Heterogeneity in Local Relationship
Patterns as a Determinant of Legislative Strategy
By: Federico DaFranca
August 24th 2018 – 15:00:00 P.S.T.
Network Science highlights the potential importance of heterogeneity and local relationship patterns in determining collective behaviour. Social patterns, therefore, determine regulation and the legal results that ensue from communicational change.
The purpose of innovation is to develop technologies that will improve the standard of life of individuals in society. Automobiles, airplanes, Personal Computers, the Internet, television and modern pharmaceuticals are all examples of technological breakthroughs that have significantly improved modern life. Formally, competition and patents are the two federal policies that stand out when it comes to the influence of innovation. To the extent that guidelines for these procedures are properly drafted, systematic bias will be reduced.
In the U.S., the economy as a mixed market economy advocates for open markets and free enterprise as the leading factors for competition by focusing upon the Free-Market principles of Say and Smith. Ceteris Paribus, optimum competition levels result in optimum prices, quantity and quality of goods and services for consumers. As a result thereof, the Sherman Act was created with the premise of “maximising consumer welfare by encouraging firms to behave competitively.”
The patent system promotes a dissemination of scientific and technical information because it requires public disclosure: “Basic quid pro quo contemplated by the Constitution and the Congress for granting a patent monopoly is the benefit derived by the public from an invention with substantial utility.”
- The Brenner Precedent
The concept is judicially interpreted as pertains thereto: The Brenner precedent deals with recognition or lack thereof for the petition of applications under the United States Patent and Trademark Office. The application of the law for the case under review determined that there was “insufficient adequate basis” for overriding the patent office’s determination that the utility requirement had not been met.
Concretely, Rule 201(a) stipulates: “An application for registration as a patent attorney under section 196 of the Law shall be submitted in writing, and the Registrar shall acknowledge its submission.” Thus, the Public Acts of recognition and admission are Administration-Discretional.
For the case under review, the basis for patentability and the allegations pertaining thereto are founded upon entitlement to interference due to prior claim.  The result of the administration for the Brenner precedent was that there was no adequate basis for overriding the patent’s office determination because the utility requirement had not been met. The foundation for denial of precedent is also that the power of the Administration that emanates as a result of discretion is monopoly-power over knowledge. Therefore, the precedent establishes that, even when a prior claim exists, discretion prevails if specific utility is not properly established so that it is “clearly commanded by statute.” The Administrative definition of usefulness is determined by the precedent under review as “a new and useful process within statute.”
In proper tradition, Antitrust law recognizes that a patent’s creation of monopoly power is necessary to achieve a greater gain for consumers. The line, therefore is blurred: If too little monopoly power is enacted, the gain for consumers becomes inefficient. If insufficient limitations are imposed, there is no balance between the need to encourage innovation and the free-competition that results from the avoidance of monopolies.
Throughout the decades, since the early 2000, the U.C. Berkeley Competition Policy Center and the Berkeley Center for Law and Technology have issued a series of Conclusions and Recommendations in conjunction with the United States Department of Justice to Preserve and maintain the above-cited balance. They are:
i.- Most of the Patent System works well, but some modifications are needed to maintain a proper balance of competition and patent Law and Policy: “Statutory standards of patentability appear largely compatible with competition; properly interpreted, they tend to award patents only when necessary to provide incentives for inventions, (…) commercial development or disclosure.”
ii.- Questionable Patents are a significant competitive concern and can harm innovation: Poor quality or questionable patents can harm innovation by a) Raising the Costs of Innovation (b) Increasing “Defensive Patenting” and Licensing Complications.
- Judicial Interpretation Methods in Heterogeneity
As a reaction to the raised costs of innovation and the increasing patenting as well as licensing complications, the opinion of Justice Stevens is of particular relevance. In this sense, his solution is to uphold patented products as a non-supported presumption of market power. The Chief Justice Stevens premise is founded upon the inverse of the “per se” rule: “Every contract, combination in the form of trust or otherwise (…) is declared to be illegal.”
“It shall be unlawful for any person engaged in commerce, in the course of such commerce, to be a party to, or assist in, any transaction of sale, or contract to sell which discriminates to his knowledge against competitors of the purchaser (…)” “…to sell good in any part of the United States for the purpose of destroying competition, or eliminating a competitor in such part of the United States…”In summary, the behavioural changes in local relationship patterns are harmful to the extent that they destroy the competition or eliminate a competitor from the market. Therefore, Illinois Tool Works Inc. v. Independent Ink establishes that in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product.
Another useful case to mitigate costs and complications is Lab. Corp. of America Holdings v. Metabolite Labs, Inc. that reflects the interpretation method of Chief Justice Kennedy on the matter. The precedent deals with the owner and licensee of a patent method for detecting vitamin deficiencies suing a former sub-licensee for breach of contract and indirect infringement. As Colucci demonstrates in “The Full and Necessary Meaning of Liberty,” Kennedy’s underlying interpretive theme is focused upon the “spacious clause” when it pertains to the moral content of the constitution. Kennedy Believes that Liberty’s moral content may be illuminated by history, tradition, original intent and precedent, but that its full and necessary meaning may extend beyond. Therefore, the duty in preserving harmony and balance by at the time of reviewing costs and complications is focused upon enforcing liberty’s moral content. In this sense, a precise standard for interpretation is limited and the search for moral liberty is centre-stage. Kennedy believes in the Judge’s independent judgment for its enforcement.
For the case in concrete, this is reflected upon the review of substantial evidence carried out by the Courts. The review of the evidence for the Lab. Corp. of America v. Metabolite Laboratories concludes that “indefiniteness without deference” existed. In this sense, the specification for the original patent was full, clear, concise and exact. The specification of the licensee was not.
In this sense, the Kennedy methodology is applied: The moral decision of the judge must be to uphold because the Licensee induced third-party infringement and the Plaintiff’s original issuance of the patent is precise. Circuit Judge Rader Affirms for the Holding, Circuit Judge Schall dissents in part.
In addition to the above-cited precedents its important to highlight KSR Int’l Co. v. Teleflex Inc. and Merck v. KGA v. Integra Lifesciences as supplementary decisions to the above-stated.
The Teleflex precedent narrates the suit of KSR International Company for patent infringement of an exclusive license for position-adjustable vehicle pedal assembly to its competitor “Teleflex Inc.” The precedent is interpreted by Chief Justice Kennedy himself and holds that the patent infringement was obvious. The basis for the interpretation is “predictable use.” Specifically, a patent infringement is obvious if “… the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention.” Therefore, it can be inferred from the above-cited precedent and based on the aforementioned explanation of the Kennedy Interpretation, the Moral Liberty of the Judge is based on procedural chronology. The factors specifically evaluated for similarities within the system include, but are not limited to: Fixed pivotry, sensor structure on support and pivot-mounted pedal position within the system. An evaluation of these factors concludes that “prior art” exists and that the obviousness of the claim is apparent as a result thereof.
Merck v. KGA Integra Lifesciences in turn, contrasts the Kennedy interpretation of the law with a Scalia application of judicial practice. The case deals with an owner of patents for pharmacologically useful peptide. The Plaintiff sues for patent infringement and inducement of infringement KGA Integra, a Research and Development Competitor Company.
For the above-stated case as cited,Chief Justice Scalia interprets. Thus, using Scalia’s syntactical and semantic interpretation of the law, the holding stipulates: The exemption set forth by the patent statute’s safe harbour provision, does not constitute infringement because preclinical studies exist for appropriateness of submission before the Food and Drug Administration.
Furthermore, the holding reflects that: i.- Exemption is not limited only to preclinical data pertaining to safety of drug in humans ii.- Exemption does not categorically exclude experimentation on drugs that are not ultimately the subject of an FDA submission or the use of patented compounds that are not ultimately submitted to the FDA.
In a market where exponential increases of patent growth lead to an increased stratification of patent citability, the moral liberty of the judge suffers greater restrains. In an economy that relies more and more heavily on knowledge and innovation for success, limitations of moral liberty that disrupt the balance between the need to encourage innovation and competition, serious financial consequences may develop.
 Federal Trade Commission Act. Report pursuant to Section 6(f). 15 U.S.C. S46(f)
 I Phillip E. Areeda & Herbert Hovenkamp, “Antitrust Law: analysis of Antitrust Principles and Their Application 100a at 4 (2000)
 Brenner v. Manson, 383, U.S. 519, 534-535 (1966)
 Patent Office Practice Rules 204(b) and U.S.C.A. App.
 35 U.S.C.A. Section 101
 Bonito Boats Inc. v. Thunder Craft Boats, Inc., 489 U.S., 141, 146, (1989)
 FTC/DOJ Hearings on Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy, David J. Earp Testimony Feb. 26, 2002; FTC.
 Chief Justice Stevens; Morton Salt Co. v. G.S. Suppiger Co., 314, U.S. 488, 62, S. Ct. 402, 86, L. Ed. 363
 15 U.S.C.A. S1-15. Sherman Act
 15 U.S.C.A. S13(a). Clayton Act
 Saiju George Citing Colucci; “On Liberty: The Moral Concepts of Justice Kennedy’s Jurisprudence.” Seton Hall University. Online (2014)
 35 U.S.C.A. S112
 Metabolite Laboratories Inc. v. Laboratory Corporation of America Holdings, 370 F. 3d, 1354, United States Court of Appeals No. 03-1120.
 35 U.S.C.A. S103
 KSR International Co., v. Teleflex Inc. et al., 127, S. Ct. 1727. No. 04-1350. 2006