I See Dead Patents: How Bugs in the Patent System Keep Expired Patents Alive

Abstract

One of the most important days in the life of a patent is the day it dies.

The moment a patent dies, the patent owner loses her monopoly over her invention, ending the stream of income generated by that patent. Without an enforceable patent to protect the invention, the competitors and public can freely buy and sell copycat products that compete with the patent owner’s. Consumers reap the rewards in the form of more options and lower prices.

Normally, those potential competitors must wait exactly twenty years from the date the patent application is filed with the United States Patent and Trademark Office (“Patent Office”). But if a patent owner is lucky, her competitors mayay wait even longer. The Patent Office may extend the life of a patent to compensate for certain delays in processing the application. Such an extension, known as a Patent Term Adjustment (“PTA”), is automatically calculated by computer software administered by the agency. But that software makes mistakes. And because the Patent Office will not double-check the computer’s calculations—unless the patent owner asks it to—those mistakes are rarely discovered. These skewed incentives lead to excessive PTA that exclusively benefits the patent owners. In some industries, such as pharmaceuticals, every additional day of patent life can result in millions of dollars of profit for the patent owner—profits that they may not be entitled to by law—and can delay the collapse of the price of the patented drug. It is little surprise that fierce litigation ensues over even a single day of patent life.

This Article exposes those software mistakes and their impact for the first time. In this EssayArticle, based on my original analysis of the Patent Office’s data, I identify two previously undiscovered software bugs, observed in more than 27,000 patents. I demonstrate how these bugs result in excessive PTA of, sometimes, 60–90 days. Because there are undoubtedly more than the two identified ways in which the software can err, I recommend that patent litigators start routinely double-checking the PTA in order to save their clients millions in patent infringement damages. Entities seeking approval of generic drugs should similarly take note of these bugs as they may impact the date on which they need to file their application with the Food |-.1.-|amp; Drug Administration. I also propose regulatory changes that would allow the Patent Office to improve the software by crowdsourcing the identification of bugs. Finally, I recommend a statutory change that would minimize the number of patents with excessive PTA.

Keywords: patent, pharmaceuticals, expiration, administrative state, administrative agency, software, bugs, errors, PTA, Patent Term Adjustment, Patent Office, USPTO, Patent Act, ANDA, generics