The Changing Face of US Patent Law and its Impact on Business Strategy

The Changing Face of US Patent Law and its Impact on Business Strategy

New Horizons in International Business series

Edited by Daniel R. Cahoy and Lynda J. Oswald

Within the complex global economy, patents function as indispensable tools for fostering and protecting innovation. This fascinating volume offers a comprehensive perspective on the US patent system, detailing its many uses and outlining several critical legislative, administrative and judicial reforms that impact business strategy.

Chapter 7: The transformation of patents into information containment tools

Daniel R. Cahoy, Joel Gehman and Zhen Lei

Subjects: business and management, international business


A patent system’s role in disseminating information is as important as the incentive it provides to invent and innovate. Rapid information disclosure is viewed as part of the bargain with the patentee. However, patents achieve their incentive ends through a broad power to exclude. It is now becoming apparent that the use of that power may in some cases interfere with the system’s disclosure mission. In particular, when reproduction or use of the patented invention is necessary to evaluate its potential impacts on the rest of the world, patent rights can actually serve as an information barrier. The lack of an effective information production exception in the law and the failure to preserve current disclosure incentives in recent legislative reform has compromised the ability to achieve a complete understanding of an invention. Overall, the US may be experiencing the unexpected emergence of patents as an information containment tool at the same time that their disclosure function has been weakened. This chapter considers the emergence of patents as information containment tools and highlights the significance of this development by overlaying the theory onto one of the most controversial technological practices of our time: hydraulic fracturing in natural gas extraction. Hydraulic fracturing has generated a classic information problem.

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