Data-GeneratingPatents

[forthcoming 111 NORTHWESTERN LAW REVIEW __ (2017)]

Brenda M. SimonAssociate Professor, TJSL

Non-Resident Fellow, Stanford Law School

Ted SichelmanProfessor, USD Law

May 6, 2016

� Data-Generating Patents:

� Patented inventions that by design generate valuable data by their operation or use.

Overview

� The Phenomenon of Data Generating Patents and Their Legal and Economic Effects

� Discerning the Problematic from the Unproblematic

� Recommendations

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Trade Secrets and Patents

� Substitution Theory

� Economic Complements

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Data-Generating Patents

� Patented inventions that by design generate valuable data by their operation or use.

� Examples

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Possible Concerns

� Patent principles are in an uneasy tension with protecting this type of data

� Effects on limiting disclosure

� Innovation balance possibly altered

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Possible Concerns

� Traditional trade secret safeguards generally do not apply to data generated from patented inventions

� Reverse engineering restricted

� Independent discovery limited

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Possible Concerns

� Data-generating patents may be leveraged to provide additional market power in the generation of trade secrets

� Is there a need for additional legal protection to incentivize the production of this kind of information?

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Discerning Problematic from Unproblematic Data-Generating Inventions

� Use of data in unforeseeable markets

� Preemptive effect on marketplace competition for the data

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Discerning Problematic from Unproblematic Data-Generating Inventions

� Unforeseeable Data Markets:

� Examines whether the patent provides the ability to use data in an area that is not directly related to the market covered by the patented invention

� The greater the extent to which the invention allows for use of data in unforeseeable markets, the more likely the invention is problematic

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Discerning Problematic from Unproblematic Data-Generating Inventions

� Data Market Preemption:

� Examines the effect on competition in the market for the data � not the preemptive effect of the invention

itself

� The greater the preemptive effect on marketplace competition related to the data, the more likely the invention is problematic

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Scenario 3

Likely Unproblematic

Scenario 2

Very Likely Problematic

Data Market Preemption

Scenario 1

Likely Problematic

Scenario 4

Very Likely Unproblematic

Discerning Problematic from Unproblematic Data-Generating Inventions

Proposals to Address Problematic Data-Generating Patents

� Innovation-related concerns

� Disclosure-related concerns

� No ideal solution, but ex post generally preferable to ex ante

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Discussion

� brendamsimon(at)gmail.com

� tsichelman(at)sandiego.edu

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