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Dan L. Burk & Mark A. Lemley, The Patent Crisis and How the Courts Can Solve It (2009).

Is there a crisis in the patent system, and if so, what should be done about it?  Two recent books respond to cries of alarm emanating from some in the patent system, and each makes a large contribution to the understanding of this system:  James Bessen & Michael J. Meurer, Patent Failure:  How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (2008) and Dan L. Burk & Mark A. Lemley, The Patent Crisis and How the Courts Can Solve It (2009).  Both books proceed from, or demonstrate, a core empirical premise: those inside the patent system experience its effects quite differently depending on their industrial setting and technical field of innovative endeavor. Both books are well worth reading, but the space here allows only for a few comments on Burk and Lemley’s more recent contribution.

Reprising, updating, and extending arguments made in prior works, Burk and Lemley set out to persuade the reader of three propositions: (1) the tradition of a one-size-fits-all approach to patent law is out of step with the diverse needs of today’s innovators in wide range of industries; (2) the response to diversity should be to retain a single Patent Act rather than to provide industry-specific legislation; but (3) the federal courts should use the flexibilities embedded in that single Patent Act to tailor its application to account for industry diversity.

Not all readers will agree that they succeed in this quest, but the journey rewards all who travel along.  For teachers, Burk & Lemley’s initial summary of the patent system (pp. 7-20) provides an excellent reading assignment for any law or applied sciences class on patent law.  For scholars, the authors helpfully summarize the literature(s) on industry-specificity in innovation and patenting strategies, and they argue that this diversity helps explain the diversity in theoretical justifications for the patent system.

Now the argument.  The authors first sweep aside the prospect that Congress can solve the crisis posed by industry diversity by reviewing the history of some industry-specific legislation and four years of failure to pass broader systemic reform because of warring industry coalitions.  While Burk and Lemley raise many valid concerns and issues on this score, many readers, including this one, would need deeper institutional analysis and analysis of  the economically more important legislative tailoring done by the Bayh-Dole Act and the Hatch-Waxman Act, respectively, before conceding the point.

Nonetheless, the heart of the argument is that the existing Patent Act confers upon federal courts, and in particular the U.S. Court of Appeals for the Federal Circuit, interpretive discretion to take account of salient economic and technological differences among innovators.  This argument, which they first made in Policy Levers in Patent Law, 89 Va. L. Rev 1575 (2003), has been updated, extended, and strengthened by taking into account numerous intervening developments, including significant Supreme Court decisions, that further enlarge the scope of judicial discretion in the patent system.

The book closes with case studies of patent tailoring for inventions arising in the biotechnology and information technology industries.  While again not all readers will accept these accounts, Burk and Lemley succinctly summarize the literature on the economic effects of patents in these fast-moving, economically significant sectors and challenge readers to think more deeply about how the law could more coherently and consistently adapt to the scientific and business realities in these sectors.

The authors acknowledge the limits of their argument by allowing that the courts should not use each and every flexible provision of the Patent Act to fashion industry-specific interpretations and that courts could not realistically do so even if so inclined in light of the dynamism and uncertain trajectories of the innovative sectors.  But they challenge all who are interested in a well-functioning patent system to recognize the real differences in how innovators appropriate returns on their investments and the real costs of a one-size-fits-all approach to patent law imposed on the majority of these innovators.  They show that at least in the domestic context, the federal courts have a range of tools available to play a more active and helpful role in responding to industry difference.  Finally, they recognize that the argument is not complete, and they invite further analysis of innovation policy and institutional design options to respond to industry diversity.

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Cite as: Michael W. Carroll, Patent Crisis?/Judicial Solution?, JOTWELL (October 27, 2009) (reviewing Dan L. Burk & Mark A. Lemley, The Patent Crisis and How the Courts Can Solve It (2009)),