Sideways and Backwards: A Broken Patent Process

Mark Twain wrote that a country without a good patent system is doomed to go only sideways and backwards.

Recently when looking at some new Hewlett-Packard patent applications and patents we stumbled on an interesting patent that issued on April 22, 2014. U.S. Patent No. 8694327, entitled Electronic Warranty System and Method, protects a method of applying a warranty to printer cartridges so that the warranty data is stored within the printer itself. This system offers a major improvement over organizational shortcomings to traditional warranties, or at least it did back when it was filed in 2002.

When reading patents it is not at all unusual for a patent to be issued a number of years after the original patent application was filed, but it isn’t every day that you see a patent issue more than 12 years after it was originally filed. Yet, that was exactly what happened with respect to the ‘327 patent application to HP. Worse yet, after HP successfully prevailed on claims in an appeal to the Board the case goes back to an examiner who for the first time raises a rejection never before made, while still continuing to make additional obviousness rejections. In short, this reads like the story of an application that examiners never wanted to issue in the first place.

Had the applicant been a small entity or individual it wouldn’t have issued. It would have been buried. Once upon a time Directors and Commissioners of the Patent Office used to believe that burying an application that should issue was as bad, if not worse, than allowing an application that shouldn’t have issued. Oh how the times have changed in this anti-patent world in which we live where it is better to not issue patents that should issue as long as we don’t accidentally issue something that might be embarrassing. And we seriously wonder why it feels like a recession never ended?

Let’s face it, aside from the unfortunately brief Kappos tenure at the USPTO the Patent Office has been anti-patent for the last 10 to 12 years. When it takes 12 years to get a patent issued, which is unfortunately not rare, opportunities are lost, investment doesn’t materialize, jobs are not created and the innovation lingers providing no benefit to the economy. Anyone with a sense of history and open eyes can see that the anchor holding back the economy is the Patent Office. Aside from this past recession every recession has lead to unprecedented growth in innovation and job creation. But if you can’t get patents, or the PTAB is there to take them once they become valuable, what exactly is the engine driving the innovative economy?

The aforementioned HP application was first filed back in August 2002, and after nearly 5 years of prosecution HP filed a Notice of Appeal, which isn’t unusual even if 5 years does rightly seem far to long. Nevertheless, HP filed that first Notice of Appeal on June 21, 2007, and their appeal brief just two months later on August 21, 2007. Ultimately the Board affirmed in part and reversed in part the examiner. In the decision the Board concluded:

We conclude that the Appellants have not shown that the Examiner erred in rejecting claims 1, 5, and 9 under 35 U.S.C. 103 as unpatentable over Kubota. We conclude that the Appellants have shown that the Examiner erred in rejecting claims 31, 32, 35, and 38 under 35 U.S.C. 103 as unpatentable over Kubota.

As a result of this Board decision, certain obviousness rejections by the examiner, call her Examiner #1, were found to be inappropriate. As you might expect that the case would go back to the examining corps, but the case went to a different examiner — Examiner #2. Still,  you might think that there would be be smooth sailing to the finish line. Unfortunately for HP, the case did go back to the examiner, but the examiner continues to reject the claims HP sought.

[Varsity-1]

In the Non-Final Action after the first appeal in this case, Examine #2 rejected claims 32, 35 and 38 again, this time for failing to comply with the written description requirement. This seemed particularly odd given that Examiner #1 had never raised a 112 rejection. So why did it arise for the first time after HP successfully appealed certain rejections? Worse, perhaps, Examiner #2 also continued to fashion obviousness rejections of the claims HP prevailed in at the Board.

HP did not seem to appreciate this late 112 rejection, although they responded in a very professional manner, providing specific page and line citations for where the terms of the claims actually found support in the specification. HP addressed each of the rejections without saying what they must have really felt, which was that Patent Examiner #2 simply was never going to let them have a patent on any claims even after they prevailed on appeal.

Ultimately, in the final rejection Examiner #2 relented on the obviousness rejections, but continued to cling to the late 112 rejections saying that the specification simply did not demonstrate compliance with the written description requirement. At this point HP had to realize they were never going to convince this examiner to issue a patent. Rather than respond after this final rejection, HP immediately appealed the case in July 2010.

On this second appeal HP ultimately prevailed. On appeal the examiner took the position that the specification was “silent regarding the communication of a warranty to a device (e.g. printer) when the warranty unit is embodied on a printer cartridge and the cartridge is ‘inserted’ into the device.” After going through the specification teaching relative to the warranty and communication of the warranty, the Board simply disagreed with the examiner, finding ample support. The Board concluded: “In our view, these statements in the Specification, among others, provide sufficient detail so ‘that one skilled in the art can clearly conclude that the inventor invented the claimed invention… as of the filing date sought.'”

The case was sent back to the examiner, but this time to a different examiner, oddly enough back to Examiner #1 who had been the one assigned previously, who issued a Notice of Allowance on February 2, 2014, which resulted in the patent ultimately issued April 22, 2014.

As is typical when you see an application that takes this long to issue, there was a prolonged prosecution in the first place followed by a lengthy appeal process. Of course, this type of prolonged route to a patent benefits no one, and leads to those unfamiliar with the patent system to inappropriately criticize the system for issuing a patent on something that may well have been known for a decade or longer. Such criticism is unfounded, because in a situation like this is would be wholly irrelevant even if it were true that the invention disclosed were known for a decade because the patent application was filed August 29, 2002, at a time when the U.S. was a first to invent system, so the critical date would have been well before the filing date when the invention was actually conceived. Still, games played at the Patent Office and unreasonably long prosecution paths create a problem both for the patent applicant and for the patent system as a whole.

Furthermore, what if this applicant were a small business or individual? Had this applicant not been HP and instead a small company, would any patent be obtained despite the fact that the Board twice reviewed the claims and twice disagreed with the patent examiner? Of course not. Had this application been filed by an individual or entity with few resources the application would have been abandoned. Buried by a patent process that couldn’t care enough to administer justice in any kind of a timely fashion. That is rather pathetic. Getting a patent issued should not have taken 12 years, and resolving the application should not have taken more than 5 years after the first appeal was successful!

[PTAB-1]

In this situation the most problematic event is the 112 rejection that comes up for the first time only after the Board sides with the applicant on the first appeal. The Patent Office preaches compact prosecution, but this case clearly shows that compact prosecution doesn’t happen in all cases. Principles of compact prosecution demand that rejections be raised so an applicant can address those rejections. There is nothing to be gained by any examiner raising some rejections, being overruled on appeal, and then having additional, new rejections raised for the first time. This is how and why there is a very real perception that some within the patent examining corps simply don’t want to issue patents.

At some point in time title to a patent needs to settle and ownership be certain. What the Patent Trial and Appeals Board (PTAB) is doing relative to post grant challenges strikes me as terrible. No patent is safe, and Chief Judge Rader is right to call the PTAB a “death squad.” See, for example, PTAB Death Squads: Are all Commercially Viable Patents Invalid? Equally problematic, however, are the games that are sometimes played during prosecution. The goal posts keep moving, new rejection after new rejection surfaces, and in this HP case even when an applicant prevails on claims on appeal they continue to have those very same claims rejected and have to appeal a second time. This is not right, it is not just. Fairness demands that patent examiners, as decision makers, raise all grounds of rejection at the earliest point possible. If a ground of rejection is not raised then that ground of rejection should be waived. Continually moving the goal posts and unnecessarily prolonging patent prosecution, turning it into nothing more than a war of attrition, is no more acceptable than the PTAB killing every claim they review. Fairness unfortunately doesn’t matter in most government processes, but it should! There is no reason the Patent Office has to operate this way.

At the end of the day the patent system suffers, and as the patent system suffers so will our economy. As Mark Twain (aka Samuel Clemens) wrote: “[A] country without a patent office and good patent laws was just a crab that couldn’t travel anyway but sideways and backwards.” A patent process that is calculated to bury allowable claims unless 12 years and hundreds of thousands of dollars are invested and a PTAB that indiscriminately kills patent claims does not bode well for the country. Given the anti-patent climate that vilifies innovators and treats them like they are evil will mean that we are doomed to travel only sideways and backwards, just as Twain so eloquently explained.