
formation of CAFC affected the duration of patent disputes during the period 1975-2000, and
thus the speed of technology diffusion through licensing. They have two main empirical findings.
First, patent disputes in US district courts are settled more quickly when infringers require
access to fragmented external rights, but this effect is much weaker after the introduction of the
CAFC. Secondly, the introduction of the CAFC is associated with a direct and large reduction in
the duration of disputes, which they attribute to less uncertainty about the outcome if patent
disputes go to trial. This is a beneficial result of the formation of this court.
However, there is some evidence that patent litigation in the information and communications
technologies as well as in software has increased substantially recently (Berneman et al., 2009;
Federal Trade Commission, 2011; Carrier, 2012). The recent report by the FTC (2011) discusses
the economic effects of injunctions and the criteria used when deciding on injunctions at great
length. The report proposes that the courts should adhere to the 2006 Supreme Court decision
in eBay v. MercExchange 8 which set out four factors required to obtain a permanent injunction
against a later patent. On the whole these factors should make obtaining an injunction much
harder than previously, as they require US courts to consider the public interest in coming to a
view about injunctions.
In Europe there has recently been a spate of court cases related to smartphones, in which firms
have sought to obtain injunctions to delay entry of products while appealing to the European
competition authorities to investigate the licensing or not of standards essential patents (Carrier,
2012). German courts have been particularly central in these legal cases as they rule quickly
and due a stronger presumption of validity built into its bifurcated enforcement system,
preliminary injunctions are more frequently employed. Helmers and McDonagh (2012a), in
contrast, find no evidence for changes in litigation behaviour before the relevant courts in
8 eBay, Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).