Empirical Legal Studies

Patents, the Mayo Decision (2012) & Innovation

Our patent system seeks to promote innovation. When it comes to levering incentives in the service of innovation, property rights flowing from patent grants do much of the expected work.

The Supreme Court's 2012 Mayo v. Prometheus decision disrupted the existing status quo and articulated a new legal test for patent-eligible subject matter. Assessing Mayo's impact in general and on molecular diagnostics innovation in particular confronts considerable data and research design challenges.

Arti Rai (Duke) et al. take up this challenge in a recent paper, Molecular Diagnostics Patenting after Mayo v. Prometheus: An Empirical Analysis. As the authors make clear, "in an ideal world, we would be able to examine rigorously differences in molecular diagnostics innovation before and after Mayo. Unfortunately, the rigorous measurement of innovation raises well-known challenges.” Despite these (and other) challenges, the paper uses data on molecular diagnostic patenting from 2009 through 2019. The paper's DID specifications exploit comparisons with non-bioinformatics and non-molecular diagnostic biochemistry inventions. The paper reports mixed results summarized in the excerpted abstract that follows.

"This Article contributes to the presently thin evidence base on the impact of Mayo by using data on patent applications, examinations, and grants from 2010-2019 to comprehensively trace the effects of the test and subsequent related developments. Using descriptive data as well as a difference-in-difference (DID) design, we evaluate the extent to which the decision was followed by one of three expected outcomes: a decline in patent quantity and quality (“retrenchment”); increase in patent prosecution “toughness”; and applicant “adaptation.” We find substantial support for our toughness and adaptation hypotheses, but not our retrenchment hypothesis: molecular diagnostic patenting did not decline in aggregate, though there is some evidence of a relative decline among small, U.S. based firms as well as a potential decline in the share of patents covering new (non-continuation) inventions. These results suggest that molecular diagnostic patents are harder to get but they are still being applied for and granted, with their narrowed scope making them less likely to block follow on innovation.”

Do Patent Reforms Enhance Innovation?

Over the past two decades, academics and policy makers in the IP/patent space have focused on three specific developments: elimination of presumptive injunctive relief for victorious patent enforcers in eBay Inc., creation of the Patent Trial and Appeal Board (PTAB), and restriction of software’s eligibility for patent protection in the Alice Corp. decision. Despite general agreement on the importance of these three patent system changes, their individual and collective impact on innovation (construed in terms of firms’ patent filings and R&D investments) remains both contested and understudied.

A recent paper by Christian Helmers (Santa Clara—business) and Brian Love (Santa Clara), Patent Law Reform and Innovation: An Empirical Assessment of the Last 20 Years, jumps into this empirical void and seeks to assess these three reforms’ impact on innovation in the U.S. To do so, the paper constructs firm-level innovation measures and of exposure to each reform and submits them to various Dif-in-Dif specifications that compare relatively exposed and relatively unexposed firms. The paper finds that “Overall, our results suggest that these three reforms had a positive effect on innovation as measured by patent filings and R&D investment.” More detailed findings are described in the excerpted abstract.

“... We find: a positive association between eBay and R&D spending by firms that were relatively more exposed to patent litigation prior to the Court’s decision; a positive association between the introduction of PTAB proceedings and both R&D expenditures and patent filings by firms that innovate in tech classes where PTAB has been most active; and a positive association between Alice and both R&D spending by software firms and patenting by firms that held relatively more software patents prior to the Court’s opinion.”

The Impact of the Court's Halo Decision on Willful Infringement and Enhanced Damage Claims

While legal formalists may generally defer to clear legal rules, others respond in different ways. For example, as Karen Sandrik (Wilamette) writes, “For decades, companies and attorneys have instructed teams of engineers, researchers, and computer scientists to ignore patents." Such strategic advice is offered, in part, to help defeat a patent holder's subsequent claim for enhanced damages.

In her recent paper, An Empirical Study: Willful Infringement & Enhanced Damages in Patent Law After Halo, Sandrik subjects this convention wisdom to data. Critically, the run of data (from 2010 through 2020) includes the Supreme Court's 2016 Halo decision where the Court wrote that enhanced damages are “designed as a ‘punitive’ or ‘vindictive’ sanction” for an infringer’s conduct that is “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.”

The data set includes all district court decisions on willfulness decided between 2010 and 2020. Exclusions from the data set include appeals as well as (interestingly) successful motions to dismiss willful infringement claims. As it relates to the latter exclusion, the author notes that successful motions to dismiss “are inconsistent standards post-Halo on what is needed to successfully plead a claim for willful infringement.” Key findings from the resultant data set (N=260) on pre- and post-Halo outcomes include: "(1) willfulness findings have increased by 27.8%; (2) enhanced damages findings have increased by 8.7%; and (3) judges are significantly more likely to find willfulness (representing an 18.6% increase in willfulness findings)." An excerpted abstract follows.

"... In this empirical study with data spanning 2010 to 2020, I provide a data-driven answer to whether this deliberate ignorance strategy is effective. The answer, in short, is that reading patents, conducting patent clearance searches, and/or responding to cease-and-desist letters does not, in isolation, open the door to enhanced damages. Finally, by employing an original data set to seek this answer and potential solutions to deliberate patent ignorance, this study provides empirical statistics regarding willful infringement and enhanced damages. This includes empirical statistics illustrating the impact of the 2016 Supreme Court decision, Halo Electronics v. Pulse Electronics.”

An Empirical Assessment of What "Substantial Similiarity" Means to Courts in Copyright Litigation

Judicial assessments of copyright infringement claims remain dominated by the two-prong "substantial similarity" test. Despite this test's centrality to copyright doctrine, very little is known about how courts operationalize and apply it. In a recent paper, An Empirical Study of Copyright's Substantial Similarity Test, Clark Asay (BYU) seeks to sketch some of the test's general empirical contours. To do so, the paper, drawing from the universe of substantial similarity opinions (found on WestLaw), exploits a random sample of 1,005 opinions (district and appellate) between 1978 and 2020.

The study's key findings intrigue. First, and unsurprising to most practitioners in this space, the Second and Ninth Circuits dominate this litigation. Second, judicial analyses on the substantial similarity test tend to dwell on the second prong with comparably less judicial attention to the first. Third, judicial analyses focusing on prong two--assessing whether the defendant’s copying amounts to improper appropriation--evidence a wide diversity of approaches. As Asay notes, "[n]o dominant means exists for resolving this question, and, in any given opinion, a court typically uses multiple subtests and copyright limitations to decide this inquiry."

The paper concludes by recommending: "First, courts should maintain the two traditional prongs of the substantial similarity test as distinct and reinvigorate their assessments of similarity under the first prong of the substantial similarity test. Second, courts should make discussing and applying any relevant copyright limitations the heart of their prong two analyses to ensure that copyright law serves its constitutional purposes."

Copyright Injunctions After eBay and the "Hysteresis Hypothesis"

Interest in a recent paper, The Hysteresis Thesis: An Empirical Study of Copyright Injunctions After eBay, by Matthew Sag (Loyola-Chi) and Pamela Samuelson (Berkeley), should extend beyond traditional IP/copyright borders. Here's why.

First, the IP/copyright implications. Prior to the Supreme Court’s landmark 2006 eBay decision, courts routinely issued injunctions in both patent and copyright cases upon a finding of actual or likely infringement of plaintiffs’ rights. Even though most scholars expected that the eBay decision would have an immediate and transformative effect on the grant of permanent injunctions in patent infringement cases, Jiari Liu's 2012 paper reported that in the first four years after the eBay ruling, courts rarely cited that decision and continued to grant injunctions at a very high rate. Sag and Samuelson's paper, however, concludes that Liu's main finding (and conventional wisdom) were "always somewhat erroneous and are now clearly outdated."

Second, the implications of the "how" and "why" of Sag and Samuelson's paper spill-over into empirical legal studies more broadly. Sag and Samuelson began their study with an eye towards "the hypothesis of hysteresis or delayed effect: the simplest way to think about this theory is that, if it is correct, we should see a greater effect in the third and fourth periods than in the 2007-2010 period immediately following eBay."

To do so, they exploited a data set of "336 reported U.S. federal court copyright injunction cases decided between January 1, 2000 and December 31, 2019. We begin with the pre-eBay era, from 2000 to 2006. Our remaining three eras are 2007-2010 (the immediate aftermath era), 2011-2014 (the Salinger-Flexible era), and 2015-2019 (the consensus era)." What they find, in part, is that: "Our evidence shows that the citation rate for eBay has increased and that the corresponding grant rate for copyright injunctions has decreased."

They attribute their findings of an Hysteresis effect to "the doctrinal conservatism of lower courts and the parochial nature of appellate court precedents, it is unsurprising that there might have been some delay in the adoption of even the most obvious implications of new Supreme Court precedents such as eBay for injunction grants in copyright cases." An excerpted abstract follows.

"... This Article tests these claims and finds statistically significant differences in the grant rate for both preliminary and permanent injunctions in copyright cases after the eBay decision. The impression of eBay lacking effect appears to be a product of hysteresis—a time lag between cause and effect, as lower courts initially delayed but eventually embraced eBay. This study reveals, moreover, that the earlier empirical study was flawed by biased sampling, most notably by including a large number of unreported cases and default judgments. This Article offers a corrective analysis and provides a more accurate understanding of the copyright injunction landscape, both pre- and post-eBay. It shows that eBay was in fact a landmark case for copyright law, both in terms of jurisprudence—it is highly cited—and real-world effect— it has a dramatic impact on case outcomes."

Journal of the Patent and Trademark Office Society ("JPTOS")--Call For Submissions

The Journal of the Patent and Trademark Office Society ("JPTOS"), a leading intellectual property law journal for over one hundred years, has recently returned from a publishing hiatus due to the pandemic and is eager to accept new article submissions. Moreover, the Journal’s incoming EIC, Timothy Hsieh (Okla City), a long-time ELS Blog reader, expressly noted that the Journal publishes “a fair amount of articles involving empirical analysis.”

JPTOS seeks articles involving intellectual property (patents, trademarks, copyrights, trade secrets, or hybrids between all such forms) or law & technology (blockchain, cryptocurrencies, NFTs, artificial intelligence, 3D printing, social media, privacy/surveillance, biotechnology, pharmaceuticals, COVID vaccine patents or patent policy and topics) and all related fields. JPTOS is one of the oldest intellectual property journals in the United States and for over a century has been at the forefront of various intellectual property debates.

Submissions may be directly emailed to: [email protected] (or to the Journal’s Scholastica location: https://jptos.scholasticahq.com/). Additional details regarding submission guidelines can be found at the Journal’s official website (http://jptos.org).

Data & Property Rights

While the array of issues incident to "data" and property rights (or "ownership") continues to grow both in number and complexity, many of the immediate, practical questions relate to the evolving relation between empirical scholars and their data sets and journal editors when it comes to the manuscript review process. A wider-angle lens, however, as well as an international perspective, are developed in a recent, brief working paper/report, Data Ownership. In it, Teresa Scassa (Ottawa) takes up broader questions concerning data "ownership," what ownership may mean, and how whatever it may mean can vary across jurisdictions. While certainly not the last word on these complex issues, an interesting take and perspective on a set of issues that will not likely go away anytime soon.

Call For Proposals: Roundtable on Empirical Methods in Intellectual Property

The second annual Roundtable on Empirical Methods in Intellectual Property, co-hosted by Chicago-Kent and the U.S. Patent and Trademark Office, will take place in Chicago, IL, on 19-20 September 2014.

The Roundtable seeks to give scholars engaging in empirical and experimental studies of IP a chance to receive feedback on their work at an early stage in their research. Accordingly, the Roundtable will be limited to a small cohort of scholars discussing projects that are still in their developmental stages. Projects that will have substantially begun data collection by the time of the Roundtable are inappropriate. Pilot data collection is, however, appropriate.

Those interested in proposing research projects will find specific application information here. Please note that applications are due by 1 August 2014.

Patently Empirical

Understanding the Realities of Modern Patent Litigation, by John Allison (Texas), Mark Lemley (Stanford), and David Schwartz (Chicago-Kent), supplies a "comprehensive picture of the outcomes of modern patent litigation." The paper updates and expands upon prior work by coding "all substantive decisions rendered by any court in every patent case filed in 2008 and 2009 -- decisions made between 2009 and 2013." The study evaluates patent validity as well as infringement and unenforceability claims. Interestingly, the paper notes "a surprising amount of continuity in the basic outcomes of patent lawsuits over the past twenty years, despite rather dramatic changes in who brought patent suits during that time."

While the data only include litigation filed in 2008 and 2009 and the analyses only involve cases that persisted to the dispositive motion or trial stages (most lawsuits settle before this), the paper will certainly interest those seeking an empirical footing in patent litigation.

Calls For Open Data Policies in Patent Law

Building off of Johnson & Johnson's recent decision to make all of its clinical data available to scientists around the world (favorable New York Time op-ed here), Dave Schwartz (Chicago-Kent) and co-authors make the case (here) that this same impulse should extend to empirical legal studies as well, particularly studies of patent assertion entities ("PAE"). An excerpt follows.

"Why is more information about PAE litigation not public? After all, the underlying data relates to litigation in the federal courts, and thus does not implicate privacy concerns like in the medical context. However, most of the raw data has been gathered and coded by private companies. For-profit businesses legitimately desire to use the information within their business and to prevent competitors and others from using commercially valuable information. That said, we believe corporate owners should release as much of the raw data (not merely descriptive statistics) as they can. To the extent that the raw data is not released or shared, society should be extremely cautious before relying upon it to make important public policy decisions."

American Bar Foundation (ABF) Call for Visiting Scholars

The American Bar Foundation (ABF)  invites scholars to join our intellectual community for the 2012-2013 academic year.

The ABF encourages national and international scholars on leave or sabbatical to take advantage of our diverse community and excellent facilities.  We offer an office, telephone, and computer, but no stipend.

Preference will be given to visitors whose scholarship coincides with the research agenda of the ABF and who will be in residence full-time for all or part of the year.  Summer visits are possible. Visitors are expected to participate in the intellectual life of the ABF, including a weekly seminar.

If you have an interest in this opportunity, please send an email to Robert Nelson at [email protected], subject line: Visiting Scholars Program, which states (1) the topic on which you are working, (2) the preferred dates for residence, (3) the days each week you would expect to be at the ABF, and (4) attach a CV.  Applications should be received by April 1, 2012.  Applications will be considered as space allows.  The ABF Appointments Committee will review applications and prospective visitors will be notified accordingly.

A Copyright Charity, For the Children

The Copyright Alliance has created a “charitable arm,” the Copyright Alliance Education Foundation. It “will develop educational programs aimed at helping America’s next generation of creators succeed.” CAEF also provides links to already existing “educational” materials on intellectual property law and promotes them for classroom use.

As an example, CAEF promotes the Electronic Software Association or ESA’s Join the ©Team curriculum, a set of materials that have been around for a few years now. While they are designed for elementary school kids, they are also a fun way for law students to discuss copyright and fair use, at least for a few minutes. I have used portions of the 4th and 5th grade materials in the discussion of copyright in my video game law seminar and may use the same materials in my intellectual property law survey course.

Here’s a problem from the curriculum materials for 4th and 5th graders about how to “copy right.” It’s accompanied by a picture of one boy giving a CD-ROM to another boy:

“Simon is giving Bob a copy of his class report on Harry Potter. What should he do to copy right?” (p. 19)

The answer, sort of, to this hypothetical is after the jump.

Cornell Copyright Duration Chart

Suppose you wanted to assign Herman Pritchett's The Roosevelt Court (1948) in your class. It's out of print. Can you just pirate copy the whole book? In answering this question, a good place to start is the recently updated Cornell Copyright Duration Chart.

There are a couple of simple rules: (1) works published before 1923 are in the public domain, but (2) works published by Disney are not and never will be. For all other works, see the chart.

Blumenthal # 2 - A Plea for Psychology (with apologies to John Austin)

A Plea for Psychology (with apologies to J.L. Austin)

So I've gotten off to a slow start, but I'll try to make some contribution now.

As I mentioned, I wonder if psychology as a discipline has gotten short shrift from ELS. As a historical matter I think so; research in legal psychology has been conducted, off and on, for about 100 years. But until recently the legal system has been skeptical, suspicious, at times hostile to psychology, and there’s not much discussion of psychological research in modern ELS – with exceptions, much of the work stems from economics or political science.

There are historical reasons for this skepticism. The conventional story is that psychology and law as a discipline was founded around 1908, with the publication of Hugo Munsterberg’s On the Witness Stand, documenting his efforts to persuade the legal system that his empirical work in criminal justice – eyewitness research, memory, perception, lie-detection, etc. – was relevant and important. (Another interesting contribution, written in a more scholarly vein, was a book by G.F. Arnold, a British legal scholar, Psychology Applied to Legal Evidence (1906)).

Munsterberg's book was pugnacious and had a lot of 'tude -- probably too much ("The time for Applied Psychology is surely near. . . .  The lawyer alone is obdurate;" "The lawyer and the judge and the juryman are sure that they do not need the experimental psychologist. . . .  They go on thinking that their legal instinct and their common sense supplies them with all that is needed and somewhat more.")  Hugo's book prompted a now-classic response article by John Henry Wigmore, in which Wigmore staged a mock lawsuit accusing Munsterberg of libeling the legal profession.  Both tongue-in-cheek and vitriolic, Wigmore's cross-examination devastated poor Hugo, and as a result, one commentator has said, for years American psychologists "left the law rather severely alone."  Last week a wonderful conference was staged at John Jay College of Criminal Justice, though, celebrating OTWS's centenary: Off the Witness Stand: Using Psychology in the Practice of Justice."  With a keynote speech by Janet Reno, and talks by many top researchers in in psychology discussing the state of psycholegal research today--experts in eyewitness testimony, memory, jury decision-making, forensic psychology, coerced confessions, and more--it was geared toward both scholars and practitioners, and was a good state-of-the-discipline weekend.  (One concern, as I hope to discuss in another post, is the impression that criminal justice is all there is for psychology to look at.)

And there are methodological / institutional reasons for the skepticism.  As I and many others have noted, experimental psychology takes a different approach to finding answers: objective rather than adversarial, nomothetic rather than idiographic, probabilistic rather than certain, descriptive rather than prescriptive.

But this skepticism is unfortunate, and has led to a lack of communication between the disciplines of law and psychology.  I think ELS suffers from that lack, in at least two ways.  The first is simply mutual unfamiliarity with the other field’s research.  This is unfortunate historically (for instance, the explosion of heuristics-and-biases research over the last 10 years or so, which builds on psychologists’ work that has been around for 30 years and appears in any introductory cognitive psychology textbook), but also in terms of keeping up with empirical developments in psychology (and other social sciences too, of course).

*

The second, which I'll turn to next post, is methodological. . . .

*

For those who are still here, thanks!