The Political Economy of the Research Exemption in American Patent Law
Nicholas Short*
ARTICLE

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26 Fordham Intell. Prop. Media & Ent. L.J. 573
Article by Nicholas Short*

INTRODUCTION

 

[A] patent system must be related to the world of commerce rather than to the realm of philosophy.

                                                          –Justice Fortas^[1]

[O]

ne of the most important questions in patent policy today is whether the acts of making and using a patented invention for research purposes should be exempt from infringement liability. The basic idea, as Justice Fortas hinted in 1966, is to ensure that those who obtain patents can use the monopoly power inherent in the patent grant to capture profits from competing sales and other commercial activity, but not to stifle the research and experimentation that promotes innovation and helps government officials evaluate the health and safety risks associated with new technological developments.

Appropriately, the research exemption (also known as the experimental use doctrine) has been the subject of significant legal scholarship and at least one major congressional inquiry over the last thirty years.^[2] Yet much of the legal scholarship has focused on normative questions like whether the law should have an exemption and what form it should take. Less attention has been given to the doctrine’s legal and political history, or to the arguments and economic interests of the individuals and institutions that have shaped the law in this area into its current convoluted form.^[3]

The call for such an analysis is amplified by the appearance, over the last decade, of several pivotal studies of the political economy of intellectual property law, emphasizing changes in the law since the 1970s. These studies tend to be “horizontal” in the sense of analyzing large policy regimes and revealing broad themes. The narrowest among them focuses on the entire patent system (Scherer),^[4] while others go even broader to include legal developments in copyright (Landes and Posner)^[5] and finance (Coriat and Weinstein).^[6] Few if any “vertical” studies trace the historical development of a single issue within the patent system to illustrate or challenge arguments about broader themes in the political economy of intellectual property law.

This Article approaches the research exemption, and related legal developments, as a case study in the political economy of patent law. Part I recounts the history of the research exemption, touching briefly on historical origins but emphasizing developments since the 1970s in legislative, executive, and judicial forums. It also examines changes during the same time frame in related areas of patent law, like the Bayh-Dole legislation and the attempted repeal of state immunity from patent infringement liability. These legal developments indirectly affected the research exemption, or implicated similar concerns about imbalance in the patent system and the use of patents to tax, control, or inhibit research activity.

Part II analyzes this history to illustrate and expand upon two major themes in the political economy of patent law, namely the surprising persistence of faulty economic ideology in patent policymaking and the institutional bias exhibited by the Court of Appeals for the Federal Circuit in shaping modern patent law. One major conclusion is that together these forces have created an excessively complex and ill-designed policy environment that is placing a significant strain on the national research system, a strain that executive agencies and the courts have tried to alleviate through ad hoc agreements and modifications of other patent doctrines, like the doctrine of subject matter eligibility.

*      Nicholas Short obtained a juris doctorate degree from Hastings College of the Law and subsequently spent seven years litigating patent and trade secret cases in state and federal court. He is currently a graduate student in the Technology Policy Program at the Massachusetts Institute of Technology. The views expressed in this Article are those of the author and do not necessarily reflect the views of the Massachusetts Institute of Technology, the Program on Emerging Technologies, or the Synthetic Biology Engineering Research Center. The author would like to thank Kenneth Oye, Leonard Miller, Arti Rai, and F.M. Scherer for their helpful criticism and commentary.