Practicing in the Patent Marketplace
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The growing secondary market for patents is a relatively recent phenomenon. Understanding this unusual and developing market is necessary to navigating it effectively. This Article surveys the marketplace, identifies its key players, and notes some of the unique challenges presented in patent sales. Patents are unique assets with differing impacts in different hands. They are susceptible of effective valuation only by specialists—yet most patents are not worth such costly effort and investment. This Article explores how this vibrant marketplace continues to adapt to value these unique assets more efficiently and to deal with imperfect information in individual transactions.
For helpful comments, thanks to Sarah Burstein, Bernard Chao, Kevin Collins, Laura Dolbow, Tabrez Ebrahim, Jeanne Fromer, Jordi Goodman, Paul Gugliuzza, Tim Holbrook, Mark Lemley, Oskar Liivak, Mike Meurer, Andrew Michaels, Lidiya Mishchenko, Nicholson Price, Arti Rai, Jason Rantanen, Jason Reinecke, Michael Risch, Andres Sawicki, Jake Sherkow, and participants at the Intellectual Property Scholars Conference and the Works-in-Progress Intellectual Property Colloquium. We thank Victoria Fang, Josh Leopold, Joseph Robinson, and Marissa Uri for excellent research assistance. Masur thanks the David and Celia Hilliard Fund and the Wachtell, Lipton, Rosen & Katz Program in Behavioral Law, Finance and Economics for support.
For helpful comments, thanks to Sarah Burstein, Bernard Chao, Kevin Collins, Laura Dolbow, Tabrez Ebrahim, Jeanne Fromer, Jordi Goodman, Paul Gugliuzza, Tim Holbrook, Mark Lemley, Oskar Liivak, Mike Meurer, Andrew Michaels, Lidiya Mishchenko, Nicholson Price, Arti Rai, Jason Rantanen, Jason Reinecke, Michael Risch, Andres Sawicki, Jake Sherkow, and participants at the Intellectual Property Scholars Conference and the Works-in-Progress Intellectual Property Colloquium. We thank Victoria Fang, Josh Leopold, Joseph Robinson, and Marissa Uri for excellent research assistance.
Since its inception, patent law has required that inventors publicly disclose information about their inventions in exchange for receiving patent rights. This foundational requirement is policed through multiple doctrines: patents fail “enablement” if “undue experimentation” is needed to practice the invention, and they lack adequate “written description” when they fail to establish the inventor’s “possession” of the invention. Despite disclosure doctrines’ centrality, fundamental puzzles about their application remain unresolved. In Amgen v. Sanofi , the Supreme Court recently took up one such puzzle: Must a patent enable the full scope of the claim or merely some number of working examples? But the Court failed to address long-standing puzzles surrounding this issue. In this Article, Jonathan S. Masur and Lisa Larrimore Ouellette tackle these questions and more. The Article attempts to bring conceptual order to the disclosure doctrines, reconciling them with one another and with the broader animating principles of patent law. These puzzles must be solved if patent law is to fulfill its promises; if they are not, the resulting doctrinal gaps will expose the patent system to strategic behavior by nefarious noninventors—including those aided by new generative artificial intelligence tools—who learn how to acquire the patent quo without paying their quid.
I would like to thank Professor Jonathan Masur and the editors and staff of The University of Chicago Law Review, including Andy Wang, Zoë Ewing, Jonah Klausner, Karan Lala, Eric Haupt, Eugene DeCosse, and Helen Chamberlin, for their thoughtful advice and insights.
Holders of patents covering technology standards, known as standard-essential patents (SEP), control the rights to an invention with no commercially-viable alternative or that cannot be designed around while still complying with a standard. This gives SEP holders significant leverage in licensing negotiations. Standards development organizations (SDOs) play an important role in curbing opportunistic behavior by patent holders. SDOs require SEP holders to license their patents on fair, reasonable, and non-discriminatory (FRAND) terms. However, courts have mischaracterized FRAND commitments, concluding that these disputes carry a Seventh Amendment guarantee to a jury trial. This mischaracterization undermines the fair resolution of FRAND disputes, and a different approach is necessary. In this Comment, Marta Krason proposes an alternative analytical framework that more accurately characterizes FRAND disputes by drawing on principles from contract and property law, concluding that the constitutionally proper adjudicator is a judge, not a jury.
Search costs matter and are reflected in many areas of law. For example, most disclosure requirements economize on search costs. A homeowner who must disclose the presence of termites saves a potential buyer, and perhaps many such buyers, from spending money to search, or inspect, the property. Similarly, requirements to reveal expected miles per gallon, or risks posed by a drug, economize on search costs. But these examples point to simple strategies and costs that can be minimized or entirely avoided with some legal intervention. Law can do better and take account of more subtle things once sophisticated search strategies are understood. This Essay introduces such search strategies and their implications for law.