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`M i c h a e l A b r a m o w i c z & J o h n F . D u f f y
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`The Inducement Standard of Patentability
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`a b s t r a c t . In Graham v. John Deere Co., the Supreme Court explained that patent law’s
`nonobviousness doctrine is meant to restrict the award of patents to only “those inventions
`which would not be disclosed or devised but for the inducement of a patent.” This Article argues
`that this inducement standard, largely ignored in practice, should serve as the doctrinal polestar.
`Such an approach would provide a solid economic foundation for the patentability standard and
`would align patent law with the many other fields of regulatory law that currently apply
`economic analysis in determining the scope and content of regulation. The Article also offers
`several refinements to the inducement standard and explains how the Patent and Trademark
`Office and courts could implement the inducement standard in an administrable way.
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`a u t h o r s . Michael Abramowicz is Professor of Law, George Washington University. J.D.,
`Yale Law School. John F. Duffy is Oswald Symister Colclough Research Professor of Law,
`George Washington University. J.D., University of Chicago Law School. The authors would like
`to thank Beverly Chang, Ashkan Eshghi, and Alan Lau for research assistance, Ed Walterscheid,
`Arti Rai, and Ed Kitch, as well as participants in a University of Virginia workshop and a Federal
`Trade Commission-Department of Justice workshop. The authors also thank the Kauffman
`Foundation and the George Washington University Law School for financial support.
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`the inducement standard of patentability
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`a r t i c l e c o n t e n t s
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`introduction
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`i. rehabilitating the inducement standard: a doctrinal
`foundation
`A. The Difficulties with a Cognitive Approach
`1. The Imaginary Person of Extraordinary Knowledge and Ordinary
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`Creativity
`2. The Degree of Obviousness and the Commingling of Economic Factors 1608
`B. The Inducement Standard and the Statutory Text
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`1. “Obvious” and Ease of Discovery
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`2. “Ordinary” Skill
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`3. The “Person” Who Possesses the Skill
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`C. Reconciling the Patentability Standard with General Regulatory Theory
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`D. Implications of the Inducement Standard
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`1. Objectivity
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`2. Trade Secrecy and Disclosure
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`3. Nonpatent Inducements for Innovation
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`ii. refining the inducement standard
`A. Time
`B. Competition
`C. Invention
`1. Speculative Patents
`2. Kitch’s Prospect Theory
`3. Merges’s Model of Nonobviousness
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`iii. administering the inducement standard
`A. Methodological Questions
`1. Heuristics Versus Direct Application
`2. Courts Versus Agencies
`B. A Structured Economic Inquiry
`1. Obviousness of the Invention to a PHOSITA
`2. Secondary Considerations
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`a. Considerations of Nonobviousness
`b. Considerations of Commercial Success
`c. Considerations of Obviousness
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`conclusion
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`the inducement standard of patentability
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`The inherent problem was to develop some means of weeding out those
`inventions which would not be disclosed or devised but for the inducement of a
`patent.
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` —A unanimous Supreme Court in Graham v. John Deere Co.1
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`i n t r o d u c t i o n
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`The quotation above is one of the most memorable and insightful lines
`from arguably the most important patent law case of the twentieth century: the
`Supreme Court’s 1966 decision in Graham v. John Deere Co.2 Graham’s
`preeminent place in the patent canon is well justified, for it is the Supreme
`Court’s seminal opinion on a patent law doctrine—the “nonobviousness”
`requirement—that is typically introduced as “the most important of the basic
`patent requirements,”3 “central to determining patentability,”4 “the key to
`defining what is a patentable invention,”5 or simply “the ultimate condition of
`patentability.”6 The basic rule of nonobviousness is easy enough to recite:
`under 35 U.S.C. § 103, a patent may not be granted on an invention that
`“would have been obvious at the time the invention was made to a person
`having ordinary skill in the art.”7 But the apparent simplicity of the
`requirement belies the complexities and difficulties that have historically
`bedeviled the doctrine.8 The inducement standard, as articulated in Graham,
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`1.
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`2.
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`383 U.S. 1, 11 (1966).
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`383 U.S. 1.
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`3. ROBERT PATRICK MERGES & JOHN FITZGERALD DUFFY, PATENT LAW AND POLICY: CASES AND
`MATERIALS 643 (3d ed. 2007).
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`4. Michael J. Meurer & Katherine J. Strandburg, Patent Carrots and Sticks: A Model of
`Nonobviousness, 12 LEWIS & CLARK L. REV. 547, 548 (2008).
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`5. Alan L. Durham, Patent Symmetry, 87 B.U. L. REV. 969, 970 (2007).
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`6. This phrase comes from the title of NONOBVIOUSNESS: THE ULTIMATE CONDITION OF
`PATENTABILITY (John F. Witherspoon ed., 1980), a prominent collection of articles
`celebrating the twenty-fifth anniversary of the codification of the obviousness doctrine in 35
`U.S.C. § 103 (2006). Other authors have since used the same phrase to describe the
`doctrine. See, e.g., Daralyn J. Durie & Mark A. Lemley, A Realistic Approach to the Obviousness
`of Inventions, 50 WM. & MARY L. REV. 989, 990 (2008).
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`7.
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`35 U.S.C. § 103(a).
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`8. See, e.g., Durham, supra note 5, at 971 (“Obviousness is a difficult issue to resolve. It requires
`one to imagine how a claimed invention might have looked to a different person . . . at a
`different time . . . and without resorting to hindsight based on knowledge of the claimed
`invention . . . .”); Rebecca S. Eisenberg, Obvious to Whom? Evaluating Inventions from the
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`appears to be vitally important to understanding the statutory nonobviousness
`requirement, for it offers a simple explanation for why society should deny
`patents on some innovations: if the innovation would be created and disclosed
`even without patent protection, denying a patent on the innovation costs
`society nothing (because the innovation would be developed anyway) and
`saves society from needlessly suffering the well-known negative consequences
`of patents, including the restriction on output caused by a patentee’s exclusive
`rights and the administrative and litigation costs associated with running a
`patent system.
`Yet despite its apparent promise as the theoretical basis for the most
`important patentability doctrine, Graham’s inducement standard has achieved
`only a modicum of influence.9 Though frequently cited, the inducement
`standard is often relegated to a passing mention or a footnote in introducing
`the patentability standard.10 Some articles have devoted more extended
`attention to the inducement standard, but these too have generally highlighted
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`Perspective of PHOSITA, 19 BERKELEY TECH. L.J. 885, 887 (2004) (stating that “the
`implementation of [the nonobviousness]
`standard poses certain administrative
`challenges”); Gregory Mandel, The Non-Obvious Problem: How
`the Indeterminate
`Nonobviousness Standard Produces Excessive Patent Grants, 42 U.C. DAVIS L. REV. 57, 59 (2008)
`(explaining that the indeterminacy of the nonobviousness standard results in too many
`patent grants even though “[t]he nonobvious standard is not simply too low, but both too
`high and too low. It is indeterminate.”); Joshua McGuire, Nonobviousness: Limitations on
`Evidentiary Support, 18 BERKELEY TECH. L.J. 175, 175 (2003) (“To obtain a patent, one must
`have patentable subject matter that is useful, novel, nonobvious, and adequately described;
`however, the standard for a nonobvious invention is often difficult to apply.” (footnote
`omitted)).
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`9. Some commentators, meanwhile, have criticized Graham for failing to articulate a clear test.
`T.J. Chiang, for example, notes: “The opinion gave all the appearance of expecting a
`solution to appear out of thin air once the formula was followed. The lack of an articulable
`rule meant that determinations of obviousness took the appearance—and arguably the
`reality—of resting on judicial whim . . . .” Tun-Jen Chiang, A Cost-Benefit Approach to Patent
`Obviousness, 82 ST. JOHN’S L. REV. 39, 49 (2008) (footnote omitted).
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`10. For example, Rebecca Eisenberg begins the analysis in a recent article by noting: “In theory,
`[the nonobviousness] standard prevents the issuance of patents on inventions that,
`although new, are so close to the prior art that they are likely to be forthcoming even
`without the incentive of a patent.” Rebecca S. Eisenberg, Pharma’s Nonobvious Problem, 12
`LEWIS & CLARK L. REV. 375, 381 (2008). The footnote to that sentence quotes Graham’s
`articulation of the inducement standard, id. at 381 n.13, but inducement theory is never again
`mentioned in the remainder of the article. Similarly, Gregory Mandel quotes Graham’s
`inducement standard in a footnote. See Mandel, supra note 8, at 85 n.121. Yet Mandel
`describes the sentence from Graham as “dicta” and concludes that the Graham Court did not
`hold “that this is what the statutory nonobviousness standard actually measures.” Id.
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`the inducement standard of patentability
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`the difficulties in using the standard to decide cases or to shape legal doctrine.11
`For example, Ed Kitch’s classic verdict on Graham’s inducement standard
`emphasized that the nonobviousness requirement, as articulated by the courts,
`provides only an “awkward” tool “to sort out those innovations that would not
`be developed absent a patent system,” with the “focus” of the legal doctrine
`always being on other issues.12 Kitch’s view has become the consensus. Thus,
`in a widely cited and influential 2003 report, the Federal Trade Commission
`summarized the testimony of numerous legal and economics scholars as
`demonstrating that, even though the inducement standard represents “the
`right way to assess whether to grant a patent” from a “theoretical perspective,”
`the standard is not “administrable,” so “the more manageable standards of the
`patent statute have evolved to serve as the means by which to measure when to
`grant a patent.”13
`In some ways, we agree with these prior assessments of the inducement
`standard. There is a certain awkwardness in the relationship between the
`inducement standard and the nonobviousness requirement, at least as that
`requirement has previously been articulated by the courts. Moreover, the
`Supreme Court in Graham did not provide a rigorous foundation for deriving
`the inducement standard from the statutory language. The absence of such a
`legal foundation may explain why courts and the Patent and Trademark Office
`(PTO) have typically avoided looking to the inducement standard for guidance
`in interpreting and applying the statutory nonobviousness requirement. The
`one exception, an insightful but ultimately flawed panel opinion by Judge
`Posner, relied on the inducement standard to invalidate a patent but
`nevertheless failed to identify any administrable test or metrics for applying the
`inducement standard to the specific facts of that case or other cases.14 Posner’s
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`11. Glynn Lunney considers the inducement standard in his treatment of obviousness doctrine,
`but in his view the lack of “empirical evidence [for] determining the point at which a patent
`becomes necessary to induce desirable invention” is a stumbling block to using the
`inducement standard more extensively in crafting patentability doctrine. Glynn S. Lunney,
`Jr., E-Obviousness, 7 MICH. TELECOMM. & TECH. L. REV. 363, 416 (2001). Similarly, Samuel
`Oddi has provided a treatment of inducement theory. A. Samuel Oddi, Un-Unified Economic
`Theories of Patents: The Not-Quite-Holy Grail, 71 NOTRE DAME L. REV. 267, 277-81 (1996).
`But he views the theory as merely one of several competing theories of the patent system, see
`id. at 268-71, and he does not attempt to refine the obviousness doctrine to conform to an
`inducement standard.
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`12. Edmund W. Kitch, Graham v. John Deere Co.: New Standards for Patents, 1966 SUP. CT.
`REV. 293, 301.
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`13. FED. TRADE COMM’N, TO PROMOTE INNOVATION: THE PROPER BALANCE OF COMPETITION
`AND PATENT LAW AND POLICY ch. 1, at 11 (2003).
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`14. See infra notes 112-135 and accompanying text.
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`panel opinion was vacated en banc,15 and that history has perhaps cemented the
`notions that the inducement standard conflicts with the statutory obviousness
`standard, is antipatent, or is simply too difficult to apply in actual cases.
`This Article aspires to show those notions to be wrong and to revitalize the
`inducement standard as the touchstone for understanding and refining the
`obviousness doctrine. The result should be more coherent, defensible, and
`predictable decisionmaking than is possible either under the current doctrine
`or under Judge Posner’s treatment, which missed important implications of the
`inducement standard.
`There are two motivations for undertaking this project. First, the time is
`right. In its 2007 decision KSR International Co. v. Teleflex, Inc.,16 the Supreme
`Court overturned a quarter-century-old test for nonobviousness that the
`nation’s expert appellate court for patent law, the Court of Appeals for the
`Federal Circuit, had meticulously constructed. The KSR decision has
`precipitated a vibrant debate among scholars seeking to help the courts rebuild
`a pragmatic obviousness doctrine that yields predictable answers and is more
`theoretically sound than the Federal Circuit doctrine rejected in KSR.17 That
`reconstruction project can have little hope of enduring success without
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`15. See Roberts v. Sears, Roebuck & Co., 697 F.2d 796 (7th Cir.), vacated en banc, 723 F.2d 1324,
`1329 (7th Cir. 1983).
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`16. 550 U.S. 398 (2007). The Court rejected the Federal Circuit’s test as excessively rigid and
`formalistic. Id. at 419. The Supreme Court explained that “familiar items may have obvious
`uses beyond their primary purposes, and in many cases a person of ordinary skill will be
`able to fit the teachings of multiple patents together like pieces of a puzzle,” precluding
`bright-line tests. Id. at 420.
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`17. See, e.g., Durie & Lemley, supra note 6, at 998 (arguing for a more realistic inquiry into
`obviousness, and noting that “[i]n KSR, the Supreme Court ostensibly made the
`obviousness inquiry more ‘flexible’ and pragmatic”); Eisenberg, supra note 10 (analyzing the
`effect of KSR on the application of the nonobvious standard to pharmaceutical patents);
`Jeanne C. Fromer, The Layers of Obviousness in Patent Law, 22 HARV. J.L. & TECH. 75, 76
`(2008) (discussing the proper object of the nonobviousness inquiry and stating that
`“[d]espite this overarching purpose [of encouraging innovation] highlighted in KSR,
`neither courts nor scholars have analyzed or settled on the obviousness inquiry’s object, that
`is, the thing which must be nonobvious”); Meurer & Strandburg, supra note 4, at 548, 551
`(measuring the effect of the nonobvious standard on the “choice of research projects” and
`stating that “[t]he KSR decision clears the way for new thinking about the obviousness
`issue, which, despite its importance, is surprisingly under-theorized”); Joseph Scott Miller,
`Remixing Obviousness, 16 TEX. INTELL. PROP. L.J. 237, 240 (2008) (discussing the impact of
`KSR on the concept of the person having ordinary skill in the art and advancing a
`“framework for determining whether a combination claim is nonobvious”); Joshua D.
`Sarnoff, Bilcare, KSR, Presumptions of Validity, Preliminary Relief, and Obviousness in Patent
`Law, 25 CARDOZO ARTS & ENT. L.J. 995, 1036 (2008) (“Whatever the legal or factual status
`of the obviousness inquiry, KSR has enormous importance as it has clearly raised the bar for
`determining when inventions are non-obvious and thus patentable.”).
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`reexamining and reevaluating the ultimate goal of the nonobviousness
`requirement.
`A second and more important motivation is the promise of the inducement
`standard in providing significant insights into some of the most difficult
`theoretical and practical problems in the field. Economic analysis of patent law
`frequently begins with the assertion that patents present a social tradeoff
`between providing incentives for innovation at the expense of accepting the
`deadweight loss associated with monopoly-like exclusive rights.18 And even
`beyond the law-and-economics literature, legal scholars often frame intellectual
`property law generally and patent law in particular as presenting a conflict
`between the public and private domains—a choice between openness and
`exclusivity.19 If, however, the law follows Graham’s inducement standard, such
`tradeoffs and conflicts do not necessarily exist.
`Under a rigorously enforced inducement standard, patents would cover
`only those innovations that otherwise would not be created or disclosed—in
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`18. See, e.g., WILLIAM D. NORDHAUS, INVENTION, GROWTH, AND WELFARE: A THEORETICAL
`TREATMENT OF TECHNOLOGICAL CHANGE 76 (1969) (creating a model for calculating
`optimal patent term by balancing increased incentives for innovation against greater
`deadweight loss); Richard Gilbert & Carl Shapiro, Optimal Patent Length and Breadth, 21
`RAND J. ECON. 106, 106 (1990) (referring to “the conventional analysis of optimal patent
`length, based on the tradeoff between the incentives for innovation and the extent of static
`monopoly deadweight loss”).
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`19. See, e.g., James Boyle, The Second Enclosure Movement and the Construction of the Public
`Domain, 66 LAW & CONTEMP. PROBS., Winter-Spring 2003, at 33, 38 (describing the “limits
`to intellectual property rights” as the “antierosion walls around the public domain” and
`more generally arguing that expansions of intellectual property rights erode the public
`domain); Niva Elkin-Koren, What Contracts Cannot Do: The Limits of Private Ordering in
`Facilitating a Creative Commons, 74 FORDHAM L. REV. 375, 375 (2005) (noting the effect of the
`expansion of intellectual property rights on the contraction of the public domain); Christine
`D. Galbraith, A Panoptic Approach to Information Policy: Utilizing a More Balanced Theory of
`Property in Order To Ensure the Existence of a Prodigious Public Domain, 15 J. INTELL. PROP. L.
`1, 4 (2007) (advocating for a more accessible public domain because “[u]nfortunately, the
`public domain appears to be diminishing as the recent trend in formulating information
`policy is to utilize an organizing concept of private property ownership”); Pamela
`Samuelson, Enriching Discourse on Public Domains, 55 DUKE L.J. 783, 791 (2006)
`(acknowledging the tension between intellectual property rights and protecting the public
`domain and quoting International News Service v. Associated Press, 248 U.S. 215, 250 (1918)
`(Brandeis, J., dissenting) (“The general rule of law is, that the noblest of human
`productions—knowledge, truths ascertained, conceptions, and
`ideas—become, after
`voluntary communication to others, free as the air to common use.”)); John R. Therien,
`Exorcising the Specter of a “Pay-Per-Use” Society: Toward Preserving Fair Use and the Public
`Domain in the Digital Age, 16 BERKELEY TECH. L.J. 979, 1035 (2001) (arguing that “the
`judiciary must protect the public domain and fair use, whether impinged upon by
`technology-derived statutory rights or the technology itself”).
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`other words, patents would cover only innovations that, without the patent
`system, would not have been in the public domain. The patent system would
`then have only positive effects on the public domain: patents would cover only
`inventions that would otherwise not be in the public domain and, when the
`patents expire, the inventions would enter into and enrich the public domain.
`Similarly, the apparent deadweight losses created by patent rights would be an
`illusion because, if patent rights had not been available, the invention would
`not have been available from competing firms but instead would have been
`either unavailable or covered by trade secrecy. As we will show in this Article,
`the optimal implementation of the inducement standard may not achieve such
`a Panglossian resolution because, at least in some circumstances, patents
`should be allowed even if they merely induce earlier innovation. Thus, the
`analysis suggested by the inducement standard helps to identify more clearly
`the precise economic tradeoff at issue: patents produce earlier innovation but at
`the cost of higher prices and associated deadweight loss in a later period (when
`the invention would have existed even without the inducement of the patent).
`This point highlights another deep theoretical strength of the inducement
`standard, for it holds out the hope of grounding patentability decisions in a
`more rigorous economic framework and thereby bringing patent law closer to
`the vast body of modern regulatory law that commonly uses economic analysis
`in making specific decisions about the scope and extent of regulation.
`The Article’s rehabilitation of the inducement standard begins, in Part I,
`with an investigation of doctrinal difficulties associated with Graham’s
`inducement standard. As Professor Kitch noted over forty years ago, the
`nonobviousness requirement seems at first to be an awkward way to
`implement an inducement standard. We agree that perhaps one natural
`interpretation of the statutory text points toward a cognitive definition of
`nonobviousness that focuses on whether individuals have epistemic awareness
`of technological solutions to problems. In embracing the inducement standard
`as the ultimate theory underlying nonobviousness, the Graham Court
`embraced an economic definition of nonobviousness and implicitly rejected a
`cognitive approach in interpreting the statute. The Court, however, failed to
`provide a sufficient legal justification for that interpretation, and that failure
`has almost certainly made courts and lawyers wary of placing too much
`reliance on the theoretical standard. Yet establishing a legal justification for the
`inducement standard is not so difficult. The statute itself sets the obviousness
`standard by reference to a highly fictional concept, the “person having ordinary
`skill in the art.”20 Defining that fictional person’s abilities by reference to
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`20. 35 U.S.C. § 103(a) (2006).
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`economic incentives rather than technological cognition is no more radical than
`the now-familiar use of economics to define the behavior of the fictional
`reasonable person in tort law.21
`The awkwardness of the inducement standard is, however, only partially
`remedied by the development of a more rigorous legal basis justifying the use
`of the standard in patentability determinations. Part II of the Article introduces
`ambiguities, puzzles, and other difficulties associated with the inducement
`standard. Because the inducement standard has not been taken seriously in the
`past, these ambiguities and difficulties have not been resolved. Our analysis
`leads to three necessary clarifications of Graham’s inducement standard.
`First, Graham’s articulation of the inducement standard may be fairly
`criticized for treating a fundamentally dynamic issue—invention—as if it were
`static, with no time frame specified or implicit. Graham’s inducement standard
`asks which inventions would be devised and disclosed even without the
`inducement of a patent, but it is silent on the crucial question: devised and
`disclosed by when? Even with no patent system, it is hard to imagine that
`many inventions would remain undevised and undisclosed forever. Thus, if the
`Graham inducement standard were interpreted as trying to identify “those
`inventions which would not [ever] be disclosed or devised but for the
`inducement of a patent,”22 then almost nothing would be patentable. On the
`other hand, if the inducement standard were interpreted as trying to identify
`“those inventions which would not [immediately] be disclosed or devised but
`for the inducement of a patent,”23 almost everything would be patentable
`because patent law presumably provides at least marginal incentives for
`inventing earlier. Both extremes must be wrong. We show that Graham’s
`inducement standard is best interpreted as requiring patents to cover only
`those inventions that, but for the inducement of a patent, would not have be
`disclosed or devised for a substantial period of time. Our reformulation
`produces a dynamic inducement standard, which is consistent with the
`growing body of literature that views the patent system as attempting not so
`much to increase but to accelerate invention.
`A second insight relies upon an important feature of the patent system:
`competition. The modern patent system does not grant monopolies to industry
`participants that the sovereign happens to favor. Rather, patents are awarded
`competitively, and the competition to obtain patents has
`important
`implications for the practical enforcement of the patentability standard. Our
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`21. See, e.g., United States v. Carroll Towing Co., 159 F.2d 169 (2d Cir. 1947).
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`22. Graham v. John Deere Co., 383 U.S. 1, 11 (1966).
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`23. Id.
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`dynamic adjustment to the inducement standard introduces the concept of a
`“substantial period of time,” which naturally leads to the question of just how
`substantial a time period is necessary. Yet the competitive structure of the
`patent system makes the answer to that question less important than it first
`seems. The strong incentives of the patent system, coupled with the
`competition to obtain patents, should substantially accelerate the time of
`innovation, often by a period longer than the patent term itself, except in
`certain specific circumstances—the circumstances that make a patent-
`motivated innovator insignificantly better (that is, insignificantly earlier) than
`an innovator not motivated by the patent system. Those circumstances can
`serve as proxies for the inducement standard so that, by looking for such
`circumstances, government officials and judges can identify inventions not
`induced by the patent system without invoking any complex models of
`technological acceleration. These circumstances include a rapid decline in the
`cost of innovation, for example, because of the development of a technology
`that is an input into the new technology, or a positive demand shock shortly
`before invention, especially where multiple firms respond to the shock by
`developing the technology and even more so if some of those firms do not
`appear to be patent-motivated.
`A third and final clarification to Graham’s inducement standard resolves the
`ambiguity in the concept of “invention.” Once it is recognized that the
`inducement standard must be interpreted dynamically—so that the inquiry is
`whether the inducement of the patent accelerated the arrival of the invention—
`then a crucial question becomes: what precisely must be accelerated, the
`conception of an invention or its practical, commercial implementation? Our
`conclusion is that Graham’s standard should be interpreted as requiring the
`inducement of an earlier arrival of the commercialized invention, not merely
`the “invention” in theory or on paper in a patent disclosure. A contrary
`approach would induce what we call “speculative patents”—patents that
`describe possible future applications of embryonic technologies. Such
`speculative patents, if they were to be allowed, might have a high option
`value—they would be valuable if technological development takes a particular
`course. But if the patents do little or nothing to advance the actual arrival of
`new technology in practical terms, then they would have little or no social
`value.
`This third clarification to the inducement standard provides insight into
`what has so far been a muddled debate about the meaning and desirability of
`so-called patent trolls. The term “patent troll” has been generally, if somewhat
`loosely, defined in the literature as a “nonpracticing entity,” an entity that has
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`1600
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`the inducement standard of patentability
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`technology.24 Such
`its patented
`never commercialized or “practiced”
`nonpracticing entities have generated enormous controversy in recent years
`and, as the label “troll” suggests, some patent practitioners have a visceral sense
`that, at least in some circumstances, such nonpracticing entities stand in the
`way of true innovators. But under orthodox patent doctrine and theory, it
`should not matter whether an entity practices a patent, because the quid pro
`quo of the patent is said to encompass merely the disclosure in the patent
`document. Our approach to the Graham inducement standard shows why it
`can matter whether an entity is practicing its invention: while a nonpracticing
`patentee might accelerate the actual practice of an invention, it is difficult to
`believe that has happened if other parties have independently invented and
`commercialized the technology without even planning to seek patent
`protection. Such circumstances would seem to be powerful evidence that the
`inducement of the patent was unnecessary to generate the invention and thus
`that the patent may be invalid under the inducement standard.
`While Parts I and II are devoted to resolving the previously perceived legal
`and theoretical awkwardness of the inducement standard, Part III focuses on
`the other major criticism of the standard—that it is unadministrable. Many
`doctrines of patent law can be subjected to the simplistic objection that they
`lack mathematical precision, and prior approaches to the nonobviousness
`standard have been especially vulnerable to such attacks. A reinterpreted
`inducement standard need not demonstrate perfection. It can be an
`administrative success if it is even just a bit better than current doctrine as a
`helpful theoretical and pragmatic guide for applying the obviousness doctrine.
`We believe that the inducement standard easily satisfies that test. As a
`theoretical matter, the inducement standard provides a sound basis for
`interpreting “the person having ordinary skill in the art” not only as a person
`possessing technological knowledge but also as someone who is responsive to
`both economic incentives and economic limitations. Those economic incentives
`and limitations not only help to answer the previously intractable question of
`how obvious something must be to be obvious under the statute; they also help
`to unify patent law with bodies of regulatory law as diverse as common law
`torts, antitrust law, and modern federal administrative law. Beyond its
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`24. Peter Detkin, former assistant general counsel of Intel, claims to have created this term in
`2001 while describing companies that do not create patents but rather buy them and then
`demand unusually high license fees by threatening costly litigation in the alternative. See
`Peter N. Detkin, Leveling the Patent Playing Field, 6 J. MARSHALL REV. INTELL. PROP. L. 636,
`636 (2007). The broadest definition describes a patent troll as an entity that extracts profits
`by offering a target entity an option of purchasing a license or facing litigation. See Thomas
`S. Kim & Michael D. Stein, Patent Value: Increased Interest Extends Beyond ‘Trolls,’ LEGAL
`INTELLIGENCER, May 23, 2005, at IP3.
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`1601
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`the yale law journal
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`1 2 0 : 1 5 9 0 2 0 1 1
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`theoretical successes, the inducement standard can also be a practical success.
`For example, it provides concrete guidance for how the nonobviousness
`standard should apply in fields like software, in which the costs of achieving
`any particular innovation may fall over time25 and mechanisms other than
`patents (such as copyright protection) are likely to provide very significant
`inducements for innovation. The inducement standard suggests that patent
`e