How to Fix the USPTO

The United States Patent & Trademark Office has just released the 2008 Performance and Accountability Report, which is the annual report explaining the activities of the Office during fiscal year 2008.  While so much of the report is a self congratulating look back at what the Dudas Administration believes it effectively achieved over the past year, the report should be anything but self congratulating given the dire situation that the US Patent System faces moving forward.  As of the end of Fiscal Year 2008 there are 1,208,076 patent applications still pending at the Patent Office.  At the end of Fiscal Year 1997 the number of pending applications left over was only 275,295, so over the last 11 years there has been a  439% increase in the number of pending applications left over that could not be resolved.  That is alarming.  Each year since 1997 this number has gone up, first going over the 1 million mark in 2006.  As patent applications continue to pile up the US patent system is plunging further and further into irrelevance, and that is not a good thing for our economy or for the future of innovation.  Something needs to be done immediately to reverse this trend.

Luckily, there are a number of things that can be done immediately that would fix this crisis.  Unfortunately, none of the proposals over the last few years by the Dudas Administration are calculated to succeed.  The Dudas Administration has been hell-bent on changes that allow for senior level management to testify to Congress that they are doing something, the trouble is none of the changes have done anything to resolve the real problem, which is that the examination system is overburdened and has stopped working to grant patents on real innovations.  Quality control has become nothing more than a joke.  If you limit the amount of time one has to find errors do you really expect to find errors?  Of course not!  If you limit meaningful reviews you will find fewer errors, but you can say quality goes up because when you stop looking for errors you will find fewer errors, and that has to mean quality has improved, right?  Ridiculous!

One major focus by the Dudas Administration limitations on the number of claims that can cover an invention and limiting the number of applications one can file to cover varying aspects of an invention.  Luckily both rule packages which were ordered stopped by Judge Cacheris of the Eastern District of Virginia, and the Patent Office is now appealing the decision to the United States Court of Appeals for the Federal Circuit, but everyone in the industry expects the Federal Circuit to simply affirm the Cacheris ruling.  The oral arguments are scheduled for December 5, 2008, and I will be there and reporting later that day on the hearing, which will just be another step toward explaining to the Patent Office that the primary reform they wanted to bring about was enacted in direct contravention of what Congress has authorized in the Patent Act.  On top of that, even if the Patent Office got what they wanted it wouldn’t have helped the situation because such a small number of continuation applications are filed it would have done absolutely nothing to address the growing backlog of pending applications.  Worse, only those inventions that are commercially relevant are the ones for which follow-on continuation applications are filed, so if you limit the number of continuation applications you are disproportionately attacking those innovations that are the most meaningful in the marketplace.  That is just a bad idea at any time, but a really stupid idea when our economy is in a state of free fall.  Why would anyone want to cut off commercially relevent innovations given the current economic realities?  I can’t tell you because it just makes absolutely no sense.

There are some fixes that could be implemented tomorrow that would make a difference.  Everyone knows that the quality of an issued patent is directly related to the quality of the search that is performed and the quality of the review that is conducted by the Patent Office.  Unfortunately, there is no requirement that a search be conducted prior to filing a patent application, and no real requirement that would force an applicant to disclose the best prior art that can be found.  Sure, applicants need to disclose what they know to be relevant, but if you don’t look then you can’t find something and if you don’t find something that you never looked for then how could you withhold information from the Patent Office?  The simple answer is you can’t withhold what you don’t know about, so in many technical areas you don’t look for prior art because if you looked you would find and if you find you have to disclose.  See how this game goes?  It is like the three monkeys… see no evil, hear no evil, speak no evil.  That is now how the patent system should operate.

One change that should be implemented immediately is to stop having patent examiners or any Patent Office personnel do a patent search.  Patent examiners should examine patents and review the information that is submitted by the applicant.  We already require the applicant to define the invention in their own words and if they leave something out that they could have claimed then they have to largely live with that decision.  So we already have in place the concept that your patent rights are only as good as what you submit to the Patent Office, so what is the harm in expanding that concept?  There is none!

The Patent Office should say that patent examiners will examine patents based on the prior art that is submitted by the applicant.  If no prior art is submitted by the applicant then the patent will be reviewed to make sure it meets the format and formalistic requirements, nothing more.  If the applicant submits prior art then the patent examiner will review that prior art submitted, and only that prior art submitted by the applicant.  Any patent that issues would be presumed valid based upon only those prior art references that are submitted by the applicant.  We would need Congress to amend that statute to alter the presumption of validity to tie it to those pieces of prior art submitted by the applicant.

With respect to patent litigation we need to move toward something similar to what happens in the employment discrimination arena.  In certain situations where employment discrimination is suspected a complaint must be filed with the EEOC and a right to sue letter must be obtained by the EEOC before a federal complaint can be filed.  What we need to do is force plaintiffs to go back to the Patent Office before they are given the right to sue for patent infringement in the federal courts.  A patent owner should be forced to submit the application to the Patent Office and pay for a thorough and complete examination of the patent before the patent can be sued on in federal court.  This patent review will be conducted by senior level patent examiners who have intimate technical familiarity.  The examination will not be limited to the prior art submitted by the patent owner, but rather an exhaustive review will be conducted and any invalid claims will be thrown out with only those surviving allowed to be the basis for a federal complaint. 

By following these changes we will ensure a quick but meaningful review of all patent applications so that obviously bad patents won’t issue, assuming the applicant discloses some prior art, but if they don’t the right they get will not be one worth much.  Then those few patents that really matter every year, the less than 1% of patents that are commercially relevant enough to be the subject of a lawsuit, will be thoroughly reviewed.  Thus resources will be preserved to exhaustively review only those patents that matter.

In the coming weeks and months I will expand upon this proposal, because there needs to also be a realistic fee for service model applied to the litigation created examinations, and there ought to be provisions to help independent inventors who cannot afford to be represented by an attorney or agent, but this system will work to solve the problems we are facing and will save the US patent system from irrelevance.


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