Smucker Loses Reexam Battles, But May Win Litigation War

On Thursday the PTO Board of Appeals affirmed (here, here) the reexamination examiner’s findings that two patents – U.S. Patent Nos. 7,314,328 and 7,325,994 – are valid over certain prior art. The ‘328 and ‘994 patents are owned by Mack-Ray and claim nozzle structures for “a spreader apparatus,” e.g., a squeeze bottle for holding jelly and spreading it on bread. Mack-Ray sued Smucker (the jelly company) for infringing the two patents, and both companies subsequently requested the present reexaminations. What will interest reexamination practitioners, however, is the extreme reluctance of the Board to consider issues not strictly within the PTO’s reexamination jurisdiction.

Mack-Ray sued Smucker for infringement of the patents in May 2008. A few weeks later Smucker sent Mack-Ray a prior art reference, “the Seaquist Application,” that, according to Smucker, disclosed the nozzle structure of Smucker’s accused squeezable bottles. Smucker’s message to Mack-Ray, and later to the PTO, was that if its bottles infringed the ‘328 and ‘994 patents, the Seaquist Application anticipated those patents.

Mack-Ray then requested ex parte reexamination of the patents, stating that a substantial new question of patentability had been raised, but that “Mack-Ray maintains that the ‘328 Patent remains patentable over Seaquest.” The same sentence appears in Mack-Ray’s ‘994 reexamination request. The ‘328 and ‘994 requests also stated that Seaquist fails to disclose the claim requirement of a “side wall having a peripheral outer surface defined by a concave surface that transitions into a convex surface that terminates at the opening,” or the claim requirement of “upper and lower walls [comprising] a concave surface that transitions into a convex surface terminating at the opening.” This concave-convex nozzle structure, on which both Mack-Ray and Smucker focus, is shown in Fig. 4 of the ‘328 and ‘994 patents in which nozzle 11 slopes outwardly and then inwardly at the opening.

Presumably believing that Mack-Ray had not done justice to the disclosure of the Seaquist reference, Smucker requested inter partes reexamination. The PTO granted all four requests; the two ‘328 requests were merged, and the two ‘994 requests were merged. The examiner, however, refused to adopt Smucker’s proposed rejections of the ‘328 and ‘994 claims on the basis of Seaquist, and he closed prosecution, confirming the patentability of the claims. Smucker appealed.

Smucker made two arguments to the Board: one, that the examiner had erred in failing to give the claims their “broadest reasonable construction” or to consider Mack-Ray’s “admissions in litigation,” and the other, that the examiner had erred in not rejecting the claims “in light of Patent Owner’s bringing an infringement lawsuit against the Requester.” Smucker’s argument was essentially that Mack-Ray, by filing its law suit, had admitted that its claims covered the Smucker commercial nozzle structure, and since that accused structure was disclosed in the Seaquist reference, Mack-Ray had admitted that its claims covered a prior art nozzle structure. Mack-Ray’s claims were therefore anticipated by the prior art.

The Board was not buying. First, the Board found that the examiner’s stated reason for not rejecting the claims was sufficient. Though, it was “concise, it is nonetheless complete because it states what was lacking in the cited prior art reference and fully meets the requirements of the Rules.” The Board faulted Smucker because it did “not specifically explain how the WO Seaquist reference discloses the pertinent limitation,” i.e., the limitation of a concave-convex nozzle structure that the examiner and the Board found lacking in the reference.

The Board then addressed Smucker’s “admission” argument. It complained that Smucker had cited no “persuasive authority that mere filing of a law suit is an ‘admission.’” Mack-Ray’s complaint had only stated that it “owns this patent and [that] Smucker’s nozzles infringe.” Mack-Ray’s legal pleadings did “not establish what the claims actually mean or that the advocated construction [of the claims] is correct as a matter of law.”

The Board then made the evidentiary point that “the record is lacking with respect to establishing that the features of the opening in the commercialized dispenser and [the nozzle structure] disclosed in WO Seaquist are identical.” It explained that “[i]t is not the PTO’s responsibility, nor does the PTO have the resources, to evaluate such factual matters.” The elements of Smucker’s assertion of the Seaquist reference “all are a poor fit for the limited evidentiary nature of a reexamination proceeding.” More broadly, “[r]eexaminations are to be based on prior art patents or publications, not on devices such as the commercialized dispenser by Smucker.”

The Board’s complete focus upon the “four corners” of the cited prior art shows that it considers its reexamination subject matter jurisdiction to be extremely circumscribed to consideration of “patents or printed publications” and nothing else. The Board’s discussion of “admissions” raises a number of questions, for instance, why didn’t the Board regard 37 C.F.R. § 1.104(c)(3) to be “persuasive authority” when it provides that an “examiner may rely upon admissions by the applicant, or the patent owner in a reexamination proceeding, as to any matter affecting patentability?” The Board’s analysis might interest patent prosecutors who routinely face rejections based on “applicant’s admissions,” not to mention the applicants who feel obliged to submit hundreds of litigation documents to comply with the duty of disclosure. Similarly surprised will be the litigators who ask whether admissions in pleadings are binding or can be withdrawn, not whether they are admissible. The Board’s refusal, because of lack of resources, to compare Smucker’s accused commercial squeeze bottle with the disclosure of the Seaquist reference is also open to question, especially since there does not appear to be any dispute regarding the structure of Smucker’s commercial nozzle. Reexamination practitioners take note.

But how does the Board’s ruling affect the parties? Mack-Ray’s case in Texas was dismissed without prejudice in 2008 after a sealed stipulation of the parties. Could Mack-Ray now return to Texas and resume its litigation against Smucker? Despite the careful, circumspect treatment of the reexaminations by its attorneys, I suspect that Mack-Ray could not. Having prevailed at the PTO with a determination that the Seaquist nozzle structure does not satisfy its patent claims, it may be difficult to convince the Texas court that Smucker’s commercial nozzle structure also does not satisfy those same patent claims.


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48 comments so far.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 13, 2011 02:06 pm

    And don’t forget that it is hot in the kitchen – there is nothing like one of my glasses of Kool Aid to quench that thirst. Buy one today!

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 13, 2011 11:22 am

    Then we both win – even in an incomplete way – thanks for being tough enough to get by the ad hominem.

    Happy baking.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 13, 2011 10:11 am

    Nor have my concerns all been answered to my satisfaction on this forum. But the dialog has been useful in helping to refine my own thoughts regarding a multi-tier patent system.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 13, 2011 08:01 am

    To borrow your metaphor, some of the apparent mush might actually be cupcake batter.

    You are not applying the metaphor quite correctly – all the mush is cupcake batter. You are delivering uncooked cupcake batter with your Tier 1 and simply calling the valueless slop a cupcake and dismissing the applicant’s desire for an actual cupcake.

    You are leaving way too many of my points unanswered here Ron. If you don’t have answers, it is permissible to just say so.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 12, 2011 05:51 pm

    If by ‘chasm’ you mean there exists a risk of invalidation in moving from one tier to the next, that is quite true. To borrow your metaphor, some of the apparent mush might actually be cupcake batter. The mush would get burned and the cupcake batter would get baked. And frosted on top, if you move all the way to Tier 3 🙂
    As for TIer 3 acceleration being meaningless, that is only true if most or all applications are Tier 3. That goes back to the question of distribution across the tiers. You maintain that the majority would gravitate to the highest tier, and I believe just the opposite would be true. That’s one reason I support the graduated fee structure to go along with the tiers. If all fees were defered until after issue, maybe most people would choose the highest tier. But if the examination fees reflect the actual cost involved, that alone would tend to hold down the number of applications at higher tiers. That’s why I refer to is as a “free market” approach – rationing a scarce resource (USPTO examination time) by the “market” price. If the demand for higher tiers were to outstrip the supply, then the price (fee) would go up.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 12, 2011 03:05 pm

    Differences noted (although with severe reservations on the tier 1 “value” – the value is much lower than you imagine, which in turn affects your given purposes of “shopping around”). Also, you are introducing quite a degree of arbitrariness at the detail of “how much” quantity, not to mention losing sight of improving actual search heuristics.

    I note another problem as you will not be able to “selectivly pursue them later” You run into the same chasm of actual examination (even granted if you somehow keep applications alive in your system – you have not addressed this point yet). It’s as if all of your “lemming” reasons for Tier 1 march right off the cliff when needed for an actual “value” patent. You cannot get around the fact that your Tier 1 is mush. Bulking up on valueless mush also falls apart – portfolio building still depends on the items of the portfolio having today’s patent strength.

    Ron, your ideas are half-baked. I see glimmers of thinking that Tier 1 patents have some strength in the reasons you give why people would want them, but you have not thought through the actual implementation details to see how worthless your tier 1 is, and thus, that no one would truly want them. Like I said – you want money for nothing. That is a gigantic system FAIL. As I also said, you keep on trying to peddle mush, when the customers want cupcakes.

    When you realize that the only value you present is Tier 3, saying that Tier 3 includes accelarated examination is quite meaningless – that’s just llike simply calling today’s examination “accelarated” – it really does not move the mass of applications (do you want to take a guess at the aggregate days of PTA being earned right now?)

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 12, 2011 02:23 pm

    The more in-depth the search, the more results there are to analyze. It’s not a difference in the quality of analysis between tiers, but the quantity to be analyzed.

    Tier 1 would probably be used by large corporations trying to bulk up their portfolios with some “fiber”, highly prolific inventors who want to get their many inventions timely on record at a lower cost and then selectively pursue them further later as the relative commercial value becomes clearer, cash-strapped individuals who can’t afford more now but want some “IP insurance” as they shop their idea around and try to raise cash for the next incremental step.

    Note that Tier 3 would include accelerated examination (or reexamination as the case may be). Maybe not exactly “just-in-time” but a lot faster and more cost-effective than litigation.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 12, 2011 01:47 pm

    and fully analyzing the results

    This is a separate part of examination from “search”. As you have stated that this portion does not change, your tiers thus are reduced to a function merely of the search.

    You are trying to lump this “analysis” in when you have explicitly said this “analysis” remains the same. Your answer here is a non-answer. My points remain unchallenged.

    Key word search, even given your actual human being is a FAIL. No robot is currently performing the massive amount of FAIL that I see now with key word searching. No matter your assumptions, your Tier 1 is a failure.

    I still believe that a majority of applicants would never go beyond Tier 1.” And I continue to tell you that your thought that a majority of applicants would buy into the system of paying for nothing in your Tier 1 scenario is utter foolishness. You are handwaiving away the backlog by saying we will only sell mush to those looking for cupcakes and the majority of those cupcake seekers will be so disillusioned that they will go away.

    Your cupcake business model is one giant FAIL.

    People are not looking for a just-in-case Tier 1 ZERO value insurance mush. There is ZERO “prudence” in pursuing this phantom “patent protection” of Tier 1.

    Your phrase “ in the unlikely event that indicates that you think that someone with Tier 1 (non)protection would jump back into the system and pursue Tier 3 protection upon infringement. Wow – what a crapshoot – especially banking on the garbage baseline of key-word searh results. Do you think such a Tier 3 activity would be timely? What possible drug-induced reasons do you have for such a wishful thinking position? Don’t tell me you think everyone will be busy rushing for the mush (when they want cupcakes). You are only compounding the FAIL. I tell you this – Just-In-Time patent protection does not work. Once again, you are assuming a later condition as a precedent input. Such systems are called wishful thinking. If you want a real world system, you need to embrace real world conditions. So far, I have not seen you do so.

    Tell me as an investor that I should invest in your business when your business plan includes such a crapshoot model. I think you can guess my investment decision.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 12, 2011 12:32 pm

    “you have basically tripled the predominate time factor of examination (the “search” portion is by far the least time consuming portion) – thus you have extremely bloated the backlog, with basically nothing to show for it..”

    The fact that the search is the least time consuming portion is itself indicative of the quality problem. Searching the prior art and fully analyzing the results of the search should constitute a major portion of the examination, even after improving the quality of the examination proper.

    Tripling the examination time assumes that every applicant will upgrade every application through every tier. I continue to disagree that such would be the case. I still believe that a majority of applicants would never go beyond Tier 1. All they need is a “catastrophic insurance policy” and would only pay the “high deductible” (upgrade costs) in the unlikely event that their IP rights are infringed or contested, if they even exercise them at all. The patent protection is only there “just in case” as a matter of prudence.

    Regarding keyword search, I am assuming a certain degree of competency in selecting appropriate search terms. In other words, an actual human being with knowledge in the field, not a robot.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 12, 2011 11:52 am

    The immediate problem you have Ron is that you are “letting the client decide” on tiers that have no value – specifically, your tier one is absolutely meaningless with the “search by key word only” protocol (you continue to glibly overlook this important point that you want the majority of users to obtain virtually nothing). You keep on peddling mush as if it is something the client wants. You in essence say that the majority of those in the patent system want only mush. You are wrong. They want cupcakes, not mush. They have decided they want cupcakes by entering the bakery.

    With the nearly non-existent value of your tiers one and two, you do not seem to grasp the chasm you have created in jumping to the only tier with actual value. You need to return to the previous posts and re-read them.

    Your tiered system offers the value of zero at tier one, the glimmer of upgrade at tier two with minimal value (as you have stripped the injunction and eviscerated any obtained patent with the lowered evidentiary standard for invalidation – so even after a long and expensive court battle, any guilty defendant can simply opt for a license that they would have had to get in the first place – such would be a welcome invitation to flaunt any patent rights obtained at this tier. The only truly meaningful tier is the gold-plated tier three. As a whole, your tiered system is a colossal failure. You offer way too much valueless options and way too much uncertainty to those who came in looking for cupcakes. As you indicate that the “of the examination practice (i.e. everything except search) would be the same across all tiers“, you have basically tripled the predominate time factor of examination (the “search” portion is by far the least time consuming portion) – thus you have extremely bloated the backlog, with basically nothing to show for it..

    Whether are not the client has a “range of motivation” has absolutely no intersection with the legal right to be obtained. You need to recognize that the “control factor” you want to use to leverage the value of the patent process is a chimera. People do not want a range of product between mush and the cupcake – they want the cupcake, They may want a range of delivery options for that cupcake, but make no mistake, it is the cupcake that is wanted.

    Finally, there is nothing wrong in “letting the client decide”, but your “motherhood” use of that term here is a fallacy – the client does decide in any system. You need to understand that even in today’s system it is always the client who decides what to do.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 12, 2011 10:51 am

    “You have to treat every application the way that applicants think about it at the time of prosecution… ”

    ” …as the potential for big bucks, as their prized jewel, as their baby.”

    The first statement above expresses the whole point of a tiered system. It is the _client_, not the attorney, not the USPTO, who makes the determination of which tier is appropriate. The second statement above represents only one way that a client may regard their invention. Now, maybe you are right that all clients see their invention in those terms. Or maybe I am right that there is a whole range of motivations for clients to seek patent protection, which furthermore can evolve over time. But all I am saying is to let the client decide! By all means inform the client of the tradeoffs, and give them the best advice you can for their circumstances and objectives, but in the end it should be _their_ decision, based on what they need and/or how much they are willing and able to pay to get it.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 12, 2011 07:59 am

    20% search effort = 0% value.

    As I have said, key word search is nowhere near 80% effective.
    Not. Even. Close.

    This search level leaves a trade off value of $0 dollars. For the highest volume track, you are asking for money for nothing. No lawyer in their right mind would advise a client to take this tier – much less the majority that you have slotted for it.

    Your comment of “Most patents (the proverbial 80%) are never contested, litigated, licensed, or even commercialized” is a red herring, because you are trying to treat the end result as the input – Prior to putting that patent on the shelf to collect dust, people do think that the application will be worth more than a dust collector. You have to treat every application the way that applicants think about it at the time of prosecution as the potential for big bucks, as their prized jewel, as their baby.

    Sorry Ron, but you are simply off the tracks on this point. People simply do not want mush when they go looking for cupcakes.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 12, 2011 12:17 am

    “Fee Capture through Maintenance Fee Only is independent of any other idea presented

    I agree it is largely independent, although the fee structure in general does factor into the tiered approach.

    “what is the “search level” at your tier two and how does that distinguish from tier three? same question for “examination”.”

    That’s what I meant by “same as” current, meaning same search practice as with current utility applications. The rest of the examination practice (i.e. everything except search) would be the same across all tiers, including the type of quality improvements that you proposed. Tier 3 would include community/industry-assisted search (could be a big part of what the proposed higher fee would cover), which the today’s search practice rarely does. I frankly don’t believe that it is humanly possible for a single pair of eyes, no matter how skilled the examiner may be, to be sure that all relevant prior art has been found. Which is why I proposed the lessening of rights for Tier 2, reserving the full rights for Tier 3.

    “I just finished explaining to you that simple keyword searching is absolutely useless, and you want to make it the lynchpin of the most voluminous (your assumption) route in all of patenting”

    It’s the 80/20 rule. Most patents (the proverbial 80%) are never contested, litigated, licensed, or even commercialized. For them, a 20% search effort that is 80% effective (i.e. 80% of the time it uncovers all of the relevant prior art) is the right trade-off. For Tier 2, maybe it becomes 90/10, would mean that the probability of missing relevant prior art has been cut by half (just for the sake of illustration). So that’s good enough to make it enforceable in court subject to a reasonable standard of evidence at trial. With Tier 3, maybe it become 99/1, and thus merits the highest presumption of validity and the availability of the “nuclear option” (preliminary injunction). In other words, I think a 10% chance of putting an innocent party, wrongly accused of infringement, out of business through the nuclear option is too high of a chance to take. But for a patent that will gather dust on the shelf (Tier 1), 20% is fine, and the 80% cost savings is worth it.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 11, 2011 10:20 pm

    Sorry Ron – busy docket today.

    One quick note: the proposed solution of Fee Capture through Maintenance Fee Only is independent of any other idea presented.

    Also a few quick questions: what is the “search level” at your tier two and how does that distinguish from tier three? same question for “examination”. You also state tier2 “same as” current, but then lesson by two critical factors. Do you realize that you just gutted the value of your “same as”?

    One last exceptionally bitter note: I just finished explaining to you that simple keyword searching is absolutely useless, and you want to make it the lynchpin of the most voluminous (your assumption) route in all of patenting. That is quite some serious disconnect with reality.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 10, 2011 02:26 pm


    I think we are focusing on two different aspects of examination quality. I am looking primarily at the thoroughness of the search and the analysis of the prior art, whereas you are looking at the analysis of the application and validity of the arguments based on the prior art and the patent statutes. Both areas are important, and I agree with your proposed solutions of allocating more examiner time based on the size and complexity of the application, and improving examiner accountability. That of course will require higher fees, because examiner time and effort is not free. Your proposed solution to that is to increase maintenance fees.

    I am 100% in favor of improving quality as you have defined it, and am not proposing tiered quality in that sense. But no matter how well the examiner analyzes the application and no matter how sound the arguments are based on the prior art that was considered, if a key piece of prior art is missed or not fully considered, then the validity of the patent may be called into question. So let me offer some more specifics on possible differences between the tiers (based mostly but not entirely Osenga’s proposal):

    Tier1: Lower fees, applicant-controlled delay, publication after favorable initial examination based on simple keyword search, unenforceable. Can upgrade to Tier 2 or 3 by paying additional/higher fees.

    Tier2: Same as current utility patent, but with a lower evidentiary standard for invalidation and no injunctive relief available. Can upgrade to Tier 3 by paying additional/higher fees.

    Tier3: Higher fees, immediate publication and active solicitation of prior art through the “peer-to-patent” or Article One Partners model, accelerated examination.

    Regarding fees, although I still believe that examination fees should be required, one advantage of your proposal for higher and more frequent maintenance fees would be induce the patent holder to allow a patent to lapse early if it no longer serves a useful business purpose.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 10, 2011 08:23 am


    I think that you need to understand better the problem with examination quality.

    It is not a matter of “breadth and depth of the prior art search“, so if you are using that as the foundation of your argument, those sands are shifting.

    (One) problem is that the examiner simply is not taking the time to read and understand prior to searching (as this is actually required of the examiner – see MPEP 704.01 “After reading the specification and claims,“). I cannot tell you the number of times that I see first actions on the merits be a complete waste of my clients’ time and money as they are the results of key word searches and strings of 103 rejections with disparate prior art that cannot be linked together. The search is the easy part.

    You also continue to maintain that many would choose tier 1 – even after we explain that tier one is valueless. I have asked you for a better explanation of this course (as recently as comment 30). Please deliver. And in any event, you do not seem to see that I have taken any business purpose type of rationale that you depend on and optimized that rationale in the annuity fee model. Yet you seem to reject this model without reason, mistakenly calling it a subsidy (still). If, for business purposes, costs could be shifted downstream, then the annuity fee model greatly outclasses the tiered model.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 10, 2011 08:08 am

    We are indeed getting closer to a mutual understanding.

    However, there is no way that you can label my fee strategy as “subsidy”, as the patent holder is paying for what he has. Please explain just what is the “subsidy”? Just what is the “perversity” you see? – My idea does not impact the applicants as you seem to think. The impacts are all positive impacts to what the Office is supposed to be doing.

    Also, I need more details on your tiers and the explicit value to the market. Just what are these so-called valid business purposes for lower quality work from the Office? Who wants mush when they are looking for cupcakes? And no – I do not equate examination with merely prior art search. That is a serious mistake to think like that. Any monkey can punch in a search based on key words – in fact that attitude is part of the deficiency of examination that needs to be eradicated.

    And yes, I do think that all examination should be “top-tier”, because I view anything less than a valid full examination as an incomplete job and refuse to sanction and institutionalize sub-standard behavior. The government behemoth already has too much of that.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 9, 2011 11:27 pm

    BD, I think we agree that:

    1. The quality of patent examination needs to be improved.
    2. Fee diversion should end and the patent office may need to increase fees.
    3. Fees and time spent on examination should be scaled with the size and complexity of the application.

    Where we disagree is that you maintain that every application should receive the same level of examination, after normalizing for size and complexity. I am arguing for tiered examination levels, varying primarily by the breadth and depth of the prior art search, and a higher presumption of validity for higher tiers. That does not mean that the current level of examination (or prior art search, to be more specific) is inadequate for one of the lower tiers, say Tier 2. One way to look at is that you think all examinations should be top-tier, whereas I am saying that there are valid business purposes for lower tiers, and given the choice, many applicants would choose a lower-cost initial examination with the option to upgrade later as business and legal considerations may dictate. I see nothing “shameful” in that.

    We also disagree on the fee strategy. You propose that there be no examination fees, but more frequent maintenance fees instead, whereas I propose that the examination fee be higher for higher tiers, to cover the increased time and effort involved. I did imply that your proposal could devolve into a goverment subsidy of sorts, since demand tends to soar when there is no cost. Even if that is not the case, it would still be a kind of “subsidy” of patent applicants by patent holders, which seems to be a rather perverse incentive.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 9, 2011 01:44 pm


    Thank you for continuing this discourse and providing additional details to your view of the three tier system. Even though my comments appear harsh – our interplay does have value.

    It does appear that we have a very basic difference in regards to viewing “examination”.

    It appears that you want to make “examination” itself a driver for market forces. I, in turn, look at examination as the given right of every applicant. To me, examination is not meant to be a market driver – I would prefer to let the ideas themselves present in the application be the market driver.

    If you are accepting poor examination based on some limitation of search time or analysis – shame on you. Advocating for weak examination as an option promotes laziness and poor work. Entrenching anything less than solid examination means accepting and even promoting a degradation of the system -that is just not acceptable. You say it is not about “sloppiness”, but it is about “sloppiness”, because you are making a conscious decision to accept something based purely on time, rather than on result. That would be like setting up a bakery and serving cupcakes as mush because you decided to only cook them for five minutes. No one wants mush when they go looking for cupcakes. This is another point that IANAE and I brought up and that you have not really answered (you may have answered to your satisfaction, but that level is not a real answer).

    As to your additional details:

    The first tier is fairly cursory” – what does “fairly cursory” mean? Does it mean that you spelled your name correctly? And what does this “fairly cursory” earn you as far as the marketplace? What is the value of this “fairly cursory” tier? I hope you have good answers here – especially given that you think that most people will want this level – it had better be good.

    the second is comparable to current examination practice – and you said I want to maintain the status quo? – Shame on you Ron. Shame. If you are going to change the current system because it doesn’t work – then keeping the system – even as one of three tiers – just doesn’t make sense. And perhaps my “chasm” comment is not making sense to you because you yourself are not clear as to what the market achieves with the result of this tier. Do they receive a patent according to today’s standards? Do they receive something less? Details Ron, you need details here.

    and the third would be more rigorous” – OK – how much more rigorous? What is the “objective standard” for “more rigorous”? It appears that you are still accepting the universal one-size-fits-all widget peg mentality, except you are just introducing three sizes of widgets and basically saying that the smallest two widgets don’t actually do anything in the marketplace.

    As for an examination-less system, I may have made the mistake of thinking that you were informed about the patent system including its history. I am not about to teach you the history of patents on a blog, so I will leave it up to you to do a little research into the registration only phase of the patent system that this country went through. You may see (if you decide to look) that that phase nearly destroyed the patent system.
    As for your thinking that the provisional patent system works well – I will not debate that it works well for its extremely limited role. But you are aware that that role does not provide any type of enforcement potential on its own, correct? This is a topic near and dear to Gene’s heart, as many unsavory promotion firms prey on people’s ignorance in this regard – promising a “patent” and only providing a nonprovisional filing. You do know that there is no such thing as a Provisional Patent, correct?

    You reply “maybe” to my idea of eliminating the widget philosophy without any explanation. I need a bit more from you on this topic and why you think only “maybe”. I am confident that my experience in this arena provides a better than “maybe” probability to this idea. Feel free to take some time to think about this, rather than giving a knee-jerk reaction – it would be a fundamental change.

    You then talk about “market solution” (very much in a “motherhood” word sense) and say that you “favor market solutions over government handouts where possible.” If you think my idea is for a “government handout” you are sadly mistaken. Having the patent still comes with a cost in the annual fees. The maintenance fees are annual rather than spread out into three payments over time – thus one with a patent must decide to do something with the patent in order to self-justify the cost each year or decide to turn the patent over to the public – there is no government handout – those earning a patent still must pay. Those not earning a patent have been handed nothing. Yes, there is a government cost in examination that did not result in a patent and the collection of patent fees, but the current budget system prevents abuse of the Office giving out patents to collect maintenance fees (If you do not understand this, then you have more research to do on your own). If you were attempting to downplay my idea as a pure government subsidy, then you failed.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 8, 2011 08:43 pm

    “the chasm to be jumped with the “actual” examination to get to tier three. You do realize that a non-examination system did exist and failed miserably, do you not?”

    An examination does occur at each tier. The first tier is fairly cursory, the second is comparable to current examination practice, and the third would be more rigorous. I am not sure why you describe this progression in graduated tiers as a chasm. The quality of examination in terms of applying the legal statutes to the available facts would not vary between the tiers. It is not a question of being more or less sloppy in that respect. The difference would be in the scope of the prior art search and the exhaustive thoroughness with which it is analyzed. Because it is largely a matter of the time alloted to the examination, and time is money, the fees would have to be correspondingly higher at each level. I am not familiar with the non-examination system you are referring to, unless it is the provisional application system, which on the whole I think has been quite successful.

    “Take the brightest and most respected examiners and task them to rate the difficulty of examination.”

    OK, I accept that.

    “Enforcing a quality examination.

    In a word – accountability.”

    Quality and accountability are kind of motherhood words. Good and desirable traits, but as you have said, the “devil is in the details” of how to get there. Let me point out that 3-tier does not try to impose “objective” quality criteria. That is up to the applicant to decide, and weigh the costs and risks associated with moving to a higher tier. Just as the free market ultimately decides the commercial value of the invention, 3-tier creates a “market” for patent examination, without trying to dictate or measure the quality of the applications.

    “even with a greatly increased front load (itself not a bad thing) the capability to effectively process applications would be greatly improved by leaving the “widget” in the dustbin.”

    Maybe. But I would still be skeptical about examinations free of charge. It’s really the opposite of the “market” solution for patent examination that I believe 3-tier would provide, and I tend favor market solutions over government handouts where possible.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 8, 2011 06:56 pm

    Well Ron,

    If you stop reading at the first sign of what you perceive as ad hominem, you are missing quite a bit. Tell me, do you always quit when the going gets a little tough?

    This is not a scholarly convocation; there are no white gloves and pinkies in the air whilst sipping tea. This is an internet blog. The standards are different and if you cannot adjust to a little bit rougher discourse, you are in the wrong arena. Now if my ad hominem did not have the backing of being correct, or more to the point if I was misleading you with statements of law contrary to what the law actually holds, I would indeed be off-base and would rightly suffer Gene’s diligent chastisement and a curb of posting privileges.

    But I have been neither incorrect nor misleading – only tough. You will need to deal with it or go away.

    It is interesting to note the wikipedia definition of ad hominem:

    An ad hominem (Latin: “to the man”), also known as argumentum ad hominem, is an attempt to link the validity of a premise to a characteristic or belief of the person advocating the premise. The ad hominem is a classic logical fallacy, but it is not always fallacious; in some instances, questions of personal conduct, character, motives, etc., are legitimate and relevant to the issue.

    You may not like my ad hominem, but mine is clearly not fallacious. It is not a fault to exploit your faults – especially when they are pertinent to the discussion.

    You ask for a specific point to address – right after I finish posting one – the chasm to be jumped with the “actual” examination to get to tier three. You do realize that a non-examination system did exist and failed miserably, do you not? This point to address of the examination chasm, I have stated repeatedly, even without sarcasm or ad hominem. This point remains a gaping hole in your proposal. How plainly must I state that this deficiency makes your three tier system incomplete to the point of being merely wishful thinking? I do not want your appreciation, I want your thoughts on this critical factor.

    Now then, let’s address your comments on my thoughts:

    The point about additional fees for length of application and number of claims.

    You are correct in that the Office does indeed charge more for these items. But the fees are not what I offered. The fees stand in sharp contrast to how the Office actually treats the applications – how they actually examine them: the Office makes absolutely NO distinction or allowance to the examiner for the increased load. None. Therein lies the problem. The fees are a non-sequitor to the examination deficiency.

    You are concerned with how an objective measure of complexity would be arrived at. Really? After postulating a hand-wave of three tiers based on what? – an objective criteria? Please, Ron – you object to an implicit weakness of your own system.

    Yet even despite that, I have read of an answer to your question. While truly arriving at an “objective” criteria may be impossible, the Office is staffed with those whose duty it is to know what the state of the art is and what level is required to be patentable over what persons having ordinary skill would consider obvious. Since this type of determination is of the same flavor of evaluating the intricacies and complexity of an application, I would posit that the Office already has staff that can rate incoming applications along a sliding scale (such determination need not be explicitly or completely “objective” in order to be effective – since each application still receives a full quality examination, there is no call of arbitrariness that reaches the applicant). Take the brightest and most respected examiners and task them to rate the difficulty of examination. This type of rating can serve not only to provide a better reflection of resource time and effort (avoiding the one-size-fit-all, gross “mass production widget” mentality) it can also better align the development and use of the varied capabilities of actual examiners. Raw examiners can be better matched with “lighter” applications. Turnover would drop and motivation skyrocket. There are several personnel-management improvement theories I can go into in more detail (prior to turning to law I ran the professional development program of a substantial number of engineers, scientists and like minded professionals).

    Enforcing a quality examination.

    In a word – accountability. When an examiner is not held accountable for their mistakes, they do not improve. This accountability must include poor rejections, a major sore point and source of contention between the patent bar and the Office. In fact, I would posit that this single item is the largest driver of poor relations between examiner and applicant. Correct this, and watch the level of decorum and willingness to work together blossom.

    Post-grant maintenance Fee Structure.

    I did warn you that there is no such thing as a free lunch. Yes, you do run the chance of actually having people want to submit more patent applications. Aside from the logistics, do you not recognize that this, in itself, would be the best furtherance of the actual mission of the Office? Unless you are a died-in-the-wool anti-patentist, more patents (appropriately examined and rightfully earned) is a GOOD thing. Anyone who holds otherwise, does not understand that the call of the Office is to PROMOTE (which means increase) the warehouse and distribution of knowledge – do you know why? Because knowledge grows on itself – This is not a linear concept – we should expect (and encourage) a nonlinear – increasing – use of the Office. The fruits of that labor increase the storehouse of all mankind. Increasing the storehouse of man’s knowledge is the business of the Office. Anytime anyone advocates for a solution that caps or stymies this promotion you should look long and hard at that person and discover the ulterior motive lurking underneath.

    Logistics – this is only a problem if we let it be. Gene has advocated quite forcibly how we (the royal we – the elected we) have actually contributed heavily to the current logistics problem with the stealing (I do not hesitate to use that term) of innovation dollars that should have been rightly used in furtherance of the goals of the Office. We can start with restoring those funds. As I indicated, other aspects of my suggestions increase the efficiency and productivity of the workers, thus helping the logistic picture.

    The fee structure itself can also be used to not only manage innovation but provide a quicker return to society of the free use of those items that patent holders deem not worth the cost. Annual fees that rise more steeply after a number of years (here I am flexible, but 7-10 come to mind) would guarantee that the ideas are either productively in use (thus enabling the user to pay the increased fee) or are opened for everyone to use.

    Another logistical solution inherent in my suggestions: I would also posit that “pendency” is directly related to the “widget” mentality and that by having a sliding scale, the throughput would be greatly increased (and yes my background also includes production management). So even with a greatly increased front load (itself not a bad thing) the capability to effectively process applications would be greatly improved by leaving the “widget” in the dustbin.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 8, 2011 04:34 pm


    If by smackdown you mean ad hominen, I have already indicated that I tune that out and won’t dignify it with a response. I reviewed the prior posts and thought I addressed most of the points. If there is a specific one you have in mind, I’d appreciate it if you could point it out.

    “provide a slidiing scale of review time to examiners based on size/complexity of the application”

    I think it would certainly make sense to allocate more time based on the length of the spec and number of claims, which already command additional fees. I’m not sure how one would implement an objective measure of complexity.

    “enforce a quality examination”

    More specifics, please.

    “move ALL (or nearly all) fees into the post-grant maintenance fee structure”

    I think this would create a greater examination backlog and exacerbate the already severe pendency problem.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 7, 2011 06:21 pm

    (and make no mistake about it – the emphasis needs to squarely be on the level of quality of the application

    should read:

    (and make no mistake about it – the emphasis needs to squarely be on the level of quality of the examination

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 7, 2011 06:19 pm

    I feel that I have addressed the substance of the criticisms on this issue to my own satisfaction, if not to yours.


    That ‘s why I replied so critically – you have not replied to the substance of the criticisms – to any acceptable level – you have left them at the wishful thinking stage.

    If you think that your replies are of a caliber to stop the discussion, you really should not have started it. As I repeatedly pointed out – you did not get around to answering the difficult questions (and you still have not – for example – the chasm jump to full examined patents issue).

    We can have a nice discussion, or I can bring the smackdown if you want to get all high and mighty.

    Your choice.

    As for an idea of reform, the one I like the best so far is to revamp the intake process and provide a slidiing scale of review time to examiners based on size/complexity of the application. Each application still merits a quality examination, but you do not force feed a crazy one-size-fits-all examination time structure. This idea has been expressed before and even suggested to POPA (I know, because I suggested it).

    Another idea I like to enforce a qualilty examination (and make no mistake about it – the emphasis needs to squarely be on the level of quality of the application) is to enforce accountability on the examiner. I mean this both for good and for bad – and the bad includes both allowances that shouldn’t be as well as rejections that shouldn’t be. This too is something that POPA needs to champion, and I have told them as much.

    Yet another idea (and one I just shared with you, even though you seemed to have missed it in your hurry to say that I offered you nothing) is to move ALL (or nearly all) fees into the post-grant maintenance fee structure.

    Sure we can agree to disagree, but I would much prefer that you actually take the time to work yourself through the questions that have been posed to you (instead of becoming so defensive). Or please feel free to shot at the ideas I have shared (both in this post and in past ones if you care to actually read them).

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 7, 2011 03:05 pm


    That’s what I thought. I asked for one specific idea for patent reform, and you offered nothing. But criticism is important and valuable too. I would be the first to agree that an uncritical approach to change for its own sake is worse than no reform at all. Having said that, I feel that I have addressed the substance of the criticisms on this issue to my own satisfaction, if not to yours. So we’ll just have to agree to disagree at this point.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 7, 2011 02:39 pm

    true defender of the faith in support of the status quo.

    Not so.

    More so – one who does not engage in unproven and speculative change for the mere sake of change.

    Clearly, I have indicated that where change needs to happen – it can and should happen now. How is that “defending the status quo”?

    The put-downs are not addressed to constructive reform – they show that your ideas are merely not as constructive as you think them to be. They are clearly not developed enough. I do not admonish you for having them – I applaud you and wish to invigorate you to make them real enough to be implementable, rather than leave them at the level of mere wishful thinking.

    Do not be so sensitive to criticism.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 7, 2011 02:01 pm


    All very “reasonable” – spoken like a true defender of the faith in support of the status quo. Tell me, do you believe that there is any possible practical improvement to the current patent system (with emphasis on “practical” since you are constantly invoking the “real world” in your put-downs of every constructive reform idea that is ever put forth). Perhaps there is, but I missed it in all of the nay-saying. If you have even one idea for patent reform that you would deem worth pursuing, and be willing to put up for scrutiny and allow to be subjected the barrage of criticism that you so eagerly dish out, we’d all love to hear it.

    Ron Hilton

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 7, 2011 08:06 am


    First of all, thank you for playing the game, even if you did not know you were playing one.

    Second, lighten up. The game metaphor is just a writing tool – nothing more. As I mentioned, this dialogue is valuable as we are fleshing out the devilish details. In that sense we are both winners. Grilling you seemed necessary as you were not meeting the difficult points that I and IANAE were posting.

    I disagree with the notion that quality is to high for any patent. We may be playing by different definitions of quality (certainly the Office has used different and decidedly improper definitions). I posit that what you might consider a “low-quality” invention merits an equal quality examination. You cannot apply a disparate examination from the Office side because you would run into series questions of arbitrariness. And just as I would disagree with your view of people choosing tier one in droves, people naturally will not want a lower quality examination. By and large, people who have gone through the trouble, time and expense to make an application do not feel that their application is a mere “low-quality” one. People simply do not throw their money and efforts away like that.

    The above also somewhat covers your “good enough” comment, but I would emphasize that the detail of setting such a good enough is pragmatically impossible. You do realize that actual examiners will be employed for the “good enough” review, correct? You do realize that, while no doubt some, nay even most, examiners are well-meaning, that they are mere cogs and will game the system, do you not? Or do you somehow change the examiner mentality with your tiered system (a devilish detail that you have not even hinted at)?

    As I indicated, the problem with any type of patentee-assessment of probable patentability is that patentee’s practically always have an inflated view of their “baby”. You speak from the stand point of a single inventor who has some experience. Your ability to “judge” the patentability of applications is not and cannot be universally assumed for the hundreds of thousands of other applicants. I have a better vantage point on multiple applicants.

    I think that our dialogue has been more successful than most, but I still want you to consider the difficult points that you have yet to address. Let’s start with the fall-out due to upgrading and the impact of trying to obtain capital (even for arguments sake allowing a large number of tier one applicants). I have seen the difference between inventors trying to obtain financing with only provisional applications versus those with non-provisional applications and versus those with patents. The difference is phenomenal. That difference also dictates that your lower tiers simply will not have enough value to those making the decision to release money. Your system “sounds” good and is a good wish, but real life is simply different, and your lower tiers would dry up as people would soon realize that what they get out of such lower tiers is simply not worth the effort. You do “get what you pay for”, and people (investors and then applicants) will not want the lower items. You need to disabuse yourself from this idea that the hoards of applications will settle for a basically meaningless “patent”, that only hold the possibility of “upgrade” into something meaningful. You need to address the chasm created by the jump to a fully examined application. If you cannot add that detail, then any version of the tiered system remains only a pipedream. If you are happy with only putting a pipedeam on the table, and merely share the idea, without more, without the chance of pragmatic success, then what have we actually accomplished? We still have the same working system and we have a wishful thinking, non-working model we can dream about, but cannot implement. Let’s not stop halfway. Congress already does that.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 7, 2011 01:38 am

    1. The quality bar is too low for high-value contested patents, too high for shelved patents, and okay for those in the middle. Raising the bar for all patents to Tier 3 would be cost-prohibitive. The whole idea is to tailor the level/cost of examination to the inherent quality of the invention. Clear and convincing is probably appropriate for TIer 3, but too high for Tier 2.

    2. You get what you pay for (at best). Lower cost means lower quality. Which is fine if that is “good enough” for the present.

    3. Like many things in life, quality is often inversely related to quantity. I stand by my prediction that Tier 1 would be the largest. Even without examination (such as in the case of a provisional) the investor/licensee or their attorney can make their own assessment of probable patentability.

    I didn’t even know we were playing a game, let alone that the opposing player is also the self-appointed umpire. My only objective is the sharing and discussion of ideas, and in that regard I consider it a successful exercise. I don’t have much more to add at this point, so feel free to consider yourself the winner.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 6, 2011 08:41 pm

    1. If the current quality bar is too low – it should be raised now – for the system already in place. A change to a tiered system is not dependent on, nor required for such a change. The presumption of validity is set by law and independent of the actual examination system. Your statement of “discouraging infringement and encouraging negotiation over litigation.” is mere conjecture and is not supported. You have shown no indication that your tiered system would increase the level of presumption beyond Clear and Convincing. Are you adding that now?

    Strike one.

    2. Lower entry costs are already in place (did you not read my post?), and as such are not dependent on, nor required for such a change.

    Strike two,

    3. The statement of “Most applications would move to Tier 1” – is pure unmitigated conjecture. You have ignored the points that IANAE and I made earlier regarding this facet. That’s like saying most people now would opt for a provisional patent and leave it at that. Your statement of “due to their upgradability is completely false. You cannot have the non-examination as a benefit, when that examination still has the same exact potential of denying patentability and expect anyone to provide funds to the unexamined application/”patent”. This concept mirrors the “registration-only” concept and would fail just as assuredly.

    Strike three.

    You are out.

    But cheer up. You still have two more outs in this inning.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 6, 2011 07:59 pm

    Here are the advantages of a tiered system:

    1. By raising the quality bar for patent enforcement, Tier 3 would help reduce litigation costs/backlog. As the current article shows, even a reexam under the current system is resource-constrained and cannot provide a thorough enough vetting to stand up in court. A Tier 3 examination would be more thorough than the current status quo, thereby rightly enjoying a stronger presumption of validity, discouraging infringement and encouraging negotiation over litigation.

    2. By providing a lower-cost entry point, Tier 1 would encourage innovation by making the patent system more accessible to individual inventors and small companies, and provide a tool for applicants of all sizes to better manage their IP costs.

    3. The current patent system provides a Tier 2 level of examination for all applicants, which as noted above is insufficient in a few high-profile cases and overkill in the majority of other cases. Most applications would move to Tier 1, reducing the backlog in the patent office. Tier 1 and 2 would still provide a deterent to infringement due to their upgradability to Tier 3. Those relatively few actually needing Tier 3 examination would pay for the additional resources required in higher fees. Tier 3 would serve to protect the highest-value inventions, which are naturally those most likely to be infringed and litigated under the current system.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 6, 2011 06:34 pm

    But that is already true for reexams and litigation in general.

    Yes, but that is not a selling point of changing to a tiered system, now is it? Remember, you are trying to sell the new idea, not say that it yields the same as the current idea. If you don’t have more, than it would seem that you agree with me. Do you have more? Will you address the other points? I am sincerely interested in your viewpoint and if you an overcome the cons, I think such would be very valuable.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 6, 2011 05:46 pm

    Yes, the devil is always in the details, no matter how promising the initial idea. Clearly, “upgrading” from one tier to the next is not without risk, since the patent could be invalidated by the more thorough examination involved. But that is already true for reexams and litigation in general. It’s that ubiquitous risk/reward tradeoff that seems to show up everywhere you turn…

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 6, 2011 03:56 pm


    Quite respectfully, falling into tiers and falling along a spectrum are two vastly different things. You do not get to mix the ever gradual spectrum with the abrupt tier model.

    Now that aside, the aspect of “upgradeable” is not a bad concept in itself. However, the devil of details of coverage, possible surrender of already earned rights, timing, and related uncertainties means that waiving a magic wand by merely saying the system allows upgrades does not advance the system from the wishful thinking stage to the pragmatic stage, especially when it concerns investment dollars.

    You still have not answered IANAE’s points, which take the nice discussion of costs/values and puts it on its ear. Again, you yourself have mentioned that there is no way a priori to know what will “fly off the shelf.” The shelf point is simply in the future after the patent aspects have been completed. At the very least this concept holds for the important financing decision points both in the current system and in the tiered system. The changed system offers no advance in this regard, because the “upgrading” needed has no guarantee – you return to the exact same uncertainty point.

    The present system already attempts to delay costs and achieve what appears to be your aim. This is actualized in the maintenance fee structure.

    Perhaps you would be amenable to pushing all (or nearly all) fees back into the maintenance fee stage. Then you would really unleash creativity, and would truly more closely align those items that hold true market success with the payments. While this would be extremely cost effective for innovators – there would be a substantial investment required. But as they say – there really is no such thing as a free lunch, now is there?

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 6, 2011 02:59 pm

    The assertion that inventions fall naturally into a tiers or along spectrum of quality/value is not at all inconsistent with the assertion that it is not always clear at the outset where along the spectrum a given invention may eventually wind up. That is exactly why an upgradable tiered approach makes sense. One makes your best guess which tier to start at, with the option of upgrading later as circumstances dictate and/or permit.

    Let me clarify the difference between what I mean by cost and value. The value of the IP is what it might eventually be worth in the marketplace once it as been fully commercialized. The cost is the investment required to reach that goal, including USPTO fees, prosecution costs, litigation costs, and other business costs. A tiered approach would help to reduce and/or manage those costs, both for the inventor and for USPTO. It would not have a large impact on the commercial value of the underlying technology. For a successful technology with a good ROI, the value should eventually far exceed the cost. That’s the profit motive at work. But at the outset, for the individual inventor or small start-up, those costs can be pretty big and a real hurdle to bringing the fruits of their innovation to society. So a more efficient, cost-effective patent system is a very desirable goal. Not to improve the value of what innovators create, but to help better realize that value for all concerned.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 6, 2011 02:28 pm


    The phrase “If the IP rights are properly secured or on a reliable path to being secured, then its value is largely that of the underlying invention” belies even the intention of a tiered system, as if what you suppose were in fact the guiding principle, any patent system would suffice – including the present one and there would be no need to even consider changing the system.

    As the fact that a change is being considered, the foundation of your argument has a gaping hole somewhere.

    So the reason for the tiered approach would not be primarily to create different levels of patent value.

    A couple of questions come to mind:
    Why do this?
    Why is this “better” than the current system?
    Does the added complexity bring enough value?

    You make some egregious assumptions, including, but not limited to “Ideas already fall into tiers in terms of the underlying quality/value of the invention“. Reality plays out quite differently. This is one of IANAE’s points that you have ignored. In fact, your sentence in the same paragraph “Furthermore, it is often difficult to predict a priori which inventions will take off and which will languish on the shelf. belies the premise – you yourself refute what you say.

    And by the way, your statement of “If not, the business case for commercialization was probably marginal in the first place.” is another one of the items that IANAE refuted. You do not get to make that assumption.

    providing the highest quality where it is needed most with the optimum overall expenditure of resources – sounds good, but so does Communism in the abstract. Problem is, that “highest quality” is nowhere guaranteed, and quite frankly, if better quality were available, we should be pushing for that now, in the current system, rather than the vast overhaul of the idyllic three tier system would demand.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 6, 2011 02:04 pm

    I am coming from the assumption that the merit of the idea, or more specifically, the commercial potential of the invention, is the main driver of IP value. The perfection of the IP rights is also vitally important, but it tends to be more binary. If the IP rights are properly secured or on a reliable path to being secured, then its value is largely that of the underlying invention. If there is any appreciable risk at all to having or being able to maintain the IP rights, the commercial value approaches zero very quickly. So the reason for the tiered approach would not be primarily to create different levels of patent value. Granted, you have to deduct the cost of perfecting the IP rights in going from one tier to the next, and quantify the risk to the business until those rights become fully enforceable, but in most cases that would represent less than the inherent upside value of the IP if it has good commercial potential. If not, the business case for commercialization was probably marginal in the first place.

    The real reason for the tiered approach is to better manage the cost to the client and better ration the resources of the Patent Office. Ideas already fall into tiers in terms of the underlying quality/value of the invention, and a tiered approach would simply reflect that reality. Furthermore, it is often difficult to predict a priori which inventions will take off and which will languish on the shelf. The tiered approach allows the client to manage the costs of prosecution and litigation over time as the market value of the underlying invention becomes clearer. The lower cost Tier 1 would allow more inventions to enter the system, and then be winnowed down to Tier 2 and Tier 3 as business/market considerations may dictate. From the Patent Office standpoint, it would tend to focus the resources where they are most needed, reducing pendency generally. The higher tiers would command higher fees and consume more resources, but there would be fewer of them. The rationale is similar to the three-track proposal, but three-tier is a more comprehensive solution that addresses both pendancy as well as quality, providing the highest quality where it is needed most with the optimum overall expenditure of resources, both by the Patent Office and the client.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 6, 2011 08:28 am


    I believe that you are mistaken as to the value you are attributing to the pending application and provisional. Yes, people will make judgments on value and act accordingly, but I would propose that the value was in the object of the provisional and pending application, rather than in the particular vehicle of the patent process. You do know that provisionals cannot be enforced on their own, do you not? You are also likely aware that pending applications have extremely limited enforcement capabilities, correct?

    From a pragmatic sense, a tiered system must be rigorously constructed. Academic “ideal ” exercises and limited experiences must be put into the harsh perspective of the full spectrum of actual real world business and legal concerns.

    I recognize that you think that Tier 1 and 2 patents would have value. Just how much value is the critical question. If the value is trivial (from the patent process perspective – not the merit of the ideas themselves), why bother (with the process)?

    I do consider you a generally thoughtful person and I am willing to explore the concept of Tiered Systems with you because I believe that you would be willing to weigh both the pros and cons, thus I really would like your view on the points raised by IANAE and myself. Let’s see how you handle the cons.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 6, 2011 12:32 am

    I disagree that TIer 1 and 2 patents would not have value. Even pending patent applications (“Tier 0” if you will) have value today. I know because I obtained a licensee for one of my own pending applications. In fact I sold the license while it was still just a provisional. If a company or investor thinks the invention has commercial potential, and that there is a good likelihood of being able to perfect the IP rights, then it definitely has value. Investors are forward-looking. They are always looking ahead to the future value of prospective investments. You know, buy low & sell high.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 5, 2011 06:31 pm

    Backtracking the analogy in order to address the points that IANAE makes does not answer those valid points

    should read

    Backtracking the analogy in order to not address the points that IANAE makes does not answer those valid points

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 5, 2011 06:30 pm

    A credible threat of an injunction is typically enough to bring about the desired outcome.

    Ron, you do not even have that for today’s patents.

    So what this boils down to is some more forceful protection afforded the most expensive patents. Even getting over the price bias (sport of kings angle), one has to wonder why this more forceful protection simply isn’t in place today – given that the current system should fully protect patent rights now, correct?

    Also, the insurance analogy remains on point – insurance rates are adjustable just as you appear to want the patent coverage levels to be. Backtracking the analogy in order to address the points that IANAE makes does not answer those valid points.

    Again, the tiered system is a joke. It is an intellectual exercise missing in real world pragmatism. You hand waive this “upgradable” option to make tier 1 and tier 2 patents seem like they would have some worth, but that worth is vapor. I just don’t buy what you are trying to sell.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 5, 2011 12:39 pm

    The cursory examination of tier 1 would be useful in weeding out applications that are fully without merit. Even though tier 2 is not immediately enforceable, the free market is forward-looking and if the patent appeared strong to a competitor they would likely choose to license it rather than risking an infringement action with the possibility of an injunction in the future. A credible threat of an injunction is typically enough to bring about the desired outcome.

  • [Avatar for IANAE]
    January 5, 2011 09:43 am

    Tier 2 is essentially equivalent to today’s utility patent, and would thus carry a similar presumption of validity and corresponding market value.

    If only tier 3 patents can be litigated, when will tier 2 patents be able to invoke their presumption of validity?

    It sounds like the market value of a tier 2 patent would be the value of a similar patent today minus the value of an injunction from now to when you’d expect to complete the upgrade to tier 3. Which wouldn’t be much more than a tier 1 patent with the same spec that entitles the patentee to all the same rights.

    A much simpler way to implement this system would be to simply give everyone five years or so of optional deferred examination. Your published application is tier 1, you have no real use for tier 2 anyway, and your issued patent is tier 3. Of course, then the PTO might have to restructure its maintenance fees to be payable while the application is still pending to make ends meet, but that would further encourage the abandonment of worthless applications prior to examination, and allow the PTO to dedicate more resources to the ones it does examine.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 4, 2011 06:05 pm

    Tier 1 is kind of the bargain basement tier for the cash-strapped inventor who wants to establish and maintain a priority date but may have no immediate plans or the financial capability to move forward at this time. Tier 2 is essentially equivalent to today’s utility patent, and would thus carry a similar presumption of validity and corresponding market value. Tier 3 would be a “super-patent” for the most valuable and potentially contested inventions. Also, the “insurance” analogy can be carried too far, because unlike insurance, the holder isn’t locked into a certain coverage based on the policy. You can wait to upgrade from one tier to the next when circumstances dictate. You are, however, subject to all the normal rules of prosecution. If it issues as a Tier 2, and you or a third party files for a reexam to Tier 3, you run the risk of having it invalidated under the more thorough Tier 3 examination, with less flexibility in terms of making amendments at that point.

  • [Avatar for IANAE]
    January 4, 2011 05:19 pm

    Tier 1 and 2 patents would still have market value, since they are upgradeable to Tier 3

    Why not simply have two tiers – “deep discount with optional upgrade” and “weapons grade”? Who’s going to want the middle tier if it’s more expensive than the bottom one and still can’t be enforced?

    And of course you run into the usual problem that plagues insurance policies of all kinds – you don’t know in advance which one you’re going to claim on, and when the need arises you want the remedy quickly. Sure, there are some blatantly obvious cases like pharma where you know you won’t need your patent for a decade (and even then, you might want it examined promptly and properly, now that there’s less benefit from mindlessly filing ten serial continuations), but most of the time you simply don’t know which patents you’re going to need until you need them, and when that happens you need them. If you didn’t think you’d have an economic use for the patent when you filed the application, you wouldn’t have bothered filing the application.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 4, 2011 05:07 pm

    Many patents are never commercialized, and of those, many are not maintained for the full term. Only a small percentage of patents are ever licensed, and even fewer are litigated. Often, a patent is simply viewed as a form of insurance, seldom actually needed but there just in case. Using that analogy, the various tiers could be viewed as providing different “premiums” and “deductibles” that can allow the “policy” to be tailored to the value of the asset, the risk level, and other business factors. Instead of wasting the client’s money and the USPTO’s time to treat all applications equally, it would only be necessary to “upgrade” to Tier 3 for those relatively few patents that actually need to be enforced. Tier 1 and 2 patents would still have market value, since they are upgradeable to Tier 3, and could be licensed and assigned as usual upon whatever terms the parties agree, presumably at some discounted value vs. a Tier 3, everything else being equal.

  • [Avatar for Blind Dogma]
    Blind Dogma
    January 4, 2011 10:44 am


    What would be the point of obtaining lower tiered patents, especially given that there is no guarantee that cost/delay would be abated?

    The tiered system “sounds” nice, but is not truly workable.

  • [Avatar for Ron Hilton]
    Ron Hilton
    January 4, 2011 09:59 am

    This may be an example where a “tiered” patent system as proposed by Kristen Osenga could improve patent quality and reduce litigation. Under her proposal, a patent would have to be Tier 3 in order to be enforced through an infringement suit. Tier 3 would involve a much more thorough examination / reexamination with a correspondingly higher fee. The higher fee would provide the resources to consider all forms of prior art, not just patent and non-patent published literature.