A Better Carrot - Incentivizing Patent Reexamination

Almost three decades ago, Congress created by statute the modern patent reexamination system. By providing an administrative mechanism to challenge the validity of patents, reexamination serves as an inexpensive alternative to full litigation. However, the system as it currently functions lacks the power and scope to be a viable alternative to such litigation, and the relative dearth of such challenges shows that parties threatened with or involved in litigation overwhelmingly choose to attempt invalidation of patents in court. Most analyzes of the system focus on modifying the existing provisions of the Patent Act to address the core deficiencies of the process. While these modifications are doubtlessly a key element of any successful reform, they fail to address a more fundamental deficiency in the schema. The current reexamination procedures are premised on the assumption that firms are actively engaged in reading, learning from, and analyzing patents. In such an environ, reexamination would be a far more attractive solution by allowing a low pressure, low cost means to reevaluate the strength of a patent. In reality, the behavior of firms runs counter to this assumption, with parties avoiding reading of patents as a defense to willful infringement and the consequent treble damages. Thus, any successful reform to the reexamination schema must overcome this institutional inertia and encourage firms to read and analyze active patents. The incentive structure of the Hatch-Waxman Act, though implemented to address a number of issues not relevant to other patentable subject matter, illustrates one possible counterbalance to the practice of willful blindness or ignorance. This paper will examine the origins and development of patent reexamination, its current implementation as part of the Patent Act, and possible reforms that would serve the fundamental interest in increasing the strength of issued patents and ensuring a dynamic, active intellectual property market