Country

CHART B4.-U.S. APPLICATIONS FILED BY COUNTRY OF APPLICANT

1962 1963 1964 1965 1966 1967 1968 1969 1970 1971

CHART B4-U.S. APPLICATIONS FILED BY COUNTRY OF APPLICANT-Continued

PATENT OFFICE REPLY TO SENATOR HART'S LETTER OF MARCH 19, 1973

APPENDIX C

C. PATENT LITIGATION IN THE FEDERAL COURTS

The last paragraph of page 3 of your letter is a request for a summary of the past five years of:

(A) patent litigation in the Federal courts, both at the District Court and Appellate level, including: (1) The number and identification of cases and patents litigated: (2) the holdings and rate of patent validity and invalidity, infringement, misuse, and fraud or inequitable behavior (and the specific grounds therefor); and,

(B) with respect to the above patents, review during patent prosecution, before (1) the Board of Appeals; (2) the Board of Patent Interferences; (3) the CCPA; and (4) others.

In accordance with your comment, the Patent Office extracted the information contained herein from the compiled notices filed in the Patent Office under the provisions of 35 U.S.C. 290. The information so obtained was cross-checked for accuracy and completeness against the reported decisions in the United States Patents Quarterly and a computer printout showing those recent U.S. patents in which (during their Patent Office prosecution) decisions were rendered by the Board of Appeals and/or by the Board of Patent Interferences. This tabulation forms Appendix C.

A complete answer to your request in (B), supra, would dictate an inspection of each patented file. However, since such an undertaking would be impossible within the time allotted, no attempt was made to provide complete information on each litigated patent as to prior review within the Patent Office, or by its reviewing courts, before its issuance.

The results of the study are set forth in the accompanying table.

Explanatory remarks

In the interest of clarity and elimination of any misconception as to the meaning and interpretation of the statistics tabulated above, the following explanation is offered.

Number of cases

The number of individual cases with a holding (dismissed, valid, injunction, etc.) during the period from January 1, 1968 to December 31, 1972, was found to be approximately 2.000. Although the actual figure was determined to be slightly in excess of 2,000, a recognition of the opportunity for mistake, taken with a potential high percentage of error, discussed infra, renders any more specific number statistically meaningless.

Number of patents

The number of individual patents litigated during the five-year period, in which the suit was terminated by dismissal, consent judgment, summary judgment, or holdings of validity, invalidity, injunction, etc., was found to be approximately 2025. Of those, the number of patents in which there was a judgment of validity, invalidity or infringement totalled 988.

For reference purposes, it is noted that during this five-year period, the Patent Office issues approximately 360,000 patents. The percentage of patents litigated with respect to the total number of patents issued over this five-year period is 0.56%. Further, the number of patents issued by the Patent Office covering the time span from the earliest reported litigated patent included in this study (#2,126,786) to the latest reported litigated patent indicated in the study (#3,678,148) is approximately 1,550,000. The percentage of patents litigated with respect to this number is 0.13%.

Patents held valid or invalid

Validity statistics may vary. They may be (a) inclusive of each individual court holding of validity or invalidity, (b) limited to holdings within each of the judicial circuits, (c) restricted to a single holding representing the final adjudication of the patent's validity, or (d) directed only to the decisions of the appellate courts.

In this study, the validity or invalidity of a given patent has been determined by tabulating the result or decision of the highest court in which the litigation was conducted and such holdings were made. Where two or more courts concurred in holding the same patent valid or invalid, that patent was counted as valid or invalid only once. In the rare instances where conflicting decisions on validity by coordinate tribunals have occurred, the patent was counted as invalid. It was noted that many court opinions and $290 notices did not point out whether all, or only some, of the claims of a patent were held valid or invalid. Where a court did explicitly hold some claims valid and other claims invalid, the patent was counted as valid, inasmuch as the patent remains in force with valid claims therein. A consent judgment of validity or invalidity, where denominated as such in the $290 notice, was counted as a holding of validity or invalidity. However, infringement and injunction holdings, without any mention of validity, were not presumed to be findings of validity.

Rate of patent invalidity

The term "rate of patent invalidity" appears to have no recognized definite meaning. Such rate may be calculated as a percentage of total patents litigated or only as a percentage of those litigated patents having a holding of validity or invalidity. The latter base has been employed in this study.

It is to be stressed that there is no evident link between the characteristics of the litigated patents which caused them to be litigated and the characteristies of the remaining unlitigated patents which would justify the conclusion that the rate of invalidity noted above can be extrapolated to, or is in anyway representative of, the total patent universe.

Infringement

Instances of infringement are not always indicated in the report of the courts' decisions. Often there is no explicit holding that a claim is infringed, although such conclusion would be implicit because the court enjoined the defendant from making, using or selling certain devices. Accordingly, in the

absence of any countervailing information, an injunction has been counted as a holding of infringement for statistical purposes.

Misuse, fraud, and inequitable conduct

The term "misuse" has been used in most instances to describe the unlawful extension of the patent rights, either beyond the seventeen-year grant or to non-patented articles. However, fraud and inequitable conduct embrace a multitude of various acts, before and/or after issuance of the patent. Therefore, it should be observed that the figures reported herein do not represent instances of "fraud" in the technical sense, but include conduct that may loosely be classified as inequitable. Instances are relatively few, but so varied and lengthy in explanation, that mere notation has been made of their occurrence. A significant number of cases were found where the issue of fraud, misuse, or inequitable conduct was raised by an alleged infringer, but not found by the court. Summary

The Patent Office views this study as far more comprehensive and accurate— particularly for the time span considered-than any studies heretofore undertaken which have examined merely, for the most part, reported decisions of the Courts of Appeals. Those previous studies are included as a bibliography to this study.

It is to be noted that the percentage of litigated patents held invalid by the Courts of Appeals (69%) in the five-year period 1968-1972 covered by this study corresponds closely to the invalidity percentages found by the other authors mentioned in the bibliography for the period 1940-1972. However, the inclusion in this study of unappealed and unreported judgments of the District Courts to obtain a resultant total rate of patent validity of approximately 50% places the entire litigated patent validity/invalidity picture in proper perspective.

Nevertheless, candor compels stating that certain inadequacies in the information available from the $290 notices could result in potentially erroneous statistics even in this study. In that connection, it was found that the notices submitted under 35 U.S.C. 290 had the following defects: (1) Notices were not filed in every case; (2) when filed, the notices were not necessarily submitted promptly; and (3) the data in the notices was incomplete and, in many instances, incorrect. For example, mere notations of dismissal, which were often indiscriminately employed in the $290 notices, were found to stand for holdings of validity or invalidity upon comparison with any reported decisions corresponding to those §290 notices.

Additionally, it may be noted that a summary limited to a "five-year" period involves certain features that give an incorrect impression. Thus, aside from the obvious effects of subsequent appeals, a dismissal in one suit (within the five-year period) subsequent to, or prior to, a final adjudication of the same patent's validity, or invalidity, in another suit (outside the five-year period) has significance different from that of a dismissal in the absence of any other decision. In other words, the complete history of the patent is necessary to a proper appreciation of the patent's validity or invalidity.

BIBLIOGRAPHY

(1) Dearborn et al., Encyclopedia of Patent Practice and Invention Management (Calvert), page 22, et seq. examined in 734 adjudicated patents in the circuit courts from 1953-63.

(2) Federico, "Adjudicated Patents 1948-54", 38 JPOS 233, 244, reported on adjudications from 1925–54.

(3) Gausewitz, "Brief in Support of Proposed Amendment to Section 103, Title 35, Patents, U.S. Code," 51 JPOS 290 (May 1969).

(4) Horn et al., "The Federal Courts' View of Patents-A Different View," 55 JPOS 134 (March 1973) studied 597 adjudicated patents from January 1961 through December 1970.

(5) Koenig, dissertation submitted in partial fulfillment of requirements for S. J. D. degree, New York University Law School, December 1971. She studied adjudications of 854 patents from 1953-67.

(6) Moxon, "Patent Invalidity Study", unpublished, January 17, 1973, examined 284 adjudicated patents in the period 1967-71.

(7) Senate Report No. 167, 90th Congress, 1st Session examined validity of 46 patents before Graham v. John Deere, 383 U.S. 1 (1966) anf 38 patents subsequent to Graham.

(8) Tegtmeyer, "For Greater Patent Validity," American University Law Review, Vol. 19, No. 1 (December 1969) studied 869 adjudicated patents from 1953-68.

In the interest of economy of space, the following abbreviations have been employed in the summary where applicable: