597

Second-Order Obviousness: How Information

and Communication Technologies Make
Inventions More Obvious and Why the Law
Should Care
Ryan Whalen

Abstract
Non-obviousness is a key component in how patent law determines the
bounds of patentability. However, there are multiple ways that a technology can be considered obvious and current patent doctrine does not consider them all. Although all inventions can lead to subsequent inventions
by providing inspiration (first-order obviousness), some have further effects on future innovation by facilitating the associated activities (secondorder obviousness). Because of the way they enable communication and
information access, information and communications technologies (ICTs)
like the Internet have particularly strong second-order obviousness effects,
as they lower the cost of invention.
This Article introduces the concept of second-order obviousness and
theorizes the relationship between ICTs and innovation. It demonstrates
three mechanisms via which ICTs ease invention and increase obviousness: (1) improved access to information; (2) increased ease of collaboration; and (3) enhanced accuracy of market monitoring. It then empirically
supports the presence of these effects as state-level Internet access and
patenting data are used to show that, even when controlling for important patenting predictors like research and development (R&D) spending,
gross domestic product (GDP), and the number of researchers, Internet access rates are positively and significantly correlated with patenting rates.
After theorizing and supporting the presence of second-order obviousness effects, this Article discusses how patent examiners and the courts
currently take them into account during non-obviousness analysis and
suggests ways to make the analysis more explicit and effective. Suggestions include altering the non-obviousness analysis to include a presumption to combine prior art references; assessing obviousness from a team
rather than an individual perspective; and paying more attention to the
market demand for inventions. To address future technologies that may

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also have second-order obviousness effects, the final Part of this Article
suggests minor alterations to the text of 103 and the United State Patent
and Trademark Offices (USPTOs) technology monitoring that would allow our innovation system to respond more proactively to changing technological capabilities.

Contents
I. Theorizing the Innovation Environment & Obviousness
A. The Incentive Justification for Patent Law . . . . . . . . . . . . .
B. How Patent Law Attempts to Strike a Smart Bargain . . . . . . .
C. The Innovation Environment . . . . . . . . . . . . . . . . . . . .

600
601
601
602

II. ICTs and Innovation

604
A. ICTs Information-Access Effect on Innovation . . . . . . . . . . 605
B. ICTs Collaboration Effect on Innovation . . . . . . . . . . . . . . 606
C. ICTs Effect on Market Transparency . . . . . . . . . . . . . . . . 607
III.Empirically Validating the Relationship between ICTs and Innovation
609
A. Patent Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610
B. Internet Access Data . . . . . . . . . . . . . . . . . . . . . . . . . 611
C. Control Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
1.
State GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
2.
R&D Spending . . . . . . . . . . . . . . . . . . . . . . . . 612
3.
Science and Engineering PhDs employed . . . . . . . . . 612
D. Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612
E. Additional Tests to Support the Existence of an ICT Effect on
Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614
1.
Analyzing a Technological Subset . . . . . . . . . . . . . 615
2.
The Internet and Collaborative Invention . . . . . . . . . 616
IV. How Should Innovation Policy React to Second-Order Obviousness?618
A. How the Innovation System May Currently Account for SecondOrder Obviousness . . . . . . . . . . . . . . . . . . . . . . . . . . 619
1.
The Person Having Ordinary Skill in the Art . . . . . . . 620
2.
Long Felt but Unmet Need . . . . . . . . . . . . . . . . . 623
B. Updating Non-Obviousness Jury Instructions . . . . . . . . . . . 624
C. Future Second-Order Obviousness . . . . . . . . . . . . . . . . . 625

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Introduction
We live in arguably the most innovative period in human history.1 One can
scarcely glance at the news without reading about the most recent happenings
in technological and scientific progress.2 Every year, more and more inventions are patented and brought to market.3 This Article argues that the information and communications technology (ICT) revolution of the past thirty
years has played a key role in facilitating this innovation explosion. By both increasing the amount of information available and making it easier to find and
organize that information, ICTs have made innovation an easier task than ever.
In addition to these individual-level effects that make an inventors job easier,
ICTs have networked society,4 making markets move faster and demand more
transparent.
All inventions have some potential to facilitate future inventions.5 Regardless of the field, any invention can be improved upon or used as inspiration for
future developments. However, ICTs remain distinct in that they facilitate future inventions not only by serving as inspiration, but also by providing functionality that eases the inventive process.6 Every invention has one input in
common: information.7 By facilitating work with information, ICTs facilitate
all types of invention, regardless of whether they directly relate to information
technology.
This Article proceeds in four parts to discuss the facilitating effects that
ICTs have on innovation. In Part I, I describe the innovation environment
the social and technological reality within which inventors work to create their
inventions. All inventions have some effect on the innovation environment,
each in some way altering the potential for future inventions. However, because of the way they alter our work with information, ICTs have especially
pronounced effects on the innovation environment.
Part II builds upon the theoretical model from Part I by exploring the mechanisms through which ICTs affect innovation. I show that there are three general mechanisms by which this phenomenon takes place: (1) ICTs increase ac1
See The Great Innovation Debate, E CONOMIST (Jan. 12, 2013, 4:11 PM), http://www.economist.com/news/
leaders/21569393-fears-innovation-slowing-are-exaggerated-governments-need-help-it-along-great (stating
that we tend to think of our age as the most innovative ever.).
2
See, e.g., Tech giant Intel backs schoolboy inventor, BBC N EWS (Nov.
5, 2014), http://www.
bbc.com/news/technology-29920654 (discussing the invention of an affordable braille printer);
Hannah Ellis-Petersen, The future has arrived:
the sci-fi inventions that have become reality, T HE
G UARDIAN (Oct.
21, 2014, 10:30 AM), http://www.theguardian.com/science/2014/oct/21/
the-future-has-arrived-the-sci-si-inventions-that-have-become-reality (discussing the invention of a hover
board); Meghan Gambino, The Smithsonian Celebrates American Invention at This Weekends Innovation Festival, S MITHSONIAN . COM (Oct.
30, 2014), http://www.smithsonianmag.com/smithsonian-institution/
smithsonian-celebrates-american-invention-weekends-innovation-festival-180953174/?no-ist (announcing an
event where inventors share the stories of their inventions).
3
See U.S. PATENT & T RADEMARK O FFICE, U.S. PATENT S TATISTICS S UMMARY TABLE C ALENDAR Y EARS
1963 TO 2014 (2014), available at http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us stat.htm.
4
See generally M ANUEL C ASTELLS, T HE R ISE OF THE N ETWORK S OCIETY (1996).
5
See infra Part I.C.
6
See infra Part II.
7
See Kenneth Arrow, Economic Welfare and the Allocation of Resources for Invention, in T HE RATE & DIRECTION
OF INVENTIVE ACTIVITY: E CONOMIC & SOCIAL FACTORS 609, 616 (NBER 1962).

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cess to information, enabling invention; (2) they ease the collaboration that is
increasingly central to generating successful inventions; and (3) they improve
access to market information, allowing innovators to be more responsive and
accurately tailor their inventive activities.
Part III sets out to empirically demonstrate the relationship between ICTs
and innovation. I show that, even when we control for important patent predictors like research and development (R&D) funding, gross domestic product
(GDP), and the number of researchers at work, higher Internet access rates are
related to higher patenting rates. In addition, Internet access also leads to more
collaborative inventions and more geographically distant collaborations. Part
IV discusses implications, including the importance of reconsidering innovation policy with these findings in mind. Suggestions include altering the nonobviousness analysis to include a presumption to combine prior art references,
assessing obviousness from a team rather than an individual perspective, and
paying more nuanced attention to the market demand for inventions.

I. Theorizing the Innovation Environment & Obviousness

To obtain a patent, an invention must qualify as novel, useful, and nonobvious.8 While each of these requirements helps determine what qualifies as
patentable, non-obviousness represents the key doctrine that the United States
Patent and Trademark Office (USPTO) and the courts use to police patentability boundaries.9 These patentability boundaries help ensure that our innovation system provides the appropriate incentives for invention, granting exclusive rights only when the underlying invention merits them.
In assessing obviousness, both the USPTO and the courts look to the prior
art to determine whether one ordinarily skilled in the art would view the invention in question as obvious.10 This Article argues that while this first-order
obviousnesssomething obvious in relation to previous inventionsis important, courts and the USPTO must also take account of how prior art affects
second-order obviousnessthe way that previous inventions affect the innovation process and make some inventions easier to achieve.
This Part will first briefly explain the main theoretical justification for
granting patents and show that obviousness analysis remains a central component in policing the boundaries of patentability. Next, I will demonstrate
the two conceptually different ways that inventions affect the innovation environment and make future inventions easier, or more obvious: inspiration effects
and functional effects.
8

35 U.S.C. 101103 (2012).

Christopher A. Cotropia, Nonobviousness and the Federal Circuit: An Empirical Analysis of Recent Case Law, 82
N OTRE D AME L. R EV. 911, 912 (2007) (The nonobviousness requirement plays a critical role in United States
patent law.).
10
35 U.S.C. 103 (2012); MPEP 2141 (9th ed. Rev.7, March 2014).
9

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A. The Incentive Justification for Patent Law

Patent law is often characterized as a quid pro quo, with the public trading the
grant of exclusive rights to practice an invention for the eventual return of that
invention to the public domain.11 This quid pro quo conception of patents has
roots in the incentive justification for patent law, which itself stems from the
Progress Clause of the constitution.12 The story here goes that to promote the
progress of science and the useful arts,13 the exclusive rights associated with
patents are a necessary incentive.
As patent law provides incentives for innovation, it follows that providing appropriate incentives is one of the most important elements of the patent
system.14 When the public grants exclusive rights so that it can incentivize
innovation, it ideally would like to optimize those incentives so that rights
are granted only for innovations that would not otherwise have occurred in a
timely fashion. In other words, in striking a bargain with inventors, the public
should strive to strike a savvy deal, giving up only what is required to acquire
the benefit of the bargain.
To strike a savvy deal, the publicvia the USPTO and the courtsmust
have some sense of the costs that the alternate partyinventors and their
employersincur. The bargain requires reassessment if and when those costs
change.

B. How Patent Law Attempts to Strike a Smart Bargain

Utility, novelty, and non-obviousness are the three principle requirements for
patentability.15 While utility and novelty play some role in policing the bounds
of the incentives granted to inventors, the non-obviousness requirement completes the lions share of the work.16 Utility and novelty act as threshold requirements in that the public does not wish to grant exclusive rights over useless or already known inventions. Non-obviousness on the other hand is more
nuanced in its tailoring of when a grant of exclusive rights is appropriate.
Non-obviousness is also the most flexible of the three patentability requirements.17 This flexibility arises because non-obviousness requires analysis via
11
See generally Jacob Adam Schroeder, Written Description: Protecting the Quid Pro Quo Since 1793, 21 F ORDHAM
I NTELL . P ROP. M EDIA & E NT. L.J. 63 (2011).
12
See U.S. Const. art. I, 8, cl. 8.
13
Id. The incentive theory does not serve as the sole theoretical justification for patent law, but does serve as
one most commonly referred to by courts and one of the most generally familiar. See, e.g., Mayo v. Prometheus,
132 S. Ct. 1289, 1305 (Sup. Ct. 2012) (stating that the promise of exclusive rights provides monetary incentives
that lead to creation, invention, and discovery.); see also Roberto Mazzoleni & Richard R. Nelson, Economic
Theories about the Benefits and Costs of Patents, J. OF E CONOMIC I SSUES 1031, 103233 (1998) (highlighting the
familiarity of that the incentive motivation theory and noting three additional justifications for patent law:
disclosure, commercialization, and exploration).
14
For discussion on the difficulty of designing appropriate patent incentives see Suzanne Scotchmer, Standing
on the Shoulders of Giants: Cumulative Research and the Patent Law, 5 T HE J. OF E CON . P ERSP. 29, 37 (1991) (There
are no simple conclusions to draw about the optimal breadth of patents.).
15
35 U.S.C. 101103 (2012).
16
Cotropia, supra note 9, at 912 (discussing the central importance of non-obviousness to a functioning patent
system).
17
KSR Intl Co. v. Teleflex Inc., 550 U.S. 398, 415 (2007) (stating that Supreme Court precedent set out an

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a multi-factor test that courts can tailor to specific scenarios. The Graham
factors take into account (1) the scope and content of the prior art; (2) the
level of ordinary skill in the art; (3) the uniqueness the invention; and (4) obvious evidence of non-obviousness.18 Courts also take into account so-called
secondary considerations of non-obviousness including whether there was a
long-felt need for the invention, commercial success, failure of others to perfect
the invention, copying of the invention by others, and whether the invention
stemmed from unexpected results.19
The state of the prior art plays a central role in the non-obviousness analysis. In assessing the obviousness of an invention, the USPTO asks whether the
differences between the claimed invention and the prior art are such that the
claimed invention as a whole would have been obvious . . . .20 The USPTO
tends to focus on prior art in the nature of previous inventionspatent grants
or applicationsor publications such as journal articles.21 To determine what
prior art qualifies as relevant to the invention, the patent examiner performs a
search that covers the claimed subject matter and . . . also cover the disclosed
features which might reasonably be expected to be claimed.22 In other words,
the prior art search is a sort of similarity search, where examiners look for previous inventions or publications that might share similarities with the invention
in question and thus imply the obviousness of the invention. The prior art
search does not encompass previous inventions or developments that, despite
sharing no functional similarities with the invention in question, may have
made the invention easier to achieve. The following section will argue that
the USPTO and the courts should remain cognizant of this sort of non-similar
prior art because it too can affect the innovation environment and alter the
incentives necessary to ensure a healthy innovation policy quid pro quo.

C. The Innovation Environment

Conceiving of the world of invention and inventors as an innovation environment can help to illuminate the different types of prior art and the way they
can affect innovation.23 Inventions can alter the innovation environment and
make subsequent inventions more obvious.
There are two mechanisms by which inventions alter the innovation environment in ways that beget future inventions: (1) they provide inspiration
expansive and flexible approach to the obviousness question).
18
Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 17 (1966); see Allen Archery Inc., v. Browning Mfg. Co.
819 F.2d 1087, 1092 (Fed. Cir. 1987) (discussing the validity of using secondary considerations as a demonstration
of non-obviousness).
19
Graham, 383 U.S. at 1718.
20
MPEP 2141 (9th ed. Rev.7, March 2014).
21
See id. 904.
22
Id. 2141(II)(A)(1); see id. 904.02, 904.01(c) (describing the prior art search process and stating that the
search should include a search of analogous technology classes).
23
There is a long tradition of conceiving of the knowledge underlying science and engineering as an envi
ronment or space. See, e.g., Richard M. Shiffrin & Katy Borner,
Mapping Knowledge Domains, 101 P ROC . N AT L
A CAD . S CI . 5183, 5183 (2004) (describing the evolution of mapping knowledge); Lee Fleming and Olav Sorenson, Science as a Map in Technological Search, 25 S TRATEGIC M GMT. J. 909, 910 (2004) (conceptualizing science as
a recombinatorial search through multidimensional space).

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that future inventors build upon;24 and (2) they provide functionality useful to
the inventive process.25 All inventors to one degree or another have the first
of these effects. Every invention results in information that may prove useful
to future inventors. Patent examiners look for this type of useful information
when they conduct a prior art search. On the other hand, not all inventions
have the second of these effects, and those that do have it to varying degrees.
For instance, the discovery of the antibacterial properties of penicillin26
eventually led to a family of new drug inventions and treatment possibilities.27
This discovery provides an example of the first type of effect, an inspiration
effect, that inventions have on the innovation environment. The similarities
between these drugs and treatments would have been relevant prior art in a
first-order obviousness analysis.
On the other hand, consider the invention of something like the scanning
electron microscope (SEM).28 This groundbreaking invention undoubtedly inspired future inventions related to microscopes.29 However, the invention also
had a functional effect enabling previously impossible research; research that
led to many new inventions.30 However, these functionally-related inventions
enabled by the SEM would not have cited the SEM as prior art. In fact the SEM
would not have necessarily played an explicit role in any of the relevant patent
applications. After all, with no similarity between the two inventions, patent
procedures do not require examiners to explicitly take this type of functional
effect on obviousness into account.
To extend the innovation environment analogy further, one can think of the
inspiration effects that inventions have as additions to a map of the innovation
environment. In the same way that penicillins discovery revealed a new field
of research, inspiration effects show new areas to explore. As future inventors
explore these areas, they will sometimes make significant discoveries.
On the other hand, functional effects enable exploration and movement
through the environment. The invention of a new microscope shares simi24
This represents the idea of cumulative innovation where one invention leads to subsequent related inventions. See generally Fiona Murray & Siobhan OMahony, Exploring the Foundations of Cumulative Innovation:
Implications for Organization Science, 18 O RG . S CI . 1006 (2007).
25
This is similar to the notion of technology affordances, which stand for the proposition that people perceive of technologies by how they allow interaction with the environment. See William W. Gaver, Technology
Affordances, P ROC . OF THE SIGCHI CONFERENCE ON H UM . FACTORS IN COMPUTING SYSTEMS 79, 79 (ACM
1991).
26
See generally Alexander Fleming, On the Antibacterial Action of Cultures of a Penicillium, with Special Reference
to Their Use in the Isolation of B. Influenzae, 10 B RIT. J . OF EXPERIMENTAL PATHOLOGY 226 (1929).
27
See Selman A. Waksman, Antagonistic Relations of Microorganisms, 5 B ACTERIOLOGICAL REVIEWS 231, 23537
(1941) (showing an early example of usage of the word antibiotic and results of research that would eventually
lead Waksman to receive the Nobel prize); see also Selman A. Waksman - Biographical, N OBLEPRIZE . ORG, http:
//www.nobelprize.org/nobel prizes/medicine/laureates/1952/waksman-bio.html (last visited Oct. 25, 2015).
28
Electron Scanning Microscope, U.S. Patent No. 2,241,432 (filed Sept. 7, 1938) (issued May 13 1941).
29
See the many patents that directly or indirectly cite the Von Ardenne and Von Borries patent as prior art.
See, e.g., U.S. Patent No. 2,527,562 (filed Aug. 2, 1945) (issued Oct. 31, 1950); U.S. Patent No. 2,680,669(filed Nov.
26, 1947) (issued June 8, 1954); U.S. Patent No. 2,932,549 (filed Nov. 20, 1953)(issued Apr. 12 1960); U.S. Patent
No. 7,474,730 (filed Oct. 17, 2006) (issued Jan. 6, 2009).
30
See, Practical uses for the SEM, A USTRALIAN M ICROSCOPY & M ICROANALYSIS R ESEARCH FACILITY, http://
www.ammrf.org.au/myscope/sem/background/practical/practical/#prettyPhoto (last visited Oct. 25, 2015)
(describing uses for scanning electron microscopes including medical research, forensic science, materials science, biology and geology).

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larities with the introduction of a new vehicle or navigation system that better
enables inventors to explore the innovation environment, regardless of what
inspired the inventors to research their specific fields.
The transportation and navigation aids that help inventors explore the innovation environment can have important effects on the balance we try to
strike within innovation policy. New technologies that alter the ease of subsequent invention effectively make many inventions more obvious than they had
previously been. This obviousness may not derive from first-order similarity
effects but rather from the technologys second-order functionality effects.
The term obvious means to be [e]asily discovered, seen, or understood;
readily perceived by the eye or the intellect; plain; patent; apparent; evident;
clear; [or] manifest.31 Traditional non-obviousness analysis asks whether
given the information contained in the relevant prior art and its similarity to
the invention in questionan invention possesses easy discoverability.32 Unlike traditional first-order obviousness, second-order obviousness effects do
not arise from this sort of similarity. Rather, second-order obviousness arises
when the functions of an invention make something easier to discover.
I argue that, to ensure the continued effectiveness of and balance within
innovation policy, policymakers and adjudicators like the USPTO need to be
aware of these second-order effects and understand how they play into the obviousness analysis. However, before moving on to an empirical exploration of
second-order obviousness effects and their implications for innovation policy,
the functional effects that ICTs have on the innovation environment requires
further examination. This will help demonstrate the mechanisms through
which second-order obviousness can ease invention.

II. ICTs and Innovation

No group of technologies has more changed the innovation environment over
the past few decades than ICTs. These technologies have had inspiration effects that have expanded the map of the innovation environment, leading to
inventions in research fields that previously did not exist.33 However, much
of the transformation has taken place via the functional effects that ICTs have
had on the way inventors engage in research and development work.34 These
functional effects have reduced invention costs in many technology areas, effectively making many types of invention more obvious than they would otherwise have been.
Information technologies reduce invention costs in at least three ways:
(1) they improve access to information, increasing the odds that inventors
31

B LACK S L AW D ICTIONARY 1078 (6th ed. 1990).

See MPEP 2141 (9th ed. Rev. 7, March 2014).
33
See, e.g., James Bessen & Robert M. Hunt, An Empirical Look at Software Patents, 16 J. OF E CON . & M GMT.
S TRATEGY 157, 15759 (2007) (noting the rapid growth of software patents in recent years).
34
See Samuel Kortum & Josh Lerner, What is Behind the Recent Surge in Patenting?, 28 R ES . POLICY 1, 24 (1999)
(showing a large scale increase in patenting activity and arguing that much of the growth has occurred due to
recent changes in the innovation process).
32

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will find relevant inspirationan information-access effect; (2) they ease collaboration, enabling teams to work together and build upon one anothers
strengthsa collaboration effect; and (3) they enable better measurement of market demandsa market transparency effect. This Section will discuss each of
these in turn.

A. ICTs Information-Access Effect on Innovation

Information is an essential component in the innovation process.35 When inventors create a new invention, they invariably rely on humanitys store of
knowledge, drawing inspiration from prior art and recombining it into new
creations. Some of that knowledge will be readily available as the tacit knowledge within a given discipline.36 Other knowledge will be codified in references, publications, and patents37 providing inventors with guidance and inspiration. Regardless of where the knowledge resides, few, if any, inventors
do not rely on the knowledge of those that preceded them.38
The patent law system is structured on the premise that information plays
a vitally important role in innovation. In exchange for disclosing the information necessary to replicate an invention, the law grants the inventor a temporary monopoly.39 This bargain that the public strikes with inventors rest
upon an implicit assumption: that future researchers and inventors will have
the ability to build upon the work of their predecessors to develop new and
improved inventions.40 Many courts and scholars consider this information
disclosure function one of the patent systems most important justifications.41
Information is not only an essential input for innovation, it is also the primary output.42 When the USPTO grants a patent, it grants rights not to a physical good, but to information. When an inventor obtains a patent, she does not
gain rights over any particular machine, device or property, but rather gains
the right to control the underlying know-how that constitutes her contribution
to knowledge. This unique trait of the innovation process, where information
is both the primary input and the primary output, creates a feedback loop. If
35
See Paul M. Romer, Endogenous Technological Change, J. OF P OL . E CON . S71, S79 (1990) (explaining that the
existing stock of knowledge is a principal component in the creation of new knowledge).
36
See Kaj U. Koskinen & Hannu Vanharanta, The Role of Tacit Knowledge in Innovation Processes of Small Technology Companies, 80 I NT L J. OF P RODUCTION E CON . 57, 63 (2002) (highlighting the utility of tacit knowledge in
the innovation process).
37
See Dan L. Burk, The Role of Patent Law in Knowledge Codification, 23 B ERKELEY T ECH . L.J. 1009, 1012 (2008)
(explaining the role patents play in codifying knowledge).
38
See generally Scotchmer, supra note 14.
39
See Bonito Boats, Inc. v. Thundercraft Boats, Inc., 489 U.S. 141, 15051 (1989) (stating that the federal patent
system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful,
and nonobvious advances in technology and design in return for the exclusive right to practice the invention for
a period of years.).
40
For this reason, common law has long allowed for a research-use defense to patent infringement. See Madey
v. Duke University, 307 F.3d 1351, 136162 (Fed. Cir. 2002) (noting the existence of the research exemption while
limiting its scope).
41
See Bonito Boats, 489 U.S. at 15051; Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 48081 (1974); see also
Jeanne C. Fromer, Patient Disclosure, 94 I OWA L. R EV. 539, 541 (2008). But see Alan Devlin, The Misunderstood
Function of Disclosure in Patent Law, 23 H ARV. J.L. & T ECH . 401, 40106 (2010) (arguing that the disclosure
function does not serve as important a function as many assume).
42
Arrow, supra note 7, at 616.

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information begets innovation, and innovation begets information, then innovation begets innovation.
Information technologies compound this informationinnovation feedback
loop. The invention of ICTs not only adds to the total stock of information
in the manner of any invention, but it also facilitates work with information,
thereby strengthening the signal in the feedback loop. This information effect is
the first of the three principle ways that ICTs affect innovation, and ultimately
give rise to second-order obviousness.
Because information is an essential input in the innovation process, it has
long been popular to associate changes in ICTs with changes in the innovative process.43 These arguments are intuitively attractive. For example, it is
obvious that the invention of the printing press allowed for greater dissemination of knowledge and thereby more widespread innovation.44 However,
despite their intuitive appeal, these effects have long been difficult to empirically demonstrate. While many would agree that the telegraph probably had
some effect on the speed of future inventions, there is insufficient data to prove
this assertion and determine the effect size. Furthermore, possibly because
these effects have proven difficult to validate and measure, neither the courts
nor Congress have taken them into account when interpreting and designing
patent law. In Part III, this Article will empirically support the relationship
between ICT access and increased innovation. However, the remaining two
mechanisms by which ICTs create second-order obviousness effects require
further analysis.

B. ICTs Collaboration Effect on Innovation

In addition to the information effect that ICTs have on innovation, they also
play a related but distinct role in innovation by facilitating collaboration between innovators.45 Much of the folk wisdom surrounding the way innovation occurs would suggest that inventors tend to do their inventing while
sequestered away in laboratories, slaving away in isolated research and development.46 Closer investigation, however, demonstrates that invention is a
social practice,47 and that inventors embed themselves in communities of col43
See generally H AROLD A. I NNIS, E MPIRE AND C OMMUNICATIONS (1972); N EIL P OSTMAN, T ECHNOPOLY:
T HE S URRENDER OF C ULTURE TO T ECHNOLOGY (1993); Boyan Jovanovic & Rafael Rob, The Growth and Diffusion
of Knowledge, 56 T HE R EV. OF E CON . S TUD . 569, 571, n.2 (1989).
44
See Jovanovic & Rob, supra note 43, at 571 (The invention of the printing press, telephone, mathematics and
so on, have all made communication easier and more precise. These inventions may well be largely responsible
for the sustained growth the world has experience in recent times.); see generally E LIZABETH L. E ISENSTEIN,
T HE P RINTING P RESS AS AN A GENT OF C HANGE : C OMMUNICATIONS AND C ULTURAL T RANSFORMATIONS IN
E ARLY-M ODERN E UROPE (1980).
45
In truth, this effect could be characterized as an information effect, because collaboration relies on the exchange of ideas and information. However, it remains useful to distinguish the communication functions of
information and communication technologies because of the importance of collaboration to modern innovation
practices.
46
See Jasjit Singh & Lee Fleming, Lone Inventors as Sources of Breakthroughs: Myth or Reality?, 56 M GMT. S CI . 41,
41 (2010) (noting the history of famous inventors extolling the virtues of lone inventors); Mark A. Lemley, The
Myth of the Sole Inventor, 110 M ICH . L. R EV. 709, 710 (2012) (explaining the inherent sole-inventor bias in patent
law.
47
Lemley, supra note 46, at 71012.

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laborators and competitors.48 Moreover, not only is collaboration increasingly

common in research and development, but it also leads to higher-quality inventions.49
As with other forms of organizational and interpersonal communications,
ICTs have increased and accelerated the channels for the communication and
collaboration that takes place in research and development projects.50 As communication becomes faster and easier, collaboration will become more efficient, which in turn will increase the rate of innovation as ideas are shared
and improved upon more quickly.
To illustrate this phenomenon it is useful to imagine how ICTs have affected collaboration, resulting in faster, easier, and more efficient collaborative innovation. E-mail provides a useful example, showing how instant written communication has the potential to accelerate collaboration, especially for
teams that are not co-located.51 By allowing collaborators to instantly communicate with one another essentially for free and share results, images, and
documents, e-mail demonstrates the paradigm shift that ICTs have had on collaborative communication. Prior to e-mails availability, collaborators needed
to share physical documents, relying on the postal service, couriers, and eventually fax machines to communicate with one another.
This collaboration effect is the second of the three effects that ICTs have on
the innovation process. With collaboration playing the central role that it now
does in producing inventions,52 any technological improvements that make
collaborating easier, will also make inventing easier.

C. ICTs Effect on Market Transparency

Along with improving our ability to work with information and collaborate,
ICTs also make markets more transparent. Information technology allows for
faster and more accurate access to market information.53 This improved access
48
Laura G. Pedraza-Farina, Patent Law and the Sociology of Innovation, 2013 W IS . L. R EV. 813, 83839 (2013)
(describing scientific communities of practice.).
49
Stefan Wuchty et al., The Increasing Dominance of Teams in Production of Knowledge, 316 S CI . 1036, 103738
(2007) (showing that patents by teams of inventors have greater impact than those by solo inventors); see also
Singh & Fleming, supra note 46, at 55.
50
See Jorge Schrottke & Thomas Weber, The End of the Great-Man Theory of Innovation,
B USINESSWEEK . COM
(July
10,
2013)
http://www.businessweek.com/articles/2013-07-10/
the-end-of-the-great-man-theory-of-innovation (noting a shift in management styles towards increased
collaborative research and development); see generally Samer Faraj et al., Knowledge Collaboration in Online
Communities, 22 O RG . S CI . 1224 (2011).
51
See Donald Beaver, Reflections on Scientific Collaboration (and Its Study): Past, Present, and Future, 52 S CIEN TOMETRICS 365, 375 (2001) (stating that research is nearly impossible without e-mail). E-mail is only one
example of how ICTs have transformed work. There are many other examples of how ICTs have eased collaboration, and there is in fact a whole field of collaborative software or groupware development, focused
on developing platforms to enable more effective collaborative work. See Collaborative software, W IKIPEDIA,
http://en.wikipedia.org/wiki/Collaborative software (last visited Oct 25, 2015).
52
See Wuchty et al., supra note 49, at 103738 (showing that all fields of science, social science, and patenting
have seen increasing collaboration rates in recent decades).
53
See Nelson F. Granados et al., The Impact of IT on Market Information and Transparency: A Unified Theoretical
Framework, 7 J. OF THE A SS N FOR I NFO . S YSTEMS 14849 (2006).

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to market information in turn enables more successful innovation.54

Companies and inventors can now more easily probe the market to measure demand for potential inventions, and get feedback on works in development.55 In addition, the rise of big data and customer tracking suggests that
this market transparency effect will only become stronger in the near future.56
As more and more firms track consumption patterns and as methods and tools
for analyzing these vast stores of data become more sophisticated, the demand
for potential inventions becomes more transparent.
With more transparent demand one can expect to see more efficient innovation. Companies will gain the ability to more accurately tailor their inventive
activities toward successful developments with a higher potential for success.
In theory this should lead to more inventions to fill these demands and more
patents to cover them.
This market transparency effect is the third of the three ICT effects on the innovation process. The magnitude of this effect will vary based on the type
of innovation in question because ICTs will make some markets more transparent than others. For instance, software development firms can easily track
software consumption behavior and then incorporate lessons learned from the
real-world use of their products into future developments.57 Other, less-fullywired, products are not affected to the same degree. For instance, demand for
new drugs or medical treatments are not made more transparent by improvements in ICTs. Robust public health statistics have existed for a long time.58
While the rise of the Internet may have made it somewhat easier for medical
research and development firms to measure market demand, they have not
experienced the transformative changes that other firms have.
In addition, ICTs make markets transparent not only by allowing direct
tracking of consumer product use and demand, but also by producing vast
records of human behavior and the technologies required to analyze these
large datasets. These records of human behavior come from many sources,
54

See Brian D. Ottum & William L. Moore, The Role of Market Information in New Product Success/Failure, 14 J.
P RODUCT I NNOVATION M GMT. 258, 26566 (1997) (showing that the ability to process market information
is positively correlated with a firms new product success). From an innovation theory perspective, this is
similar to the role that market knowledge plays in Nelsons model of the role of knowledge in research and
development. See Richard R. Nelson, The Role of Knowledge in R&D Efficiency, 97 T HE Q. J. OF E CON . 453,
460 (1982) (A stronger knowledge base not only enhances the general productivity of search. It increases the
sensitivity of search to the fine structure of market situation.).
55
Robert F. Lusch et al., The Phase Transition of Markets and Organizations: The New Intelligence and Entrepreneurial
Frontier, 21 IEEE I NTELLIGENT S YSTEMS 5, 6 (describing modern markets as a conversation between actors
including firms and consumers).
56
See Howard Baldwin, When Big Data Projects Go Right, F ORBES (Feb. 2, 2015, 11:22 AM), http://www.
forbes.com/sites/howardbaldwin/2015/02/02/when-big-data-projects-go-right/(describing the rise of big
data driven marketing).
57
Use tracking has become quite common, where nowadays much software prompts the user on installation
to opt-in to tracking, while others include use tracking as a mandatory part of the terms of use in which users
must agree. See David M. Martin et al., The Privacy Practices of Web Browser Extensions, 44 C OMM . OF THE ACM
45, 45 (2001) (explaining the free-to-use provided users allow tracking business model); On the enforceability of
clickwrap agreements, see Feldman v. Google, Inc., 513 F. Supp. 2d 229, 23538 (E.D.Pa. 2007); ProCD, Inc. v.
Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996).
58
See generally CDC, N ATIONAL C ENTER FOR H EALTH S TATISTICS , 1960-2010, C ELEBRATING 50 Y EARS
(2010), available at http://stacks.cdc.gov/view/cdc/23174.
OF

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including Internet clickstream data,59 social media services,60 and online shopping records.61 Data mining uses ever-more-powerful computers62 and evermore-sophisticated algorithms63 to analyze this data and extract useful market
information. This makes the market more transparent for innovators and reduces the cost of innovation by allowing them to more accurately tailor their
research and development activities to meet precise market demand.
***
The above has theorized how inventions affect the innovation environment. Arguing that any given invention can have two types of effect on the
innovation environmentinspiration effects, or functional effectsone can see
that ICTs have especially potent functional effects on the innovation environment. They supplement inventors inventive abilities by enabling work with
information, communication, and collaboration. By doing so, ICTs effectively
lower the cost of innovation, making many types of invention more obvious
than they were previously. A lowered cost for innovation should lead to an increase in inventions and patents granted. To support the above assertions, the
next section of this Article will empirically support the relationship between
ICT access and innovation.

III. Empirically Validating the Relationship between ICTs

and Innovation
The above analysis has provided a variety of theoretical explanations of the
ways in which improvements in ICTs may lead to lower cost invention.64 By
making information, the primary input in the innovation process, more readily available, ICTs lower research costs and increase the chance that inventors
will find inspiration for their inventions.65 Similarly, by enabling more effective collaboration, ICT improvements facilitate teamwork critical to modern
59
Alan L. Montgomery et al., Modeling Online Browsing and Path Analysis Using Clickstream Data, 23 M KTG . S CI .
579, 579 (2004) (explaining that website use monitoring provides a new facet to predicting consumer behavior
. . . .).
60
Daniel Zeng et al., Social Media Analytics and Intelligence, 25 IEEE I NTELLIGENT S YSTEMS 13, 14 (2010) (Forprofit businesses are tapping into social media as both a rich source of information and a business-execution
platform for product design and innovation, consumer and stakeholder relations management, and marketing.
For them, social media is an essential component of the next-generation business intelligence platform.).
61
Cesar Astudillo et al., Editorial: Data Mining in Electronic Commerce-Support vs. Confidence, 9 J. OF T HEO RETICAL & A PPLIED E LECTRONIC C OM . R ES . I, I (2014) (In recent years with the rapid growth of electronic
commerce and the large amounts of data collected through operational transactions, data mining techniques are
becoming more useful to discover and understand unknown customer patterns.).
62
Moores law, stating that computational power will double every one-to-two years, has demonstrated relative accuracy over the past four decades. See Ethan Mollick, Establishing Moores Law, 28 IEEE A NNALS OF THE
H IST. OF C OMPUTING 62, 62 (2006).
63
For an overview of data mining algorithms see Xindong Wu et al., Top 10 Algorithms in Data Mining, 14
K NOWLEDGE & I NFO . S YSTEMS 1 (2008).
64
See supra Part I.
65
See supra Part I.A.

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research66 and generate more innovation.67 In addition, ICT improvements

have allowed firms to more accurately measure, and thus more quickly respond to, market demand for innovation.68 However, ultimately these explanations of how ICTs affect the innovative process are theoretical conjecture.
Without some empirical demonstration that a relationship between ICT access
and innovation exists, it will remain difficult to determine how, or even if, the
law should respond.
Measuring both access to ICTs and the number of patents granted can help
to determine whether ICTs have a significant effect on the innovative process.
If the above discussion correctly suggests that ICTs decrease the cost of invention, we should see increased rates of patenting in areas where greater access
to information technology exists.
Measures of access to discrete information technologies remain difficult to
procure, but there are relatively reliable measurements of Internet access rates
across the United States.69 By focusing on the rate of Internet access over time
and its relationship to the number of patents granted to inventors within each
state, one can test whether a relationship between ICTs and greater innovation
exists.
The below analysis uses a panel regression model to test the hypothesis
that Internet access relates to an increase in patenting behavior. The model
includes state-level annual patent grants per 1000 people as the dependent
variable, and Internet access rates as the independent variable. The full model
also includes a number of control variables, such as federal research and development spending per capita, private research and development spending
per capita, the per capita number of science and engineering PhDs working in
state, and state GDP per capita. The regression was performed using a withinsubjects fixed-effects model.70

A. Patent Data
Patent data from the year 1994 and later was used to calculate the number of
patents granted per state per year. This data has disambiguated individual
inventors and where available has included data on their home state.71 The
annual number of patents granted per 1000 individuals in the state population
is the dependent variable used in the final model. State population numbers
for this and other per capita measures were taken from population estimates
provided by the United States Census Bureau (Census).72
66

Wuchty et al., supra note 49, at 103738; see, e.g., Toshio Murase et al., Teams Are Changing: Time to Think
Networks, 5 I NDUS . & O RGANIZATIONAL P SYCHOL . 41 (2012).
67
See supra Part I.B.
68
See supra Part I.C.
69
See supra Part II.B.
70
For more information on panel regression and the software used see generally Yves Croissant & Giovanni
Millo, Panel Data Econometrics in R: The Plm Package, 27 J. OF S TAT. S OFTWARE 1 (2008).
71
See Ronald Lai et al., Disambiguation and Co-Authorship Networks of the US Patent Inventor Database, 2138
H ARV. I NST. FOR Q UANTITATIVE S OC . S CI .,941 (2011). In the referenced article, where a patent listed inventors
from more than one state, each state was credited with that invention.
72
Population Estimates, U.S. C ENSUS B UREAU, http://www.census.gov/popest/ (last visited Oct. 25, 2015).

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B. Internet Access Data

The United States Census Computer and Internet Use survey was used to determine Internet access rates for each state.73 Unfortunately, the Census does
not perform the Internet use survey every year. The Census started the survey in 1994. Internet use questions were again asked in 1997, 1998, 2000, 2001,
2003, 2007, and 2009. Respondents who answered affirmatively when asked
if they had Internet access at home were counted as yes respondents. In
1994 the survey did not explicitly ask whether respondents had Internet access at home, but rather asked a series of questions about whether the home
computer was used for a variety of online activities, such as for sending e-mail
or shopping.74 If respondents answered yes to any of these questions, they
were counted as having Internet access at home. These data were then used to
calculate a simple rate of Internet access for each state for each surveyed year.

C. Control Variables
Examining the relationship between Internet access and patenting can show
whether the two are correlated with one another.75 However, there are many
potential confounding factors that could also explain why patenting might increase in a jurisdiction concurrently with a growth in its Internet access rate. To
ensure that the model accurately measures the relationship between Internet
access and patenting, it must control for as many of these potential confounding factors as possible.
1. State GDP
Regional wealth is of the most obvious factors that might relate to both Internet
access and patenting. As a states GDP rises, one would expect to see both an
increase in patenting76 and an increase in Internet access.77 Therefore, any
model attempting to measure the effect that Internet access has on patenting
must include controls for the per capita GDP of each state.
To do so, state GDPs were taken from the Bureau of Economic Analysis
Regional Data collection,78 and per capita GDP was subsequently computed
using the census state population estimates.79 These were standardized to 2012
dollars using conversion factors from the Bureau of Labor Statistics Consumer
Price Index data.80
73

Computer and Internet Use, U.S. C ENSUS B UREAU, http://www.census.gov/hhes/computer/ (last visited
Oct. 25, 2015).
74
Id.
75
Indeed the two have a strong correlation. See infra Part III.D.
76
See Iftekhar Hasan & Christopher L. Tucci, The InnovationEconomic Growth Nexus: Global Evidence, 39 R ES .
POL Y 1264, 1267 (2010) (showing a significant and positive correlation between GDP and R&D effectiveness).
77
See Sampsa Kiiski & Matti Pohjola, Cross-Country Diffusion of the Internet, 14 I NFO . E CON . & P OL Y 297,
3089 (2002) (showing that GDP per capita is an important predictor of Internet usage rates).
78
Regional Data, B UREAU OF E CON . A NALYSIS , http://bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=
1&acrdn=1#reqid=70&step=1&isuri=1 (last visited Oct. 25, 2015).
79
Population Estimates, supra note 72.
80
CPI Res. Series Using Current Methods, B UREAU OF L ABOR S TATISTICS , http://www.bls.gov/cpi/cpirsdc.
htm (last visited Oct. 25, 2015).

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2. R&D Spending
Along with raw GDP counts, one can also control for direct spending on R&D.
As R&D spending increases we would expect to see a concomitant increase in
patents granted.81 Thus, to accurately measure the effect that Internet access
has on patenting, one needs to hold R&D spending constant. As such, the full
model includes two R&D control variables.
Both R&D spending variables rely on data from the National Center for Science and Engineering Statistics (NCSES).82 The first R&D expenditure variable
represents federal R&D spending per capita. The second represents business
R&D expenditure per capita. Each of these is calculated for each state. The
NCSES had missing data for some years, such as in 2009 when federal R&D
funding data was not available. In these instances, the trend from the previous
year was projected one year forward to impute the missing data.83
3. Science and Engineering PhDs employed
Along with GDP and R&D expenditure, we would expect the number of researchers working in in any given state to be significantly related to the number of patents granted to inventors there.84 While it remains difficult to obtain
exact measures of the number of inventors who work in a state, one can use the
NCSES data on the number of Science and Engineering PhDs working in each
state85 to at least partially control for the number of researchers. The assumption here is that an increased number of researchers in a state will presumably
lead to a greater rate of patenting. Controlling for these PhD holders helps
the model to account for this and estimate any independent effect that Internet
access may have.

D. Results
Internet access grew remarkably quickly in the late 1990s and early 2000s. Figure 1 shows the mean level of Internet access by state for the years where data
was available. At the same time, a marked increase in the rate of patent granting occurred. Figure 2 graphs the mean number of patents granted per 1000
people.86 Taken together, these two graphs suggest that these two phenomena
are at the least strongly collinear.
81

Jinyoung Kim & Gerald Marschke, Accounting for the recent surge in U.S. patenting: changes in R&D expenditures, patent yields, and the high tech sector, 13 E CON . OF I NNOVATION & N EW T ECH . 543 (2004).
82
NCSES Data, N AT L S CI . F OUND., http://www.nsf.gov/statistics/data.cfm (last visited Oct. 25, 2015).
83
For example, to impute the 2009 Federal R&D spending, the rate of change from 2007 to 2008 was assumed
constant from 2008 to 2009 and values for 2009 were computed accordingly.
84
While a facially valid supposition, evidence exists that, at least until the recent patenting boom, growth in
the number of researchers did not lead to growth in the number of patents granted. Samuel S. Kortum, Research,
Patenting, and Technological Change, 65 E CONOMETRICA 1389, 1391 (1997).
85
NCSES Data, supra note 82.
86
The means for both Internet access rates and patents granted graphed here are the between-state means
rather than the national mean.

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Figure 1

Figure 2
The regression results show a statistically significant positive relationship between Internet access rates and the rate of patents granted by state. Table 1
shows that even when controlling for state differences in GDP, federal R&D
funding, private R&D funding, and the number of science and engineering
PhDs employed in each state, the relationship between Internet access rates
and patent granting rates remains highly significant.

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Table 1
Internet
GDP
Fed RD
Biz RD
PhDs

Estimate

Std. Error

t-value

Pr(t)

4.25E-003
-2.62E-006
9.13E-007
6.38E-005
1.19E-001

5.76E-004
3.31E-006
1.94E-006
3.01E-005
3.84E-002

7.3759
-0.791
0.4718
2.1168
3.0953

1.18E-012***
0.429466
0.63738
0.034974*
0.002123**

Signif. codes: 0 *** 0.001 ** 0.01 * 0.05 . 0.1 1

Total Sum of Squares: 16.182
Residual Sum of Squares: 11.225
R-Squared : 0.30634
Adj. R-Squared : 0.26429
F-statistic: 31.0902 on 5 and 352 DF, p-value: 2.22e-16

The above model uses granted patents as the dependent variable, which
can prove problematic in that a lag period generally exists between when an
invention is made and a patent subsequently applied for and when a patent is
granted.87 This pendency period varies from patent to patent, but over the
past two decades has generally hovered somewhere between 2-3 years.88 To
attempt to more accurately model the Internets effect on patenting, one needs
to take account of this pendency period. To do so, a second model was run
with the dependent variablepatents per 1000 peoplelagged by two years.
Table 2 shows that, even when the patent rate lags by two years to account
for patent pendency, Internet access rates show a significant and positive relationship with patents. The magnitude of the effect is somewhat diminished
in the lagged model, but it does remain statistically significant. The rest of the
model coefficients remain similar. This suggests that even when controlling
for important predictors of patentable research activity, like research and development spending and the number of researchers working in a state, when
Internet access increases, one can expect the number of patents granted to increase after a few years.

E. Additional Tests to Support the Existence of an ICT Effect on Innovation

While the above model supports the assertion that improvements in information and communication technology lead to increased rates of patenting, like
any statistical model, it is not immune to criticism. To shore up support for
87
See generally Jason J. Chung, Patent Pendency Problems and Possible Solutions to Reducing Patent Pendency at the
United States Patent and Trademark Office, 90 J. PAT. & T RADEMARK O FF . S OC Y 58 (2008).
88
USPTO Annual Reports, U.S. PATENT & T RADEMARK O FFICE , http://www.uspto.gov/about/stratplan/ar/
(last visited Oct. 25, 2015).

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Table 2
Internet
GDP
Fed RD
Biz RD
PhDs

Estimate

Std. Error

t-value

Pr(t)

2.54E-003
-1.72E-006
2.96E-006
1.41E-004
1.92E-001

6.57E-004
3.78E-006
2.21E-006
3.43E-005
4.38E-002

3.8758
3.78E-006
1.342
4.114
4.3763

0.0001268***
6.49E-001
0.180459
4.85E-005***
1.59E-005***

Signif. codes: 0 *** 0.001 ** 0.01 * 0.05 . 0.1 1

Total Sum of Squares: 18.416
Residual Sum of Squares: 14.576
R-Squared : 0.20854
Adj. R-Squared : 0.17992
F-statistic: 18.5495 on 5 and 352 DF, p-value: 2.3198e-16
the position that ICT developments have altered the way innovation happens
and that these alterations merit consideration by law and policy makers, this
Article provides two additional tests below.
1. Analyzing a Technological Subset
The above analysis has shown that access to the Internet significantly correlates with increased patenting.89 Even when controlling for R&D expenditure,
state GDP, and the number of researchers working within the state, we still
observe a positive and statistically significant relationship between Internet
access and patenting rates. One could rely on the theoretical explanations for
how ICTs affect innovation described in Part II and point to this correlation as
evidence of just such an effect. Others, however, may see this evidence and
conclude that the increased rate of innovation may not be due to the functional nature of ICTs, but rather due to the fact that states with higher rates
of Internet access also had more computers and computer-professionals during this time. During the period under examination, many technological improvements to computers and related technologies occurred. While these improvements would have led to increased patenting, especially of ICT-related
technologies, nothing clearly indicates that the increase could be attributed
to any functional attributes of ICTs. Indeed, the 1990s and early 2000s might
have happened to be a particularly fruitful period for computer-related inventions, with many avenues for relatively easy inventions opened by early
path-breaking developments in computer technology.
If this were the case, and states with higher Internet access rates experienced greater levels of patenting simply because more computers and computer professionals lived in them during the period of study, then we would
not be able to conclude that ICTs have the sort of functional effects on the innovation environment posited previously. To eliminate this alternate explanation
89

See supra Part III.

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one can perform an analysis similar to that in the preceding section, but instead
of using the total number of patents per capita as the dependent variable, use
a subset that excludes computer-related technologies.
To do so I performed an identical analysis as that described above, using
the same predictor and control variables, but excluding any patents from the
state patents per capita measure if they were classified in USPTO patent classes
that are closely related to computer technologies.90 Doing so demonstrates
that, when even when excluding computer-related technologies from the analyzed data, Internet access remains positively and statistically significantly
related to patenting rates.91 This rules out the alternate explanation suggested
above and strengthens the argument that something about Internet access, and
ICTs more generally, that encourages invention.
2. The Internet and Collaborative Invention
If ICTs genuinely do decrease the costs of innovation by facilitating easier and
lower-cost collaboration, the patenting record should show this. Patent law
requires that when two or more individuals create an invention, they each
be listed as inventors in the application.92 If the above assertion about the
relationship between ICTs and collaboration holds true,93 one would expect
that, as a states Internet access rises, one would also see a rise in the proportion
of patents filed in that state listing more than one inventor.
Using the same patent data as that in the above analysis, but changing
the dependent variable from patents granted to a collaborative patenting rate
helps get at this issue. The collaboration variable is defined as the proportion
of patents in each state that list two-or-more authors. So, in the case of a state
like New York that was home to inventors listed on 9,772 patents in the year
2000, 1,436 of which listed more than one author, the collaboration rate would
be 0.147.
Running similar within-subjects fixed-effects panel regression models as
those above94 shows that Internet access has a statistically significant relationship with a states collaboration rate. That is to say, as Internet rates increase
in a given state, we expect to also see an increase in the proportion of patents
90
All patents in the 300-level classesencompassing many electrical technology inventionsand the 700-level
classesencompassing many computer and data storage and processing inventionsalong with the following
specific class numbers were excluded from the data: 136 Batteries: Thermoelectric and Photoelectric, 174 Electricity: Conductors and Insulators, 200 Electricity: Circuit Makers and Breakers, 257 Active Solid-State Devices,
439 Electrical Connectors, 445 Electric Lamp or Space Discharge Component or Device Manufacturing. These
excluded classes are likely over-inclusive and provide a conservative test as to whether the increased patenting
observed relates to computer technology activity rather than some unique trait of ICTs. For more about the
patents granted in each class by year see Patent Counts By Class By Year, JANUARY 1977 DECEMBER 2013
, U.S. PATENT & T RADEMARK O FFICE, http://www.uspto.gov/web/offices/ac/ido/oeip/taf/cbcby.htm (last
visited Oct. 25, 2015).
91
While the magnitude of the effect-size decreases with the exclusion of computer-related patentsthose with
a coefficient of 1.99E-003 rather than the 4.25E-003 observed aboveit remains statistically significant at the p
0.001 level, with comparable results for the lagged models.
92
35 U.S.C. 116(a) (2006) (When an invention is made by two or more persons jointly, they shall apply for
patent jointly . . . .).
93
See supra Part I.B.
94
See Croissant & Giovanni supra note 70 and accompanying text.

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Figure 3

granted to inventors in that state that include more than one inventor. This
observation provides additional support for the theory that ICTs have significant effects on the innovation process, and that enabling collaboration is one
of those effects.95
It is possible that the collaboration effect that the Internet causes on the
innovation process might not be immediate. To address this possibility, additional models that lagged the collaboration rate by both one and two years
were calculated. In both of these scenarios the Internets significant and positive relationship with collaboration rates remained.

To further support the point that Internet access makes collaborative innovation easier, we can also look to the type of collaboration that occurs. If inventors use ICTs to facilitate collaborative innovation, one would expect to
see more collaborations amongst non-co-located inventors. That is to say, one
would expect to see inventors from different parts of the country working together more than they previously had.
Figure 3 shows the national rate of interstate collaboration during the period of analysis, which represents the proportion of collaborative inventions
that include authors from more than one state. As Internet access became
more common across the country, not only did collaborative inventing become
95

Contact the author for full results or for more information on the data processing and analysis applied.

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more common, but collaborating with inventors from different states also became more common. Statistically modeling this by state though use of Internet
access as a predictor of the rate of collaboration shows that Internet access is
indeed significantly and positively related to the rate of collaboration, even
when taking into account all of the control variables included in the previous
model. This remains true for same-year and lagged models.
***
While the between-state differential effect that the Internet may have on
inventive activity has likely disappeared due to the generally high rates of Internet access across the country, the lessons about innovation that this model
teaches remain relevant. The above analysis shows that access to powerful
ICTs like the Internet can lead to more inventions and an increase in patenting behavior. As Internet access spread across the country, those states that
enjoyed higher rates of access also enjoyed higher rates of patenting. Even
when excluding computer-related technologies from the analysis and controlling for major predictors of patenting like R&D expenditures, state GDP, and
the number of researchers working within the state, we see that Internet access
is related to more patented inventions. This increase is due to the second-order
obviousness effects that arise from ICT functionality. As ICTs have made information easier to work with, collaboration easier to engage in, and market
research easier to perform, they have effectively made invention easier. The
next Part will turn to how the law should react to this important lesson.

IV. How Should Innovation Policy React to SecondOrder Obviousness?

The above analysis has argued that all inventions affect the innovation environment in one of two ways: via the production of new information that can
be used as an inspiration for future inventions, and via functional effects that
change the way research and development work is done.96 Patent law addresses the first of these effects by requiring that new inventions not be too
similar to, or simplisticly derivative of, those that came before.97 This is what
I refer to as first-order obviousness, and is generally what courts, legislators,
and the USPTO have in mind when they refer to obviousness. The second
effect that inventions havethat of enabling inventive behaviorleads to a
different sort of obviousness that I refer to as second-order obviousness. As
currently designed, patent law does not explicitly engage with second-order
obviousness. There are ways that it may be implicitly accounted for in patent
doctrine, but these risk sweeping functional effects under the rug and not sufficiently taking them into account while balancing innovation incentives.
96

See supra Part I.C.

See 35 U.S.C. 102 (2012) (requiring that an invention be new to qualify for patentability); id. at 103
(requiring that an invention be sufficiently different from existing technologies).
97

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This Part will discuss how current patent law should deal with secondorder obviousness, and improvements that could be made to ensure that the
boundaries of patentability remain appropriately drawn. Suggested improvements include: (1) nuancing secondary non-obviousness considerations to respond to the funcational effects that ICTs have had on the innovation system;
(2) acknowledging the rise of team research by changing the person having
ordinary skill in the art standard into a team having ordinary skill in the art
(THOSITA) standard; (3) altering the text of Section 103 to encourage patent
examiners to account for functional technologies that may lead to secondorder obviousness; and (4) creating a USPTO innovation technology assessment office, charged with making discrete institutional silos aware of inventions outside their field of expertise that may have relevance to their fields
innovation environment.

A. How the Innovation System May Currently Account for SecondOrder Obviousness
While current innovation policy does not explicitly account for the secondorder obviousness effects that inventions like ICTs can have, courts do have
some doctrinal tools that partially take these considerations into account. As
argued above, ICTs have three types of functional effects on the innovation environment that increase second-order obviousness: information effects, collaboration effects and market transparency effects.98 Through these effects, ICTs
enable more efficient work with information, help inventors work together,
and clarify what sorts of inventions inventors should focus on.
These effects are all to some degree related to obviousness considerations
that courts have long taken into account when assessing patent validity. For
instance, the information effectwherein ICTs make it easier for inventors to
access the information that comprises an essential component in the innovative processbrings to mind the way courts consider the knowledge possessed by a person having ordinary skill in the art.99 Similarly, the market transparency effectwherein ICTs enable inventors to better measure market demand for potential inventions and thus more efficiently focus their
energiesbrings to mind secondary considerations about pre-existing market
demand.100 The improved ease of collaboration that ICTs allow does not fit as
neatly into current non-obviousness analysis, but could be considered closelyrelated to the level of ordinary skill in the . . . art101 as collaborative teams
undoubtedly possess more collective skill than their individual members.
As such, the current innovation system already has some ability to respond
to changes in the innovation environment like those brought about by ICT developments. Courts and the USPTO can and should take the innovation environment into consideration during the non-obviousness analysis. The chal98

See supra Part II.

KSR Intl Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007).
100
Id. (stating that non-obviousness analysis requires courts to look to the effects of demands known to the
design community or present in the marketplace . . . .).
101
Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 17 (1966).
99

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lenge, however, lies in understanding when the innovation environment has

changed, how it has changed, and how those changes may have affected the
innovation process behind a given invention.
In the case of ICTs, certain aspects of the current non-obviousness doctrine could be used to redraw the bounds of patentability in response to their
second-order obviousness effects. Current non-obviousness doctrine initially
applies the Graham factors to determine whether a claimed invention is unpatentable.102 In addition to the Graham factors, courts and the USPTO look to
secondary considerations of non-obviousness,103 and at times apply the teaching, suggestion, or motivation (TSM) test.104 The below will show that both
the Graham factors and secondary patentability considerations can be used to
address some of the concerns raised by second-order obviousness.
1. The Person Having Ordinary Skill in the Art
The person having ordinary skill in the art (PHOSITA) is invoked frequently
in patent doctrine.105 He represents innovation policys equivalent of the reasonable man,106 and comprises an essential aspect of the Graham inquiry into
non-obviousness.107 When assessing obviousness, courts and examiners use
the PHOSITA to determine the vantage point from which obviousness should
be assessed.108 If the PHOSITA would have found the invention obvious, the
underlying invention is not patentable subject matter.109 This individual is assumed to have both an ordinary level of skill in the relevant research area, and
an ordinary level of creativity.110
102
See id. (noting that the factors include the scope and content of the prior art; the differences between the
claimed invention and the prior art; and the level of ordinary skill in the art); see also Cotropia, supra note 9.
103
See Iron Grip Barbell, Co. v. USA Sports, Inc., 392 F.3d 1317, 132324 (Fed. Cir. 2004) (analyzing secondary
non-obviousness considerations); John Paul Putney, Are Secondary Considerations Still Secondary?: An Examination of Objective Indicia of Nonobviousness Five Years After KSR, 4 A M U. I NTELL . P ROP. B RIEF 4546 (2013);
Natalie A. Thomas, Secondary Considerations in Nonobviousness Analysis: The Use of Objective Indicia Following KSR
v. Teleflex, 86 NYU L. R EV. 2070, 207174 (2011).
104
The Supreme Court disavowed the mechanical application of the TSM test in KSR v. Teleflex, 550 U.S. 398
(2007), but courts, including the Federal Circuit, still use it to inform non-obviousness analysis. See, e.g., Pregis
Corp. v. Kappos, 700 F.3d 1348, 135455 (Fed. Cir. 2013) (looking for suggestions to combine and teaching away
in the prior art and examining motivations to invent); see Emer Simic, The TSM Test is Dead: Long Live the TSM
Test! The Aftermath of KSR, What Was All the Fuss About?, 37 AIPLA Q.J. 227, 23038 (2009).
105
In addition to non-obviousness analysis, the PHOSITA also has importance to claim construction. See
Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) ([T]he ordinary and customary meaning of a
claim term is the meaning that the term would have to a person of ordinary skill in the art in question at the
time of the invention . . .). For more on the PHOSITA standard see generally Joseph P. Meara, Just Who is the
Person Having Ordinary Skill in the Art? Patent Laws Mysterious Personage, 77 WASH . L. R EV. 267 (2002); John O.
Tresansky, PHOSITA - The Ubiquitous and Enigmatic Person in Patent Law, 73 J. PAT. & T RADEMARK O FF . S OC Y
37 (1991).
106
See Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1566 (Fed. Cir. 1987) (With the involved facts
determined, the decisionmaker confronts a ghost, i.e., a person having ordinary skill in the art, not unlike the
reasonable man and other ghosts in the law.).
107
Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 18 (1966).
108
35 U.S.C. 103 (2012) (A patent for a claimed invention may not be obtained . . . 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 to a person having ordinary skill in the art . . . .).
109
Id.
110
KSR Intl Co. v. Teleflex Inc., 550 U.S. 398, 420 (2007) (A person of ordinary skill is also a person of ordinary
creativity, not an automaton.).

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The PHOSITA standard may implicitly account for some of the concerns
raised by second-order obviousness. In the case of ICTs, two of the mechanisms through which they induce second-order obviousness, specifically information effects and collaboration effects, could each be mitigated by the obvious to a PHOSITA inquiry. However, some minor alterations to the analysis
would make treatment of second-order obviousness concerns more explicit
and would help ensure consistency and clarity in patent doctrine.
The PHOSITA and the Information Effect. Courts could use the PHOSITAs
presumed knowledge of the prior art to mitigate some of the concern raised by
the information effect that ICTs have on the innovation environment. Courts
often assume the ordinary person is actually a sort of superperson111 with
knowledge of all pertinent prior art.112 The assumption that the PHOSITA
knows all the relevant prior art could partially mitigate the second-order obviousness that arises from ICTs information effect on the innovation environment. However, current non-obvious doctrine hampers any potential mitigation because not all prior art is considered analogous and because courts will
not only look for knowledge of the prior art, but also evidence of a motivation
to combine or modify them in the manner claimed.113
Given how much easier it is to navigate the innovation environment now
than when the obviousness doctrine was originally developed, courts should
alter the boundaries of what they consider analogous art, and not require a
motivation to combine for an obviousness finding. Under current doctrine,
before considering prior art in an obviousness analysis, courts and the USPTO
first ask whether it is analogous art to the claimed invention.114 To make
this determination the examiner asks: (1) whether the prior art is from the
same field as the claimed invention; or (2) whether the prior art is reasonably
pertinent to the inventors problem.115 If the answer to either of these questions is yes then the reference in question is analogous prior art and may be
considered in a non-obviousness analysis.116
However, the analysis does not end there. Once the examiner determines
the universe of analogous prior art, she then engages in the next steps of the
non-obviousness inquiry. This involves comparing the prior art to the claimed
invention, and determining the level of ordinary skill in the art.117 Once completed, the examiner looks for some evidence that would suggest that one or111
See Michael Ebert, Superperson and the Prior Art, 67 J. PAT. & T RADEMARK O FF . S OC Y 657, 657 (1985)
(describing the PHOSITA as a superperson rather than an ordinary person because of the expectation that he
have such wide-ranging memory capacity and mental abilities).
112
Bristol-Myers Squibb Co. v. Teva Pharms. USA, Inc., 769 F.3d 1339, 1357 (Fed. Cir. 2014) (Newman, J.,
dissenting) (emphasis added).
113
Innogenetics, N.V. v. Abbott Laboratories, 512 F.3d 1363, 1374 (Fed. Cir. 2008) ([S]ome kind of motivation must be shown from some source, so that the jury can understand why a person of ordinary skill would
have thought of either combining two or more references or modifying one to achieve the patented method.)
(citation omitted).
114
MPEP 2141.01(a) (9th ed. Rev. 7, March 2014).
115
Id. (citing In re Bigio,381 F.3d 1320, 1325 (Fed. Cir. 2004)).
116
Id.
117
See MPEP 2141 II(A).

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dinarily skilled in the art would be motivated to create the invention.118 This
motivation could come from prior art that provided a teaching, suggestion,
or motivation for the claimed invention119 or alternately from any need or
problem known in the field of endeavor.120
While the motivation-to-combine requirement was perhaps a sensible policy in an era when information had a much greater cost to access and
organizeand thus innovation more costly to achieveit is too forgiving in
the current era of low-cost and ubiquitous information access. The motivation requirement places the obviousness bar too high, and should be altered in
response to the changes that ICTs have brought to the world of research and
development. Courts could easily make this adjustment by altering the nonobviousness analysis to presume the PHOSITA has a motivation to combine the
prior art as combined in the claimed invention. This presumption would be rebuttable if prior art teaches away from making such a combination.121 This
type of minor alteration to the obviousness analysis would help re-balance the
innovation incentives that have been upset by the widespread second-order
obviousness effects arising from decades of ICT development.
To demonstrate how this alteration might affect patentability deliberations,
consider Circuit Check, Inc. v. QXQ Inc., a recent case decided by the Federal
Circuit.122 QXQwhich had been sued for infringement by Circuit Check
argued that Circuit Checks circuit board interface plate patent should be
considered non-patentable because of obviousness, similarities between the
patented technique and those used in a variety of prior art including rock carving techniques, and machining and engraving techniques.123 Although the
lower court had sided with QXQ, granting a motion for judgment as a matter
of law and finding the disputed claims invalid for obviousness,124 the Federal
Circuit disagreed.125 At appeal, the Federal Circuit relied on the analogous art
doctrine, stating that [a]lthough familiar items may have obvious uses beyond their primary purposes, . . . a reference is only reasonably pertinent
when it logically would have commended itself to an inventors attention in
considering his problem.126 Taking greater notice of second-order obviousness would weaken the analogous art doctrine. Instead of requiring prior art
to logically commend itself to the inventor, courts should instead presume the
relevance of all prior art, while allowing a patentee to rebut that presumption by showing how their invention was truly non-obvious. Altering the nonobviousness analysis in this way would help it reflect more appropriately the
118

Innogenetics, 512 F.3d, at 1374.

See KSR Intl Co. v. Teleflex Inc., 550 U.S. 398, 399, 418420 (2007) (rejecting the rigid application of the TSM
test but admitting it does provide helpful insight . . . .).
120
Id. at 420.
121
In re Gurley, 27 F.3d 551, 553 (Fed. Cir. 1994) (A reference may be said to teach away when a person
of ordinary skill, upon reading the reference, would be discouraged from following the path set out in the
reference, or would be led in a direction divergent from the path that was taken by the applicant.).
122
Circuit Check Inc. v. QXQ Inc., No. 20151155 (Fed. Cir. 2015).
123
Id. at 3.
124
Id. at 4.
125
Id. at 2.
126
Id. at 67 (citations omitted).
119

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demands of the current innovation system.

The PHOSITA and the Collaboration Effect. It is less clear how current
patent doctrine addresses the collaboration effect that ICTs have on the innovation process. While collaboration has steadily increased across almost
all research disciplines127 effectively increasing societys collective technical
abilitiespatentability standards have done little to react to these changes.
The PHOSITA standard could prove useful here as well.
To respond to the rise of team science and ensure that patentability standards appropriately reflect the difficulty of inventing, courts and the USPTO
should alter the PHOSITA analysis to focus not on a person having ordinary
skill in the art, but a team having ordinary skill in the art (THOSITA). There are
some instances on the record of courts taking the availability of teammates into
account when assessing a PHOSITAs abilities.128 That said, these instances are
the exception to the overly individualistic rule that the current PHOSITA standard presents.129
A THOSITA standard would work similarly to the current PHOSITA standard, but it would first inquire as to the typical size and makeup of a team
in the field. Once it had determined how large an ordinary team is in the
relevant art, and what sort of researchers are likely to be members, the court
could then proceed with the traditional PHOSITA factor analysis, looking to:
(1) the educational level of the [team]; (2) type of problems encountered in
the art; (3) prior art solutions to those problems; (4) rapidity with which innovations are made; (5) sophistication of the technology; and (6) educational
level of active workers in the field.130 Assessing this from a team standard
would help the non-obviousness analysis more accurately reflect the actuality
of modern day innovation. It would remind courts that, instead of considering
obviousness from the perspective of the mythical sole inventor,131 they should
consider how obvious the invention would seem to an average team in the
relevant discipline.
2. Long Felt but Unmet Need
The long-felt but unmet need secondary obviousness consideration could
be used to challenge the obviousness of patents enabled by the improved market transparency type effect that inventions like ICTs have on the innovation
127

See Wuchty et al., supra note 49, at 103638.

See, e.g., Takeda Pharm. Co. v. Mylan Inc., [2014] WL 5862134, *14 (N.D. Cal. 2014) (stating in a patent claim
construction PHOSITA analysis that a PHOSITA would likely have been part of, or had access to, a team of
individuals with various skills spanning the chemical arts.); Andis Clipper Co. v. Oster Corp., 481 F. Supp.
1360, 1375 (E.D. Wis. 1979) (stating in an obvious to a PHOSITA analysis that the PHOSITA would have been a
part of a unit or team dealing with new concepts and new projects on a continuous basis . . . .).
129
Bristol-Myers Squibb Co. v. Teva Pharms. USA, Inc., 769 F.3d 1339, 135758 (Fed. Cir. 2014) (Newman, J.,
dissenting)..
130
Id. This alteration to the PHOSITA standard may require a small alteration to 103 that requires an invention
not be obvious to a person having ordinary skill in the art. 35 U.S.C. 103 (2012) (emphasis added). This apparently singular approach to the non-obviousness assessment might preclude courts from altering the PHOSITA
into a THOSITA without minor statutory alterations.
131
For more on the mythical sole inventor see Lemley, supra note 46.
128

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environment. This consideration traditionally weighs against finding an invention obvious if there was pre-existing demand for the technology that had
long gone unmet.132 A long-felt but unmet need demonstrates that an invention was not obvious because had it been obvious, the need would not have
gone unmet.133 Using the motivation to invent provided by improved market
transparency as evidence of obviousness would analyze market demand in a
more nuanced way, with the demand potentially cutting either for or against
an obviousness finding depending on how long demand remained unmet.
The analysis here would turn on how high demand was for the invention,
how transparent that demand was, and how long it had been unmet for. A
long felt but unmet demand would remain unchanged as evidence of nonobviousness for the same reason it is so now. On the other hand, a newfound
and sufficiently evident demand for a given technology would cut in the opposite direction in favor of finding an invention obvious. All else being equal,
it is less likely that we need to provide patent rights for an invention newly in
high demand. It is very possible that the market may fulfill this demand on
its own, making a patent in the area ultimately inefficient. If a market failure
occurs and the demand remains unmet, then the original interpretation of the
long felt but unmet demand consideration will encourage innovation and help
a related invention survive an obviousness challenge.
These minor alterations to current non-obviousness analysisa presumption of motivation to combine, applying a THOSITA rather than PHOSITA
standard, and paying more attention to the length that demand for an invention has existedwould help respond to the changes that ICTs have brought
to our innovation environment. However, the ICT revolution has already
wrought much of its change. Future technologies will surely transform the innovation processes in new and as-yet unimagined ways, and innovation policy
needs to be designed in a manner that will allow it to respond to these changes.

B. Updating Non-Obviousness Jury Instructions

Altering jury instructions to explicitly refer to the capabilities that the currently
available technology affords inventors could help courts ensure that secondary
obviousness concerns are adequately considered. Take for instance the Federal
Circuit Bar Associations Model Patent Jury Instructions.134 These instructions
currently direct the jury to consider the level of ordinary skill in the field [of
the invention] that someone would have had at the time the [invention was
made] or [patent was filed], the scope and content of the prior art, and any differences between the prior art and the claimed invention.135 The instructions
defining the PHOSITA in turn read:
132
See, e.g., Procter & Gamble Co. v. Teva Pharm. USA, Inc., 566 F.3d 989 (Fed. Cir. 2009); Monarch Knitting
Mach. Corp. v. Sulzer Morat GmbH, 139 F.3d 877 (Fed. Cir. 1998).
133
Timothy J. Le Duc, The Role of Market Incentives in KSRs Obviousness Inquiry, 11 WAKE F OREST J. B US . &
I NTELL . P ROP. L. 33, 4748 (2010).
134
See, generally, F ED .
C IRCUIT B AR A SS N , M ODEL PATENT J URY I NSTRUCTIONS 2 (2014), available at http://memberconnections.com/olc/filelib/LVFC/cpages/9004/Library/2012%20Updated%20FCBA%
20Model%20Patent%20Jury%20Instructions.pdf.
135
Id. at 46.

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In deciding what the level of ordinary skill in the field of [invention] is, you
should consider all the evidence introduced at trial, including but not limited
to: (1) the levels of education and experience of the inventor and other persons
actively working in the field; (2) the types of problems encountered in the field;
(3) prior art solutions to those problems; (4) rapidity with which innovations
are made; and (5) the sophistication of the technology.136
The final instruction here, urging jurors to consider the sophistication of
the technology is the most suitable area to incorporate explicit reference to
the technological affordances that ease invention. As the instructions currently read, the sophistication of the technology consideration speaks most
directly to the complexity of the invented technology, with jurors perhaps understanding that more sophisticated technological developments are less obvious than their less sophisticated counterparts. However, this instruction could
be adapted somewhat so as to account not only for the sophistication of the
technology in question, but for the availability of all technologies and the abilities they afford inventors who work in the area.
To do so the final clause in the jury instruction PHOSITA definition could
be altered to flag the effect that general technological affordances may have
on the invention process. Doing so would make the jury instructions read as
follows, with emphasis added:
In deciding what the level of ordinary skill in the field of [invention] is, you should consider all the evidence introduced at trial,
including but not limited to: (1) the levels of education and experience of the inventor and other persons actively working in the
field; (2) the types of problems encountered in the field; (3) prior
art solutions to those problems; (4) rapidity with which innovations are made; and (5) the sophistication of the technology at issue,
and the capabilities of all available technologies that affect the research,
development and invention process.
The italicized phrase adds very little complexity to the jury instructions, but
ensures that the jury is asked to consider not only the technology at issue in
the contested patent, but also the general technological environment and how
it might affect obviousness.

C. Future Second-Order Obviousness

This Article has focused on ICTs as an example of how technologies can have
second-order obviousness effects and has argued that inventions have two potential types of effect on the innovation environment: inspirational and functional. Inspirational effects are those most familiar in patent non-obviousness
analysis and lead to first-order obviousness. On the other hand, functional
effects are less often appreciated as they lead to second-order obviousness.
In the case of ICTs, these functional effects include increased access to information, eased collaboration, and improved market transparency. Part III
136

Id. at 48.

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provided support for this contention by demonstrating that as the Internet

todays ICT non pareilspread across America, the rate of invention also increased. However, the Internet is not unique in its ability to facilitate invention.
Future technologies, perhaps ones that we cannot now even imagine, will almost certainly have their own functional effects that will threaten to upset the
balance struck by federal innovation policy.
By more fully theorizing second-order obviousness effects, this Article
hopes to put policymakers on notice to prepare them for when new technologies emerge that further alter the innovation environment. Society saw rapid
increases in the rates of patenting as the Internet became widely used across
the United States.137 To the extent that this growth in patenting reflects the increased ease of invention that innovation policy had yet to take into account,
it demonstrates the danger posed by not appropriately responding to the development of new technologies that ease invention.
Inadequately adjusting innovation policy to account for changes in difficultly in creating new inventions risks upsetting the patent incentive system
and thereby allowing for a proliferation of exclusive rights that risk slowing
future innovation. As discussed above, patent grants are intended to create incentives that will lead to inventions that either would not have otherwise occurred or would have occurred more slowly absent the incentive.138
If those incentives are improperly tailored, the USPTO will grant patents to
inventions that would have been created regardless of the incentives offered,
which ultimately leads to inefficiencies. Granting bad patents unnecessarily
forecloses competition by allowing a single firm to control the use of an invention that, even without the potential for a patent, would have been developed
anyway.139
A proliferation of exclusive rights to inventions also risks upsetting the
innovation system more generally. The more patents there are, the more likely
any invention is to potentially infringe upon another patent.140 This raises
transaction costs as innovators must search more prior art and negotiate for
more licenses to bring their products to market.141 This gives rise to a potential
innovation chilling effect as patent thickets may prove such a disincentive that
innovators do not bring their potential innovations to market because they
believe the risk of infringement liability is too high.142
137

See U.S. PATENT & T RADEMARK O FFICE, supra note 3.

Supra Part I.A.
139
See E XEC . O FFICE OF THE P RESIDENT, PATENT A SSERTION AND U.S. I NNOVATION 2 (2013), available at
https://www.whitehouse.gov/sites/default/files/docs/patent report.pdf. But see F. Scott Kieff, Property Rights
and Property Rules for Commercializing Inventions, 85 M INN . L. R EV. 697, 70204 (2001) (arguing that the patent
system functions not only to incentivize creation, but more importantly to incentivize development and commercialization).
140
Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, in I NNOVATION
P OLICY & THE E CONOMY, V OLUME 1 119, 121 (Adam B Jaffe et al. eds., 2001) (The vast number of patents
currently being issued creates a very real danger that a single product or service will infringe on many patents.).
141
Id. at 119 (Cross licenses and patent pools are two natural and effective methods used by market participants to cut through the patent thicket, but each involves some transaction costs.).
142
Id. at 144 (Our current patent system is causing a potentially dangerous situation in several fields . . . in
which a would-be entrepreneur or innovator may face a barrage of infringement actions that it must overcome
to bring its product or service to market.).
138

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While the risk that future inventions may upset carefully crafted innovation policy will remain ever-present, we can prepare for this eventuality in
ways that will help the patent system become more responsive to these sorts
of changes. Congress could signal to the USPTO and courts that they should
take full account of the innovation environment when assessing patentability. To do so, a minor alteration to 103 would help clarify that examiners
should take into account not only the inspirational effects that prior art has on
the likelihood that a given invention would have been created, but also the
second-order obviousness effects that more general-use technologies have on
the innovation environment. This could be done by altering 103 to preclude
patentability 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 to a person or team having access to technologies commonly used in the relevant field and having ordinary
skill in the art to which the claimed invention pertains. This is the existing text
from 103, with the addition of the italicized clause that would serve to make
second-order obviousness concerns more prominent to courts and patent examiners. While, as mentioned above, the current PHOSITA analysis could be
construed to include consideration of the PHOSITAs team situation and access to technologies, making these considerations explicit will help mitigate
concerns about granting bad patents.
In addition to alterations of 103, the USPTO should consider establishing
an innovation technology assessment office. This office would monitor technologies that promise to have functional effects on the innovation system. The
USPTOs current structure potentially discourages examiners from appreciating the effects that inventions outside their area of expertise may have on
inventions within their field. The USPTO is organized into a series of technology centers, each of which contains a number of art units that are responsible for examining patent applications in some set of classes and subclasses.143
While this structure promotes specialization and encourages examiners to become familiar with their fields prior art, it also risks overspecialization.
This overspecialization may cause examiners to be less aware of technological developments in other fields that may have functional effects on the innovation processes relevant to their own art units. An innovation technology
assessment office would track new technologies that alter the way innovation
occurs and create reports for examiners in affected art units. For instance, if
software developers created a new program capable of modeling flavor compounds in a manner that was an order of magnitude more efficient than current flavor compound research occurs, it may make some inventions that previously would have been patentable, unpatentable for non-obviousness reasons.144 However, specialization at the USPTO may lead to lag before relevant
143
See Patent Technology Centers Management, U.S. PATENT & T RADEMARK O FFICE, http://www.uspto.
gov/patent/contact-patents/patent-technology-centers-management (last visted Oct. 25).. See also MPEP
903.08(b)(d) (9th ed. Rev. 7, March 2014).
144
It is true that this flavor compound may ultimately be held unpatentable if the patent were ultimately challenged. In this situation the lag between the patent application and any ensuing trial would allow the functional
effects of the new hypothetical computer program to become more widely known. Regardless, proactively deal-

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JPTOS

examiners become aware of the new computer technology, and bad patents
may be granted in the interim. An office of innovation technology assessment
would help address this lag by proactively seeking out inventions that examiners should be aware of.
***
These alterations to patentability standards would help to re-balance the
deal struck by the public with inventors. As noted above in Figure 2, the
number of patents granted has exploded in recent years. With more patents
granted, society stands to face increased problems with patent thicketing,145
and potentially slower innovation than would otherwise occur. To correct
for this the public needs to be more discerning as to when it grants exclusive
rights. Altering the text of 103 to foreground second-order obviousness concerns, and charging an office with monitoring how new technologies may have
more general effects on the innovation process, will help ensure that the patent
system is able to respond to future changes to the innovation environment.

Conclusion
Technology changes the way people innovate. In addition to providing inspiration for future inventions (first-order obviousness), it also changes the way
people work and research, making even seemingly unrelated inventions easier to create (second-order obviousness). This Article has theorized different
ways that technology affects the innovation policy system. ICTs have provided a recent and dramatic example of how some technologies can have both
inspirational and functional effects on the innovation system. ICTs ease work
with information, facilitate collaboration, and make markets more transparent,
which leads to lower cost inventions and more patent grants. This occurred recently as Internet access spread across the country, raising local patent rates as
it did so.
To ensure appropriate incentives, policymakers must engage with secondorder obviousness. Altering the non-obviousness analysis so that it explicitly engages not only with the inspirational effects of prior technologies but
also their functional effects can satisfy this imperative. Additionally, increased
monitoring of new technologies and training at the USPTO will help ensure
that technological developments with generalized effects on the innovation
system do not go unnoticed by potentially affected art units..
Technology can have innovation feedback loops, accelerating innovation
and transforming peoples lives in an ever-faster fashion. Making sure that the
public stays aware of these effects and that innovation incentives are designed
to account for them is essential to ensuring that maximum benefits accrue to
ing with these sorts of situations is preferable because it does not require litigationan expensive and relatively
unlikely occurrenceand it reduces the number of bad patents granted.
145
Shapiro, supra note 140, at 119122.

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the public in future years. Otherwise society risks unnecessarily enclosing untold amounts of intellectual property that would not have survived a secondorder obviousness challenge.