Third-Party Interests and the Property Law Misfit in Patent Law

Courts and scholars have long parsed the characteristics of patent grants and likened them, alternately, to real or personal property law, monopolies, public franchises and other regulatory grants, or a hybrid of these. The characterizations matter, because they can determine how patents are treated for the purposes of administrative review, limitations, and remedies, inter alia. And these varied treatments in turn affect incentives to innovate. Patents are often likened to real property in an effort to maximize rights and allow inventors to internalize all of the benefits from their activities. And courts often turn first to real property analogies when faced with novel issues in patent law; yet they do not always end there. Sometimes, patents are public rights. Sometimes, they are protected by liability rules rather than property rules. And sometimes, a U.S. patent cannot stop the resale or importation of goods it covers. Patents are very much like real property, it seems, except for when they are not. This Article argues that these decisions are justified by a number of misfits between patent rights and traditional property rights and identifies and explores a previously understudied misfit that results from a lack of possession on the part of the patent holder and third-party property rights on the part of potential infringers. One well-studied misfit is that patent law imposes steeper information cost on third parties than is typically thought to attend private property. There are a number of other misfits, however, that have been under-examined. For example, patent law presumes a robust public domain--that is, a vast swath of unowned ideas, whereas traditional real and personal property entitlements do not expire and render goods or land available to all. Another understudied misfit occurs because patents affect third parties\u27 freedom to use their own property over which they exercise dominion. Traditional forms of property, in contrast, presume some level of dominion by owners. This Article identifies and describes the set of patent law misfits and shows how, taken together, they explain the Court\u27s deviations from a property law framework. More than simply explanatory or predictive, however, this insight has normative weight. The misfit is real, and in contexts where it is most relevant, a strict application of property rules will work against the values embedded in the patent system. For this reason, we need a clear account of when and why property rights may be a starting point--but ought not be an ending point--for doctrinal evolution in patent law