The Antipatent: A Proposal for Startup Immunity

Nebraska Law Review Volume 93 | Issue 4 Article 5 2015 The Antipatent: A Proposal for Startup Immunity Amy L. Landers Drexel University Thomas R. Kline School of Law, Follow this and additional works at: https://digitalcommons.unl.edu/nlr Recommended Citation Amy L. Landers, The Antipatent: A Proposal for Startup Immunity, 93 Neb. L. Rev. 950 (2014) Available at: https://digitalcommons.unl.edu/nlr/vol93/iss4/5 This Article is brought to you for free and open access by the Law, College of at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Nebraska Law Review by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Amy L. Landers* The Antipatent: A Proposal for Startup Immunity TABLE OF CONTENTS I. II. III. IV. V. VI. VII. VIII. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951 The Proposed Solution: The Antipatent . . . . . . . . . . . . . . . . 957 Assumptions: Ideas, Inventions, and Innovations . . . . . . 961 The Value of Experimentation Without Adverse Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966 A. Clearer Paths to Creation . . . . . . . . . . . . . . . . . . . . . . . . . 966 B. Components of Creative Endeavors . . . . . . . . . . . . . . . . 972 Patent Lock-in: Standing on the Shoulders of Plaintiffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 977 A. The Difficult Path to Permission: Search . . . . . . . . . . . 980 B. Patent Lock-In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984 C. Patent Law’s Limited Experimental Use Defense . . . 987 D. Prior User Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 988 E. Other Private Ordering Solutions . . . . . . . . . . . . . . . . . . 992 1. Patent Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992 2. Coordinated Efforts to Resolve Innovation Roadblocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 994 The Rationale for Shielding Startups . . . . . . . . . . . . . . . . . . 995 A. The Role of Small Firms in Creating New Ideas . . . . 995 B. Small Firms as Compliments and Competitors . . . . . 998 C. Could Large Firms Fill the Gap? . . . . . . . . . . . . . . . . . . 1001 An Individualized Balance: Benefits of the Patent System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 A. Potential Adverse Impacts of Opting Out . . . . . . . . . . 1005 B. The Venture Capital Question . . . . . . . . . . . . . . . . . . . . . 1007 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1011 © Copyright held by the NEBRASKA LAW REVIEW. * Professor of Law, Drexel University Thomas R. Kline School of Law. The author wishes to thank Professor Greg Vetter and the participants of PatCon4 sponsored by University of Kansas School of Law, IIT Chicago-Kent College of Law, University of San Diego School of Law, and Boston College Law School for comments. 950 2015] THE ANTIPATENT 951 I. INTRODUCTION The U.S. patent system, in place continually since its initial enactment in 1790, has become a fixture of the American economy. The concept that “[a] strong intellectual property system supports and enables the innovation that is the lifeblood of our economy” is a wellengrained maxim among governmental decision makers.1 One of the foundational assumptions of the U.S. patent system is that “IP rights play a large role in generating economic growth.”2 In the words of the former U.S. Patent and Trademark Office Director David Kappos, “[o]ur national love affair with invention has produced the strongest patent system in the world by any and all measures,” and that same system “substantially undergirds a great innovation-based economic engine.”3 Some assert that patents are necessary to correct the market failure inherent in knowledge-based assets.4 Intangible information can be costless for rivals to reproduce and, absent some form of protection or reward, some posit that “the inventor will therefore be at a market disadvantage relative to rivals, and will possibly be dissuaded from investing” in research and development.5 1. Office of the Press Sec’y, Fact Sheet - Executive Actions: Answering the President’s Call to Strengthen Our Patent System and Foster Innovation, THE WHITE HOUSE (Feb. 20, 2014), http://www.whitehouse.gov/the-press-office/2014/02/20/ fact-sheet-executive-actions-answering-president-s-call-strengthen-our-p, archived at http://perma.unl.edu/H5T-PGQ6; see also, e.g., S. COMM. ON PATENTS, TRADEMARKS, & COPYRIGHTS, 90TH CONG., REP. OF THE PRESIDENT’S COMMISSION ON THE PATENT SYSTEM 5 (Comm. Print 1967) (summarizing the committee’s conclusion that the patent system “continues to provide an essential incentive for the conduct of research and the investment of capital”); STUDY OF S. COMM. ON PATENTS, TRADEMARKS, & COPYRIGHTS, 85TH CONG., AN ECONOMIC REVIEW OF THE PATENT SYSTEM (Comm. Print 1958) (study prepared by Fritz Machlup); ECON. & STAT. ADMIN. & U.S. PAT. & TRADEMARK OFF., INTELLECTUAL PROPERTY AND THE U.S. ECONOMY: INDUSTRIES IN FOCUS at I (2012), archived at http://perma.unl .edu/W7UD-BW5N (stating that “[p]rotecting our ideas and IP promotes innovative, open, and competitive markets, and helps ensure that the U.S. private sector remains America’s innovation engine”); Pres. Richard M. Nixon, Special Message to Congress Proposing Patent Modernization and Reform Legislation (Sept. 27, 1973), archived at http://perma.unl.edu/8P68-DPSV (observing that the nation’s “creative history” is based in part on the patent laws that have “enormously stimulated our progress and prosperity”). 2. ECON. & STAT. ADMIN. & U.S. PAT. & TRADEMARK OFF., supra note 1, at v. 3. David J. Kappos, Investing in America’s Future Through Innovation: How the Debate over the Smart Phone Patent Wars (Re)Raises Issues at the Foundation of Long-Term Incentive Systems, 16 STAN. TECH. 485, 497–98 (2013). 4. See generally Kenneth J. Arrow, Economic Welfare and the Allocation of Resources for Invention, in THE RATE AND DIRECTION OF INVENTIVE ACTIVITY: ECONOMIC AND SOCIAL FACTORS 609, 613 (1962). 5. Nancy Gallini & Suzanne Scotchmer, Intellectual Property: When Is It the Best Incentive System?, 2 INNOVATION POL’Y AND THE ECON. 51, 53 (2002). 952 NEBRASKA LAW REVIEW [Vol. 93:950 This view stridently advocates the necessity of patent laws as a critical path to encourage knowledge creation and economic growth.6 Some research has observed a positive correlation between researchand-development spending, innovation, and growth in the gross domestic product.7 The National Patent Planning Commission, an ad hoc body commissioned by President Roosevelt, described in a 1945 report: Research is . . . affected by the patent laws. They stimulate new inventio (...truncated)