Using Signal Theory to Determine Nonobviousness of Inventions

– Michael O’Brien and Idonah Molina

Patent claims to inventions that are likely to be invalid or overbroad are currently characterized as “obvious” by the U.S. Patent and Trademark Office. At the time of filing a patent application, it is unclear which patents will provide positive benefits to society spuring innovation in the United States and which patents will create an economic drain causing an increase in prices and preventing others from working in the field of innovation. In particular, patent holders often form patent pools consisting of products that are substitutes for each other and charge monopolistic prices, where instead complementary inventions would be more socially desirable, maximizing consumer and social welfare. While the Supreme Court considers the constitutionality of the Patent Trial and Appeal Board’s authority to invalidate less beneficial patents through inter partes review in Oil States Energy Services, LLC v. Greene’s Energy Group, O’Brien and Molina propose a more rigorous review of patent applications to reduce the number of weak patents granted and later invalidated. Specifically, the authors propose a new process by which patent applicants arbitrate the question of “obviousness” in front of a panel of technical experts who will make a threshold determination as to what test would best determine “non-obviousness.” The panel, through an adverse selection process, would also select an appropriate hypothesis by which to compare a proposed invention with prior arts and to measure the unexpectedness of the results of the test, thereby determining obviousness. This process would eliminate key weaknesses of the current, subjective “unexpected results” test, which is ineffective in weeding out socially undesirable patents. The authors draw on signal theory to demonstrate that the proposed test would increase the efficiency of the patent granting process by making the cost of demonstrating unexpected results unreasonably high for weak, substitute inventions and reasonably low for more valuable complementary inventions.

Abstract Written by Taryn L. Arbeiter, 2018