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Archived updates for Monday, April 24, 2006

What Copyright Law Can Do for Patents

In "What Copyright Teaches Patent Law About Fair Use: And Why Universities are Ignoring the Lesson" Professor Lorelei Ritchie de Larena writes that it is the "Paradox of the Patent Community," which provides a strong disincentive for for anyone to actually fight for a clear “fair use” doctrine in patent law:
This is due to the internally-conflicting interests of the largest players in the inventive community, who perform both research (i.e., use) and development (i.e., ownership) of technology. In copyright law there is a fairly clear line between the primary owners (Hollywood studios and publishing companies) and the primary infringers (high-tech companies, universities, and consumers). Not so in the patent community, where the primary patent owners (large companies and universities) are also the primary infringers, and are therefore loath to petition for a “fair use”
doctrine that will benefit their research programs but potentially lower revenue for their licensing (and litigation) units.
And universities are stuck in the middle. "As researchers, they want full and free access to patented technology owned by others," she writes. "As owners, however, universities are concerned that a research exemption could be construed to protect those who would infringe university patents as much as the reverse."

She goes on to suggests a statutory scheme for balancing these divergent interests using fair use factors that might look something like the spectrum shown in Diagram E:

And, for patented technology which is not being practiced by the patent owner, or where some prongs of the fair use test are highly polarized, she also proposes a new Collective Rights Organization for patent owners:

In many cases, instead of the royalty- free license that impliedly is granted by a determination of “fair use,” it may be very appropriate to grant a paying, royalty-bearing compulsory license. This could be socially beneficial where a technology is not being brought to the market by the patentee or where transaction costs are very high for licensees or consumers, but where the patentee invested significantly in the patented technology. A compulsory license may also be appropriate in other situations where the “fair use” assessment is highly polarized in different prongs of the test (e.g., infringer is using technology purely for commercial reasons, but patentee is not otherwise commercializing it and has no plans to do so).

. . . A compulsory license scheme in United States patent law could be effectively administered by a Collective Rights Organization, as has successfully been done in copyright.211 In a CRO scheme, industry participants, rather than ex ante statutes or ex post court decisions, set the licensing rates. This makes the rates more likely to fit market conditions, and more easily adjustable with them. In the case of patent law, the very “Paradox of the Patent Community” means that the users are the owners, but this can be a real benefit in the CRO scheme, because it will act as an economic incentive to all participants. A CRO scheme could standardize the rules, the rates, and the situations where litigation (or preferably for most, arbitration), and even injunctions, become appropriate.

Besides, if you liked the Copyright Royalty Tribunal, the Copyright Royalty Arbitration Panel, and now the Copyright Royalty Board, you'll love the proposed Patent CRO. "Indeed, the idea has already been successfully implemented in sister-copyright law, the patent laws of internationaleconomic partners, and some areas within the current United States patent law," writes Professor de Larena.

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