This document discusses data-generating patents, which are patented inventions designed to generate valuable data through their operation or use. It notes potential concerns regarding how these patents can limit disclosure and alter the innovation balance. It proposes analyzing patents based on the foreseeability of the data markets and preemptive effects on data market competition to discern problematic from unproblematic patents. Recommendations to address problematic patents focus on ex post solutions rather than ex ante due to lack of an ideal solution.

1. Data-Generating
Patents
[forthcoming 111 NORTHWESTERN LAW REVIEW __ (2017)]
Brenda M. Simon
Associate Professor, TJSL
Non-Resident Fellow, Stanford Law School
Ted Sichelman
Professor, USD Law
May 6, 2016

2. — Data-Generating Patents:
— Patented inventions that by design
generate valuable data by their
operation or use.

3. Overview
— The Phenomenon of Data Generating Patents
and Their Legal and Economic Effects
— Discerning the Problematic from the
Unproblematic
— Recommendations
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4. Trade Secrets and Patents
— Substitution Theory
— Economic Complements
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5. Data-Generating Patents
— Patented inventions that by design
generate valuable data by their
operation or use.
— Examples
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6. Possible Concerns
— Patent principles are in an uneasy
tension with protecting this type of
data
— Effects on limiting disclosure
— Innovation balance possibly altered
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7. Possible Concerns
— Traditional trade secret safeguards
generally do not apply to data
generated from patented inventions
— Reverse engineering restricted
— Independent discovery limited
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8. Possible Concerns
— Data-generating patents may be
leveraged to provide additional
market power in the generation of
trade secrets
— Is there a need for additional legal
protection to incentivize the production
of this kind of information?
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9. Discerning Problematic from Unproblematic
Data-Generating Inventions
— Use of data in unforeseeable markets
— Preemptive effect on marketplace
competition for the data
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10. Discerning Problematic from Unproblematic
Data-Generating Inventions
— Unforeseeable Data Markets:
— Examines whether the patent provides
the ability to use data in an area that is
not directly related to the market covered
by the patented invention
— The greater the extent to which the
invention allows for use of data in
unforeseeable markets, the more likely the
invention is problematic
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11. Discerning Problematic from Unproblematic
Data-Generating Inventions
— Data Market Preemption:
— Examines the effect on competition in the
market for the data
— not the preemptive effect of the invention
itself
— The greater the preemptive effect on
marketplace competition related to the
data, the more likely the invention is
problematic
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12. Scenario 3
Likely
Unproblematic
Scenario 2
Very Likely
Problematic
Data Market Preemption
Scenario 1
Likely
Problematic
Scenario 4
Very Likely
Unproblematic
Discerning Problematic from Unproblematic
Data-Generating Inventions

13. Proposals to Address Problematic Data-
Generating Patents
— Innovation-related concerns
— Disclosure-related concerns
— No ideal solution, but ex post
generally preferable to ex ante
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14. Discussion
— brendamsimon(at)gmail.com
— tsichelman(at)sandiego.edu
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