TY - JOUR
T1 - How many patents are truly valid? Extent, causes, and remedies for latent patent invalidity
AU - Henkel, Joachim
AU - Zischka, Hans
N1 - Publisher Copyright:
© 2019, Springer Science+Business Media, LLC, part of Springer Nature.
PY - 2019/10/15
Y1 - 2019/10/15
N2 - A substantial number of patents tested in court for validity are invalidated. If a similar portion of all patents was deemed invalid in hypothetical validity tests, then this would indicate a seriously flawed patent system due to restrictions unduly imposed by these erroneously granted patents on users and follow-on innovators. Thus, we ask, if a randomly picked patent underwent revocation proceedings, what are the odds of its invalidation? We address this question by analyzing the various selection effects through which patents become subject to validity decisions. Empirically, we focus on Germany, where revocation proceedings are separate from infringement suits and where, in court decisions during the period of 2010–2012, 45% of patents were determined to be fully invalid and 33% to be partially invalid. Based on data gleaned through expert interviews, a survey among lawyers, and an econometric analysis of court judgments, we find the likelihood of (hypothetical) invalidation of a randomly picked patent to be in the same range as that for actually adjudicated patents. As the main cause of patent invalidity we identify incomplete searches for prior art during examination. Our arguments carry over to other legislations. To remedy this situation, we suggest a significant increase of the inventive step required for patent grant combined with a smaller increase of the inventive-step standard in litigation.
AB - A substantial number of patents tested in court for validity are invalidated. If a similar portion of all patents was deemed invalid in hypothetical validity tests, then this would indicate a seriously flawed patent system due to restrictions unduly imposed by these erroneously granted patents on users and follow-on innovators. Thus, we ask, if a randomly picked patent underwent revocation proceedings, what are the odds of its invalidation? We address this question by analyzing the various selection effects through which patents become subject to validity decisions. Empirically, we focus on Germany, where revocation proceedings are separate from infringement suits and where, in court decisions during the period of 2010–2012, 45% of patents were determined to be fully invalid and 33% to be partially invalid. Based on data gleaned through expert interviews, a survey among lawyers, and an econometric analysis of court judgments, we find the likelihood of (hypothetical) invalidation of a randomly picked patent to be in the same range as that for actually adjudicated patents. As the main cause of patent invalidity we identify incomplete searches for prior art during examination. Our arguments carry over to other legislations. To remedy this situation, we suggest a significant increase of the inventive step required for patent grant combined with a smaller increase of the inventive-step standard in litigation.
KW - Innovation
KW - Inventive step
KW - Litigation
KW - Patent
KW - Patent validity
UR - http://www.scopus.com/inward/record.url?scp=85071621746&partnerID=8YFLogxK
U2 - 10.1007/s10657-019-09627-4
DO - 10.1007/s10657-019-09627-4
M3 - Article
AN - SCOPUS:85071621746
SN - 0929-1261
VL - 48
SP - 195
EP - 239
JO - European Journal of Law and Economics
JF - European Journal of Law and Economics
IS - 2
ER -