Pathological Patenting: The PTO as Cause or Cure

The Patent Act was last revised in 1952. The hydrogen bomb was ex ploded that year, vividly demonstrating the power of the nucleus; in the ensuing postwar period, the Next Big Thing was clearly the molecule. 1

Novel compounds were synthesized in the hopes of finding new medicines; 2 solid-state devices ex�loited the special characteristics of germanium and other semiconductors; as investments in polymer chemistry soared, advice to the college graduate soon boiled down to "one word ... just one word [:] ... Plastics.' , 4

Over the next half-century, things changed dramatically. "Better living through chemistry" has begun to sound dated (if not sinister). 5 Genomics and computer science have come into their own. The molecule is still val ued, but not so much for its reactivity as for its informational content. Even the business of knowledge production has evolved. Once the border between science and technology was clear; now it is a blur. 6 There are scholars who patent fundamental research, and commercial firms that are run like aca demic departments. ' And while knowledge has always grown cumulatively, the relationship among inventions has become more complex as products have become interoperable, functionality has converged, and markets have globalized.

8 With the character of inventiveness changing so drastically, the need to reexamine the patent system has become evident. In the last three years, the Federal Trade Commission, the National Academy of Sciences, and even the Patent and Trademark Office ("PTO") have suggested that it is time for reform. 9 As I write, Congress is contemplating significant revision of the system.

io Given this context, Adam Jaffe 11 and Josh Lerner 12 have given us a won derfully timely book-and also one that is beautifully executed. If Congress is to reform the system, the public ought to understand its current fa ilings.

Interest group politics have played an especially corrosive role in this field because the law is complex and creates substantial economic benefits on behalf of particularly well-organized parties. Further, as the authors note, the "second class status" of patent law within the academy has meant that the perspective usually provided by legal scholars has largely been absent here (p. 161). Their book is a splendid antidote. It lays out the basic struc ture of patent law in a manner that is sure to educate and intrigue both readers unfamiliar with law and lawyers unfamiliar with the patent system.

It uses as examples patents on inventions that are accessible to even the con genitally innumerate: the ubiquitous peanut butter and jelly sandwich, the oxymoronic comfortable high-heel shoe, and (of course) the proverbial bet ter way to "catch[] ... mammalian pests not exceeding 100 grams" (pp. 32,52,28). There is also a nice historical section demonstrating that there are 6.

See, e.g., Francis Narin & Dominic Olivastro, Status Report: Linkage Between Technol ogy and Science, 21 RES. PoL'Y 237 (1992) (demonstrating the ever-closer tie between science and technology).

See, e. g., Dante Di Gregorio & Scott Shane, Why Do Some Universities Generate More Start-ups than Others?, 32 REs.

See, e. g. , Pamela Samuelson & Suzanne Scotchmer, The Law and Economics of Reverse Engineering, 111 YALE L.J. 1575 (2002) (describing the need for the law to evolve in order to ac commodate the kinds of reverse engineering needed to produce products for the current technological environment).

no easy answers and that the debates over the patent system are enduring and cyclical (pp. 78-95).

Neither Jaffe, an economics professor at Brandeis University, nor Lerner, who teaches finance and entrepreneurial management at Harvard Business School, is a lawyer. As a result, there are small technical errors. As specialists in the economics of innovation, however, the authors provide a superb analysis of the trade-offs inherent in designing a system that protects innovators from those who would free-ride on their investments but leaves inventions accessible to those who would build upon earlier work. Their book would make excellent supplemental reading for students in a patent law or an innovation theory class. I can only hope that it will be studied by policymakers.

Despite the title's reference to "discontents," the book projects an image of pathology: according to the authors, thickets of strong but invalid patents are raising transaction costs and creating a drag on innovation. Their diag nosis is that these symptoms arise from the confluence of two congressional moves that began in the mid-1980s: establishing the Court of Appeals for the Federal Circuit to hear all federal patent appeals and underfunding the PTO. Their proposed cure lies in improving the efficacy with which patent validity is tested. This is a simple story, and keeping it simple may be the best strategy for a book aimed at a lay audience. It is also fairly accurate. There is, however, little to substantiate the assertion that bad calls by the PTO and the Federal Circuit constitute the only plagues on patenting. In fact, the problems go far deeper, raising questions about institutional compe tence to grapple with the changing face of science. Nonetheless, the reforms suggested have strong institutional implications. With some modification, they could go a long way toward healing the system.

No one can lay out a case more graphically than two empiricists. Their core thesis is that the patent system has undergone a fundamental change in the last twenty-five years and has done so across two dimensions. As their figures illustrate, in that period, the number of patents skyrocketed (p. 12), and the exclusionary power of these patents increased dramatically (pp. 105, 107).

The rise in numbers is troublesome on its own: the authors suggest that as the volume of patents increases, it becomes more difficult to assemble the rights needed to pursue lines of research or manufacture products. Thickets of rights are especially problematic for new entrants (often the most vibrant competitors), who must search through existing patents to determine how free they are to operate. They cannot afford to pay for, or bear the risk of, protracted litigation, so they are inclined to improvident settlement. And because these firms lack patents of their own, they are unable to offer cross licenses to those who sue them. The payments they are forced to make di vert resources from research activities (pp. 13-15).

But as bad as the raw numbers are, the problem is aggravated by the in creased power associated with these patents. The authors demonstrate that in the last two decades, the probability that a patent will be found valid and infringed has risen substantially. Furthermore, there is greater likelihood that permanent injunctions and substantial monetary damages will be awarded. With increasing confidence in the efficacy of patent litigation, new business strategies have emerged. Because patents are now more attractive than other ways of appropriating the benefits of inventiveness (such as relying on first mover advantages), firms that might once have allowed their advances to fall into the public domain instead tie down new technologies with patents. Fur thermore, the prospect of a rich award or settlement leads firms to look for "Rembrandts in the Attic" to assert against their rivals.

13 Indeed, there are now "patent trolls"-firms whose only business is to hold up established companies and force them to pay hefty fees (see, e.g., pp. 56-64).

The result is a vicious cycle. The better patents are at protecting invest ments in innovation, the more firms• rely on patents; the more evident it is that patents are good sources of income; the more they are used as invest ment vehicles. As the thicket of rights grows, it becomes harder to maneuver without attracting litigation. Since the best defense is often a good offense, firms patent to the hilt, creating a base for even more suits. 14 So far, so good. There is no reason to doubt that these numbers are accu rate and worrisome. However, at the crux of the book is the claim that improving examination will fix the system. For that to be true, the authors must demonstrate not only that there are many more patents, but also that these new patents are largely invalid. Unfortunately, it is difficult to evaluate that claim because Jaffe and Lerner never say what they mean by invalidity. Because subsequent arguments are mainly directed at the PTO and the Fed eral Circuit-especially their failure to adequately consider earlier materials ("prior art") when determining patentability-the concern is presumably with patents on advances that are not inventive as defined by statute or precedent.

Understood this way, the authors' support is spotty. They furnish four types of evidence. First, there are the anecdotes: they dwell on the peanut butter and jelly sandwich patent (pp. [32][33], and also cite patents on Ama zon's "one-click" checkout procedure (p. 75), a remote control that enables a T.V. to display adjustment instructions (p. 121), a garbage bag that looks like a jack-o' -lantern when filled (p. 122), and two methods for pricing expi rationless options (pp. 145-46). These stories do make one wonder what is going on in the Patent Office. However, none of the patents described is likely to tax innovation heavily. Further, mistakes are sure to happen indeed, the authors suggest (for reasons discussed below) that it would be foolish to expend resources on too much accuracy at the earliest stage of

examination (pp. 174-75). But that means that the existence of some bad patents does not tell us whether the system as a whole is sick. The next two forms of evidence are comparative. The authors first con sider data on validity and infringement before and after the 1980s, showing that findings of validity have increased substantially (pp. 98-107). This in formation is suggestive, but before concluding that the marketplace is now awash with bad patents, one needs to know whether the validity determina tions in the earlier era were accurate. Perhaps courts were previously too quick to invalidate patents. And, in fact, there is reason to think that in the 1970s, the research community believed that patents were offering insuffi cient protection against free-riders; there may have been a flight to trade secrecy that inhibited the flow of information and, in its own way, impeded scientific progress. 15

The second comparison offered by the authors is between the rates of growth of U.S.-origin patents in the United States and abroad. From these statistics, the authors reason as follows:

If the examination standards in the United States were not changing, we might expect successful applications in the United States by U.S. inventors to grow at about the same rate as our measure of internationally important inventions originating in the United States .... The fact that the growth in successful PTO applications was, instead, twice as large as the growth of international [counterparts] is hard to explain in any manner other than de clining standards in the U.S. PTO, producing an ever-growing proportion of U.S. patents the patent-holders themselves did not think merited patent ing elsewhere. (p. 143) Again, this is provocative. However, the inference that the excess U.S. patents must be invalid is not so straightforward. National laws differ. For example, inventors who publicly reveal information about their inventions have a one-year grace period to file for U.S. patents.

16 Because this is not so elsewhere, a university professor who presents cutting-edge research at a conference will be unable to acquire foreign rights, but could get a (valid) U.S. patent. More important, the cost of worldwide protection is high: all but the richest applicants must make choices. Since the U.S. market is more likely to be a core source of business for U.S.-based inventors, some will file only locally. 17 brand loyalty on the part of multinational buyers, one square (a single large market) can control a large section of the board.

The last piece of evidence-published patents--demonstrates that prior art citations can be low. This too is worrisome, but-again-not necessarily a sign of pathology. The data, which are scattered throughout the book, are drawn largely from business methods (e. g. , p. 145), where the recent advent of patenting means that there is a thin literature on which to rely and a pau city of materials at the PTO itself. But these problems cannot be generalized to fields where patenting and publication have been the norm. Furthermore, there is also nothing to say what the right number of citations is. More is not necessarily better: if the applicant knows a "killer" cite, it can make more sense to hide it in a long list than to omit it and incur the risk that the patent will be unenforceable, antitrust laws will be violated, or the patent agent will be suspended. 1 8

Quibbling ab out the evidence on validity is, however, something of a red herring. The deeper problem is that the authors largely ignore the many other factors contributing to the patenting explosion. They do admit that "in an area as complex as patent law, there are always going to be decisions that go the other way" (p. 125). Thus, they note that the Federal Circuit has cut back on use of the so-called "doctrine of equivalents," which has historically operated to expand the scope of patents beyond their literal meaning. But while they (quite properly) make this observation about the doctrine of equivalents in connection with the discussion of patent strength, they appar ently miss its implication regarding the number of patents that issue. That is, the authors do not appear to see that when the court re stricts use of the equivalents doctrine, the number of issuances is likely to rise as applicants who learn that their claims will no longer be read to cover a wide range of equivalents (and, indeed, that the court is also going "the other way" and constraining the literal meaning of claims 1 9 ) begin to file many narrow pat ents that collectively provide broad coverage.

20 Of course, these patents may be problematic-they too create thickets that raise transaction costs-but the problem is not one of invalidity.

More generally, during the time period on which the authors focus, a great deal happened in the sciences and in the relationship between science and patenting. In The court has also tried to contain broad-ranging patents by adapting the disclosure requirement to limit patent scope, but that approach may be creat ing even denser thickets of rights. Most startlingly, despite the quickening pace of change, the court rarely revises the level of skill in specific arts. 3 6 To the contrary, its scope decisions entrench low levels of skill, virtually guar anteeing an explosion in (valid, but low-quality) patents. 37

The authors do not have a particularly difficult time diagnosing the source of the problems upon which they concentrate. Both the spurt in the number of patents and the augmentation in their power began in the mid-1980s, as two important changes were made in the patent system. In 1982, the Court of Appeals for the Federal Circuit was given exclusive jurisdiction over federal patent appeals (pp. 107-26); beginning in the 1990s, the Patent Office was turned into a "profit center" (p. 11)-it was initially required to support itself out of filing, examination, and maintenance fees, and later told that some of these fees would be diverted to the general revenue (pp. 130-44 ).

In the authors' view, the concurrence of these events is especially lethal (pp. 149-50). Fee diversion has impoverished the PTO, making it difficult for the Office to search or examine prior art comprehensively. Further, the PTO's profit orientation disposes it to grant its customer/clients' patents. Nor are these patents invalidated when they get to court. Because the Fed eral Circuit is so specialized and hears mainly from patent lawyers, there is always a suspicion that, in the authors' words, the judges will "tum inward," be "swayed by a belief in the unique importance of the field," and be "prone to [getting] 'captured' by those who benefit from [it]" (p. 103). Among the examples of Federal Circuit actions too supportive of patents, the authors cite the burden of rebutting the statutory presumption of validity with clear and convincing evidence, which they believe is inappropriate in light of the deficiencies in examination (pp. 108, 152, 192-95), and the court's failure to limit juries, which are "too easily swayed by a beribboned patent document" (p. 124).

The authors' concerns about the PTO are seconded by other commenta tors, including Rob Merges, who has made many perceptive observations about the operation of the Office.

38 It is also easy to be persuaded that a bench immersed in patenting might adopt rules that are simple to apply and review, even if these results happen to make it harder to attack validity. The authors' example of In re Lee, the case about the television remote control, is particularly well chosen. 39 The invention incorporated two known fea tures, and the PTO rejected the application on the ground that ordinary artisans would have had the common sense to combine them. The Federal Circuit's reversal, which requires the Office to demonstrate a specific sug gestion to combine in the prior art, is a poster child for the quality problem: in the name of facilitating review, the court essentially rejected use of com-40 mon sense.

The authors' straightforward diagnosis of the pathology in patenting is, of course, extremely attractive, for it makes the prescription for a cure obvi ous. It does not, however, fully account for the symptoms observed. For one, it is not entirely accurate on its own terms. It is probably correct to blame the Federal Circuit for strengthening patent remedies and for making it harder to prove invalidity. But the court cannot be held responsible for such fa ctors as fo stering jury trials or extending patents to new kinds of subject matter.

With respect to jury trials, the authors are right that they too have soared. 41 And the Federal Circuit may be a cause, but only indirectly: it may be that litigants, wary of the Federal Circuit's. expertise, choose jury trials because their verdicts are perceived as harder to overturn than judicial find ings. But there is not much that the Federal Circuit can do about that. The right to a trial by jury is grounded in the Constitution 4 2 and. the law allocat ing decisionmaking authority and setting standards of review is virtually all of the Supreme Court's making. 43 Ironically, the Federal Circuit once did try to write its own law on an issue of review, but the Supreme Court summarily While the authors are right that Diehr did not go as far as the Federal Circuit in approving patents on software and business methods (p. 116), the Court 40. Id. at 1345 ("[Case law] did not hold that common knowledge and common sense are a substitute for evidence, but only that they may be applied to analysis of evidence.").

The authors provide another wonderful graphic on page 123. left the law in a state that was clearly unworkable; extending protection more broadly was not an irrational way to fix it. 47

Further, while one could plausibly believe that some specialized courts could become biased, it seems unlikely that bias is the cause of the problems at the Federal Circuit. Not all the Federal Circuit's judges are ex-patent law yers, 4 8 the docket is not entirely composed of patent cases, 4 9 and not all the patent cases on the docket are brought by lawyers whose business is prose cuting patents. 5 0 In infringement actions, both sides are often well-financed, enj oy the advantages of repeat play, and (because the patent bar is not split along plaintiff/defendant lines) have access to the same representation. 51

Because knowledge is cumulative, even those who invest in invention do not, in the long run, benefit from laws too protective of patent rights. 5 2

Finally, as we have seen, many other things were happening at the time patenting was proliferating. The scientific enterprise restructured so signifi cantly that major developments in patent jurisprudence should have occurred: not only updating "skill in the art," but also maintaining the law's coherence in a shifting technological environment-reevaluating the rela tionships between the pace of invention, claim scope, and patenting activity as well as reexamining the effect of upstream patenting on follow-on inven tion. To be sure, the authors occasionally acknowledge that the real issue is not invalidity but patents that ought to be invalid because they represent mi nor advances (e.g., p. 12). However, they are strangely resistant to the notion that dramatic changes in science may require fundamental reconsideration of patent doctrine (pp. 198, 199, 202-05). A more nuanced critique would acknowledge the problems posed by technological change and ask why there has been so little effort to keep law abreast with it.

After all, things did not start out that way. The Federal Circuit was estab lished for the express purpose of creating the expertise needed to bring coherence to patent law. In its early years, the court certainly appeared to un derstand itself to be playing that special role. Realizing that administering a field as fact-intensive as patent law would require the articulation of new poli cies and doctrines in a factual context, the court fashioned rules that allowed it to give close scrutiny to all aspects of the decisions it reviewed. There is yet another problem for the Supreme Court: it can only improve patent jurisprudence if its decisions are interpreted correctly. The Federal Circuit's thin skin may make that difficult. 64

Congress may also be contributing to the strengthening of patent rights and the disarray in the law. As noted earlier, interest group politics tends to focus Congress on the benefits of intellectual property protection, not on its costs. Thus, it is not insignificant that the changes the authors observe in patenting are mirrored by legislative moves to expand the coverage and strengthen the benefits of copyright and trademark protection. 65 Congress' interest in patents may additionally derive from the way that the economic numbers are measured. Because patents on end-products convert consumer surplus, which is not easily measured, into producer surplus, which is monetized, lawmakers interested in creating the appearance of a strong economy will prefer strong patents. Of course, patent protection will often be a wash from the domestic viewpoint (since the profits patentees make are experienced as costs to those who use patented inputs 66 ); the international perspective is different. The United States is a net technology exporter. Ac cordingly, strong patents (including strong rights for Americans abroad) improve its balance of payments. Thus, it is not surprising that comparable moves are underway in other countries-some as a result of internal forces, but often in response to efforts by the United States to strengthen rights for Americans abroad. 6 7

• This is not to say that the authors are completely off the mark in their diagnosis (or, as we shall see, their proposed cure). Jaffe and Lerner are right to suspect that the problem is one of institutional design, albeit not of the sort they posit. The Federal Circuit was arguably a grand experiment in shifting responsibility for keeping the law coherent from Congress to the Judiciary, but experience shows it was poorly structured. Creating a special ized appellate court can promote uniformity, but not, in this context, coherence. Without percolation or dialogue, perfecting the law is difficult;

because the core issues in patent law are mixed questions of fact and law (What should ordinary artisans be deemed to know? What should the art be deemed to teach?), a court tied to an appellate role is poorly suited to the task of crafting doctrine in response to exogenous developments.

Despite its limitations, Innovation and Its Discontents makes a valuable contribution. Even if not all patent problems are about invalidity, low quality patents are a high-priority issue and the authors' recommendations are insightful. And even if the diagnosis is incomplete, the proposals may, with modification, restore health to the system.

The authors' starting point is Mark Lernley's observation that compre hensive examination of every application is misguided because many patents are never exploited. 6 8 Their system devotes increasing resources to examination as the importance of an invention is clarified. It begins with pre-grant opposition, proceeds to postgrant reexamination, and ends with a revamped trial procedure (pp. 181-86, 191-97). Variants on this approach have been suggested previously, 6 9 but the authors explain how these stages interrelate, justify the contours of each stage, and, in the process, provide criteria for evaluating competing schemes. As they admit, however, the devil is in the details (p. 186)-and not all their details are fu lly specified or workable.

Pre-grant opposition takes direct aim at the PTO's problems searching prior art. Although denominated an "opposition," this would be an ex parte process, and, as such, it is nicely balanced to provide third parties with op portunities to furnish examiners with reference materials without creating opportunities for dilatory practice. There is not, however, much that is new here: the PTO already has such a procedure, albeit of narrow scope.

70 And even if submission practice is improved, 71 this stage is not likely to have a dramatic impact on quality. The small possibility of stopping a patent "on the cheap" does not provide much incentive to study applications as they are published.

Postgrant reexamination allows challengers to formally argue fo r invali dation. This inter partes procedure would entail the use of more resources, but because these resources would be devoted to patents considered signifi cant enough to oppose, the added expense will not be wasted. Indeed, the value will be amplified, for if postgrant review operates effectively, it will set up a "virtuous cycle" and discourage the filing of unworthy applications (p. 185). Unfortunately, the details of this stage are not fully elucidated. The authors do not specify the standard of review, nor do they say how long the period for reexamination would last. These are important points because the burden of proof and the time period allowed for opposition balance the in terest of inventors in stable rights against the public's interest in detailed scrutiny of the patent. Nonetheless, the authors make several useful sugges tions. They would set the fee at around $50,000---low enough to attract users but sufficient to deter frivolous challenges and to create a good proxy for value (pp. 188-89). Unlike the current postgrant review procedure, 72 the estoppel effect of a decision is nicely set to protect the victorious patentee without discouraging use of the process. They also recommend the ap pointment of a specialized group of "reexaminers" to hear reexaminations within the PTO (p. 188).

The next test of the patent would be at trial. Here, the recommendation has two components. First, there is the burden of proof. Although the au thors believe it is now too high, they would not change it if reexamination were instituted. In their view, adopting a preponderance of the evidence standard is dangerous because validity would become so uncertain that in centives to invest in innovation would diminish. Besides, if a patent withstands reexamination, it deserves a strong presumption. The authors would also give the benefit of a strong presumption to any patent that has 70.

See 37 C.F.R. § l.99 (d)-(e) (2005) (providing a short period in which prior art can be submitted, but forbidding the submitter to explain how the art submitted is relevant to the decision on whether to grant the patent).

See H.R. 2795, supra note 10 , sec. 10 (pre-grant submissions).

not been subject to reexamination, this time on the theory that if no one tried to challenge the patent, an inference can be drawn that it must be valid.

In many ways, this approach is odd. It assumes that the burden of proof in reexamination would be set to provide a meaningful opportunity to in validate the patent and that challengers would have as long as they need to ask for reexamination. But if that is so, then reexamination could create as much uncertainty as lowering the burden of proof at trial. 73 More important, the inference that un-reexamined patents are valid assumes there are strong incentives to oppose. This is true in Europe, but that experience may not be transferable. The European Patent Office issues a bundle of national patents ;

the only way to "centrally attack" them is through post-grant opposition.

Once that period lapses, challenges must be made in each country individu ally. 74 Because U.S. issue preclusion rules tum every challenge into a central attack, 75 reliance on PTO procedures will likely be less prevalent here . In some ways, the better approach would be to lower the burden of proof with The essence of the authors ' proposal is to leave validity open for continuous reevaluation. In a sense, then, it is surprising that the ultimate recommenda tion is not to channel validity challenges that arise in litigation back to postgrant reexamination, where they can be decided by expert reexaminers, subject to appellate review.

But despite these weaknesses, this is an artfully designed proposal. It does, however, raise questions: If it is true that Congress has an independent interest in strong patents, will it act on the recommendations the authors put forth? If it does, will the observed pathology in the system be cured?

The postgrant opposition contemplated by H.R. 2795 is heavily contested, partly because it proposes lowering the burden of proof and partly because the nine-month window for opposition is supplemented by a period to protest after infringement is alleged. H.R. 2795, supra note 10, sec. 9, § 323.

Convention on the Grant of European Patents arts. 99-1 12, supra note 28.

See Blonder-Tongue Labs., Inc. v. Univ. of Ill . Found., 402 U.S. 31 3 (197 1) (once a patent is invalidated, nonmutual issue preclusion prevents the patentee from ever asserting it again).

Markman v. Westview Instruments, Inc., 517 U.S. 370 (1 996).

Id. at 390. In addition, the Court thought the historical evidence on construction was mixed. Id at 388.

We may soon know whether Congress has the will to improve patent quality, for there is at least one bill pending that includes both an ex parte submission procedure and an inter partes opposition before a panel of ad ministrative judges, using the preponderance of the evidence standard and providing a narrow scope of estoppel 78 -in other words, a system that essen tially builds upon the one Jaffe and Lerner suggest. Whether the bill actually becomes law may depend on whether the book manages to convince law makers to recognize the downside of patenting.

The authors ' efforts may be aided by the many patent scholars now poised to present their perspectives. The involvement of academia in the patenting arena may, however, also complicate matters because universities have unleashed a new force-the technology transfer officer. These officers style themselves as the voice of academia, but their interests align with pat ent holders . Indeed, their views can be particularly perverse. There is much about the PTO that makes this a desirable course. With its thousands of examiners, many of whom hold advanced degrees in the pre cise areas where they work, its resources outstrip the Federal Circuit's. 85

Turnover is high, but the continual need to hire brings in scientists fresh from the field. The PTO also stays abreast of developments by holding train ing sessions with outside experts and through notice-and-comment rulemaking. 8 6 In re Lee is also suggestive: in that case, the PTO rejected the application; the patent issued because the Federal Circuit reversed its deci-

Admittedly, there are several impediments to according greater defer ence to the PTO. Some are legal. Chevron deference rests on a presumption of congressional delegation and requires that the agency's actions have the force of law and offer opportunity for public input.

88 Careful consideration needs to be given to each of these requirements. Although the fo rce-of-law requirement may be satisfied when the PTO interprets the statute in the course of entertaining patent applications, the Office's expertise will likely be utilized most effectively through rulemaking. However, the absence of explicit rulemaking authority and the long history of denying deference may be enough to rebut the presumption of congressional delegation. Moreover, the ex parte procedures used in the PTO, even when coupled with the vari ous forms of outside participation currently available, are likely insufficient to satisfy the public-input requirement. 89 Other impediments are practical.

The Federal Circuit appears resistant to the idea of according substantial deference to the PT0. 9 0 More important, the PTO 's managerial difficulties and practices have created a strong public perception that it favors patentees.

For example, applicants are actually called "customers" 9 1 and the method for overseeing examiners tends to reward grants over denials. 9 2

In this connection, the Jaffe and Lerner proposals assume new signifi cance. On the legal side, the procedures they envision create broad opportunities for public involvement, thereby arguably qualifying PTO deci sions for Chevron deference. The new procedures suggested by Jaffe and Lerner would also improve operations within the Office, making its deter minations worthy of that respect. For example, the reexaminer post would Of course, there would still be an important role for the Federal Circuit.

It would review infringement decisions, but would have greater opportuni ties (and factual input) with which to fully consider the issues that arise in that context, such as the appropriate breadth of patents in light of rapid ob solescence and the correct role for a research defense in light of the needs of follow-on inventors. It would, of course, also continue to review the PTO .

The authors diagnose the recent proliferation of strong patents as symp tomatic of a problem in the way the system is administered: by an agency supported by patent seekers and by a court overly-focused on patenting. The confluence of an explosion in patenting, the Federal Circuit's establishment, and the PTO's financial restructuring is provocative. However, when these events occurred, equally dramatic shifts were happening in the organization, methodology, and production of science. Because these changes altered the factual bases on which patent law is grounded, a strong argument can be made that the observed problems are not caused merely by the implementa tion of the law, but also by its articulation: by an institutional failure to keep patent law and policy abreast with developments at the technological fron tier. The authors ' proposals, although not designed for that purpose, would go a long way toward fashioning a PTO that could fill the vacuum.