Patent Fraud by Design

Patent law is supposed to offer property-right protection to
inventors in order to promote and incentivize innovation. Yet current
patent law doctrine effectively incentivizes patentees to defraud the
patent office, allowing them to secure undeserved legal protection. What
is worse, once such protection is fraudulently obtained, patentees can use
it to stop downstream innovation, harm competitors, and charge
supracompetitive prices to consumers. The current patent system
generates all of these harms because it offers strong legal protection
while failing to impose equally strong sanctions against those who
attempt to abuse it. Indeed, the current system rarely sanctions patentees
who have defrauded the patent office, and even when it does, it typically
allows them to retain huge profits reaped from their fraud. The patent
system thus creates a strong incentive to commit patent fraud, thereby
inhibiting, rather than promoting, innovation and competition.
To combat these problems, this Article suggests a novel enforcement
mechanism designed to uncover patent fraud and to sanction
meaningfully patentees who commit it. It argues that because competitors
of those patentees are best situated to identify the fraud, they should be
allowed to lead class action lawsuits against wrongdoers. The Article
further argues that patentees found to have engaged in patent fraud must
be required to give up all profits derived from the fraud to make sure that
fraud is no longer economically beneficial. It demonstrates that existing
legal doctrines, such as the remedy of disgorgement, Walker Process antitrust claims, and class action procedures, can be invoked to offer
such legal solutions.