How Bureaucracies Learn From Innovation In The Patent Office's Handling Of Interferences 1836-1940 Presented by: Mrs. Eisenberg And Mrs. Lamoreaux Date: 5 April 2023 Supreme Court Of The United States - Syllabus - UNITED STATES v. ARTHREX, INC. ET AL. - CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT - No. 19-1434. Argued March 1, 2021-Decided June 21, 2021* We Take Inspiration From Literature On The Theory Of The Firm: - Ronald Coase famously asked why does so much economic activity take place inside firms, rather than in the market. • Answered that the flexibility that firms had to structure transactions internally provided less scope for opportunism than (necessarily incomplete) contracts in the market. - We ask why an analogous question: Why does so much adjudication occur in administrative agencies rather than courts? • - Hypothesize that administrative adjudication mitigates opportunism. We also explore the possibility that agencies, like firms, are sites of learning, and the advantages of agencies over courts, like firms over markets, can grow over time as officials figure out how to improve their internal processes. Number of Interferences Relative to Patents, 1912 to 1940 Year Number of Applications for Utility Patents 1912 69,236 Number of Ratio of Interferences to Interferences Declared Patent Applications 1,642 0.024 Year 1915 1920 1925 1930 1935 1940 Number of Applications for Utility Patents 66,497 81,943 76,024 91,430 57,593 62,194 Number of Interferences Declared 1,472 1,443 1,369 1,540 2,155 1,190 Ratio of Interferences to Patent Applications 0.022 0.018 0.018 0.017 0.037 0.019 Interferences Terminated before Final Hearing, 1912 to 1940 Year 1912 1915 1920 1925 1930 1935 1940 Number of Interferences Terminated 1,525 1,553 1,242 1,227 1,537 2,051 1,261 Number of Interferences Terminated before Final Hearing 1,241 1,341 939 958 1,332 1,821 1,039 Proportion of Interferences Terminated Before Final Hearing 0.81 0.86 0.76 0.78 0.87 0.89 0.82 Commissioner Fisher's Innovation (Rule 53, July 1870) - Upon the declaration of an interference each party will be required, before any time is set for the taking of testimony, to file a statement under oath giving the date and a detailed history of the invention; showing the successive experiments, steps of development, extent and character of use, and forms of embodiment. Such statement shall not be open to inspection by the other party, until both are filed, or until the time for filing both has expired. In default of such filing by either party, or if the statement of either fails to overcome the prima facie case made by the respective dates of application, or if it shows that the invention has been abandoned or that it has been in public use for more than two years prior to the application of affiant, the other party shall be entitled to an adjudication by default upon the case as it stands upon the record. Opinion of Commissioner Fisher in the interference Schenck v. Rider (Oct. 27, 1870): - The object of the preliminary statement is to serve as a pleading, in which each party, in ignorance of his opponent's case, sets forth the date and history of his own invention. This me must know better than any one else, and he will be held to make a full and accurate disclosure, without evasion or reservation. He must distinctly state the date which he proposes to prove as that of invention, and he must set forth the character of the substantive act of invention, upon which he proposes to rely. If he fixes upon one date for his invention and then calls witnesses to fix another, such proof will be rejected, or will be viewed with the greatest suspicion. It is proposed to put an end to the practice, which it is to be feared has prevailed to too great an extent, of striving on each side to learn an opponent's date of invention, only to manufacture such proof as may be necessary to fix an earlier time. Files Resolved Without a Hearing: The Problem of Motions to Dissolve Period Number of Files Proportion of Files Resolved Before Hearing Average Number of Lines per Docket in Files Resolved Before Hearings 19011910 19111920 19211926 132 0.80 14.2 129 0.80 94 0.81 Proportion of Files Resolved Before Hearings that Included Motions to Dissolve 0.27 Average Number of Lines per Docket in Files Resolved Before Hearings that Included Motions to Dissolve 24.0 Average Number of Lines per Docket in Files Resolved Before Hearings without Motions to Dissolve 10.3 19.1 0.30 30.7 14.1 19.8 0.22 42.0 13.5 Rule 122 on Motions to Dissolve (1899 version): - Motions to dissolve an interference upon the ground that no interference in fact exists, or that there has been such irregularity in declaring the same as will preclude a proper determination of the question of priority, or which deny the patentability of an applicant's claim, or his right to make the claim, should, if possible, be made not later than the twentieth day after the statements of the parties have been received and approved. Such motions, and all motions of a similar character, should be accompanied by a motion to transmit the same to the primary examiner, and such motion to transmit should be noticed for hearing upon a day certain before the examiner of interferences. When in proper form the motion presented will be transmitted by the examiner of interferences, with the files and papers, to the proper primary examiner for his determination, who will thereupon fix a day certain when the said motion will be heard before him upon the merits, and give notice thereof to all the parties. If a stay of proceedings be desired, a motion therefor should accompany the motion for transmission. When the motion has been decided by the primary examiner, if no appeal has been taken therefrom, at the expiration of the time limited for appeal the examiner will return the files and papers, with his decision, to the examiner of interferences. Such decision will be binding on the examiner of interferences unless reversed or modified on appeal. Patent Office tried to limit the disruptive effects of motions to dissolve in a number of ways: - Tried to place time limits on when they could be made. - Shifted responsibility for adjudicating them (e.g., to a law examiner on the commissioner's staff) - Cut steps out of the appeals process. Conclusions - Patent Office was able significantly to improve the efficiency with which it adjudicated patent interferences using techniques (for example, leveraging the secrecy of the patent application process) that would not have been available to the courts. - It still had to balance efficiency with quality (fairness), and that proved more difficult (would also have been difficult for courts). - Complaints about the resulting delays have dominated discussions of the interferences (and the Patent Office's internal adjudication process), with little recognition of the extent to which the Office achieved improvements in efficiency. That is not a good way to make policy. - Discussions of the administrative state have the same defect. Need to understand the largely invisible achievements of administrative agencies- invisible because successful.