Rules for Patents

There is widespread agreement that the patent system in the United States is in need of reform. Most of the proposals for patent reform that have proliferated in recent years share two common assumptions: first, that patent policy is best made through case-bycase adjudication of the validity of individual patents; and, second, that the existing allocation of authority over patent policy, in which the courts are primarily responsible for interpreting and applying the broad language of the Patent Act, ought not to be disturbed. ThisArticle challenges both assumptions. I approach the problem of patent reform primarily as a problem of sound administration rather than innovation policy and argue that Congress should grant the Patent and Trademark Office (PTO) substantive rule-making authority. The administrative structure of the patent system has been largely unchanged since 1836. But the administrative tasks that a wellperforming patent system must carry out have changed markedly since that time. Most importantly, technology in the early- to midnineteenth century was relatively uniform. Today, by contrast, the process of innovation varies widely among different technologies and different industries. If the patent system is to meet its goal of providing incentives for innovation, it must self-consciously tailor the elements of patentability—both rules and standards—to those diverse circumstances. Optimal patent policymaking requires forward-looking deliberation and cost-benefit analysis based on technological and economic expertise; clarity and predictability so that entities making investment choices based on the property-like aspects of patents can be confident in the legal regime governing those rights; and transparency and accountability to ensure that the public interest—which is often distinct from the interests of patent holders—is taken into account. Unlike courts, agencies acting through rulemaking cangather and expertly analyze all of the relevant information to make express policy judgments based on costs and benefits, can decide issues prospectively and avoid piecemeal decision making, and can systematically engage the public in the policy-making process. Although agencies are subject to certain well-understood institutional pathologies, such as capture by powerful interests, on balance they are more likely to make effective patent policy than courts. Granting the PTO substantive rule-making authority would require significant changes to the structure and function of that agency, and to the role of the courts. The PTO would require the addition of a policy-making capacity separate but capable of drawing insights from the examination process. The courts in turn would play a constructive secondary role by surfacing issues that require attention in the interstices of agency rules and engaging in judicial review of those rules under traditional standards of administrative law