Did You Hear About the Statistician Who Drowned in a Lake With an Average Depth of Two Feet?

I was reminded of this question, often posed by my dad to remind me not to become a slave to statistics, by two dramatic things that happened last week. On the one hand, at the IAM 2017 Patent Law and Policy conference in Washington DC, investors spoke about waning interest in the U.S. market given the increasing frequency of patent invalidations. On the other hand, the Nasdaq composite index (consisting of 86% U.S. companies) hit record closing and intraday highs. Whom are we to believe: those who say weak patent coverage is threatening our economy or those who say that patents are not, in fact, necessary for economic strength?

Or is there a third possibility—that other factors overwhelm the economic importance of patents so we can’t really give too much weight to the statistics?

The speakers at the IAM conference cited PTAB invalidation rates and post-Alice hostility to 21st century technologies as reasons that they are looking more kindly on, for example, European, Chinese, and Canadian portfolio elements. Uncertainty regarding PTO examination norms and PTAB decisions, as well as apparently inconsistent panels of the Federal Circuit, have reportedly made it more difficult to value U.S. patent assets than those of other jurisdictions. The fact that the Supreme Court in the Oil States case is considering whether PTAB review of issued patents is even constitutional gives yet more pause.

The flip side is that these developments, as well as the TC Heartland decision, have clearly reduced the value of troll lawsuits. Many GCs appear eager to trade portfolio value for reduced litigation risk, and the valuations their companies are receiving seem to support their view.

So we see some evidence supporting both sides of the argument. But that doesn’t mean we should give up on trying to draw meaningful conclusions from these facts. Many factors go into a bull or bear market, whether in the technology sector or otherwise. Even if the investors speaking at the IAM 2017 conference provide only anecdotal evidence, still it is evidence that is directly relevant to the issue at hand: whether the threat of narrowed patent protection drives investment away from the U.S. The views expressed by the IAM 2017 investor speakers seem intuitively reasonable.

It’s not likely that we’ll see any truly definitive evidence of whether narrow subject matter eligibility is, net-net, economically damaging or beneficial. At least hopefully we won’t—patents are important but not important enough that we would ever want to see them overwhelm myriad other factors that impact our economy. So we’ll have to do our best by looking at evidence that we need to admit is either anecdotal or subject to varying interpretations.

If we’re really searching for the “right” answer, then instead of being result-oriented and looking merely to support some desired outcome, we’ll pay attention to all of the facts that present themselves to us. We’ll acknowledge and even embrace the ambiguities, rather than trying to mold them to some desired outcome. In this instance, to this observer, the contradictory facts still seem to support the notion that narrow subject matter eligibility is doing our economy no favors. But that conclusion is far from certain, and we’ll keep looking at the facts with an open mind.

*The perspectives expressed in the Bilski Blog, as well as in various sources cited therein from time to time, are those of the respective authors and do not necessarily represent the views of Fenwick & West LLP or its clients.