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Halo Is Not the Saving Grace for the Patent System

Patent law is facing growing pains as it tries to operate within a framework originally created with different technology in mind. As technological advancements have proliferated in recent decades, cracks in the patent system’s foundation have become apparent. As Justice Breyer pointed out, “[t]oday’s patent world is not a steam‐engine world. We have decided to patent tens of thousands of software products and similar things where hardly anyone knows what the patent’s really about.” There is a mounting concern among scholars and members of Congress that the patent system is infested with invalid patents. While a precise number of invalid patents currently in force is not measurable, studies suggest that the over‐granting of patents is a real threat. Invalid patents increase transaction costs for subsequent innovators: innovators must navigate unnecessary red tape and non‐practicing entities (commonly referred to as “patent trolls”) can abuse the patent system by threatening to assert these invalid patents against others.

The patent system can combat the problem of invalid patents at three stages. First, more resources can be dedicated to the United States Patent and Trademark Office (PTO). The initial review of patent applications can be expanded to allow for a more thorough vetting upon initial receipt. Possible measures of reform could include hiring more examiners, increasing the time spent on each patent application, or requiring greater disclosure of prior art by the potential patentee. But reform at this stage would provide an incomplete solution because it would fail to dispose of bad patents that are already in circulation.

A second point at which invalid patents can be confronted is the post‐issuance, pre‐litigation stage. This approach was followed in the 2011 America Invents Act (AIA). With a concern for invalid patents at the forefront of policy discussions, the AIA bolstered administrative proceedings at this intermediate stage, introducing inter partes review and post‐grant review. Congress sought to create an “administrative route more efficient and less expensive than district court litigation.” Still, invalid patents have continued to plague the patent system in the years following the implementation of the AIA. Setting aside the questionable effectiveness of these administrative routes, there is a more immediate question of whether these proceedings by the PTO are even constitutional. The Supreme Court will address this issue in its coming term.

The final stage at which invalid patents can be eliminated is litigation. When optimally structured, litigation is a promising method of correcting errors carried over from the patent issuance stage. An adversarial system provides an opportunity for a judge to have a (potentially) fair view of both parties’ positions. The finality of the decision provides clarity for patent owners and the public. But the current litigation system suffers from procedural defects, making it costly, time consuming, and ill‐equipped to handle an abundance of patents. Patent litigation costs in the United States are extremely high, especially as compared to foreign patent systems. In addition to the high costs, parties are tied up for an average of two and a half years before their cases reach trial. With these substantial burdens, patent litigation is not a realistic option for small companies, nor is the system well‐equipped to sort through a large volume of patent disputes. Thus, patent litigation is a good candidate for reform. A more streamlined system will allow increased access to litigation, thereby increasing the number of patents that courts can either dispose of or validate.