Set Better Standards for Quality to Save the U.S. Patent System

“What is needed to keep pace with the exponential increases in knowledge and innovation is a more tailored approach to patent examination and protection coupled with clearly defined benchmarks for the quality standards expected from the patent system.”

https://depositphotos.com/13160135/stock-photo-high-quality-level.htmlA recent New York Times Editorial Board opinion urged comprehensive reform of America’s patent system by focusing on a few examples of what the Board views as “bad” drug-related patents. Unfortunately, the opinion does not define what makes a patent good or bad. Nor do the sources relied on by the Board provide open access to the underlying data on which such judgments are made.

Calls for improving America’s patent system should be based on more than unverifiable grievances. Real reform will take more than just suggestions that nibble around the edges of our current patent system in response to broad allegations of unfairness. Real reform needs objective standards for measuring patent quality that can guide improvements. Such evidence about patent quality may show that fundamental aspects of our patent system must be updated to keep it relevant for today’s innovation economy.

Tailoring the System to Account for Growth

Patents and copyrights are the only enumerated “rights” initially set forth in the Constitution, rather than the Bill of Rights. Our Founders realized the importance of incentivizing the investments and efforts needed to commercialize the results of our uniquely human penchant for innovation and creativity. As Abraham Lincoln, the only president to be granted a patent, so aptly said, patents add “the fuel of interest to the fire of genius.”

Congress is granted the power to create a system of intellectual property rights that serve as a kind of insurance for profits that encourages businesses and individuals to take the risks required to bring new ideas to market. In this way, the exponential increase in the number of granted patents over the last century represents the growth of our economy — and it is this exponential growth that has overwhelmed the original patent examination system crafted by Thomas Jefferson.

The Editorial Board opinion is correct to criticize the amount of examination time now allocated to examine a patent application. With 600,000+ patent applications filed each year, it is understandable why the 10,000 patent examiners at the U.S. Patent and Trademark Office (USPTO) can only devote around 20 hours to examining each application. Moreover, the total amount of prior knowledge that should be reviewed for each application continues to expand as human knowledge now doubles at least every day. Contrary to the Editorial Board suggestions, no amount of effort to enforce existing standards in granting patents — and no amount of tinkering with how granted patents can be challenged — will change these trends.

What is needed to keep pace with the exponential increases in knowledge and innovation is a more tailored approach to patent examination and protection coupled with clearly defined benchmarks for the quality standards expected from the patent system. The following are some suggestions for how such a more tailored approach might be accomplished.

Create Different Tiers of Utility Patents. Unlike Germany and China, which have both utility and utility model patents, the U.S. has a one-size-fits-all approach for examination and enforcement of U.S. utility patents. Congress should consider enacting statutory changes to create different tiers of examination and protection that reflect different levels of quality of examination. For example, create two tiers of examination — Normal Examination and Enhanced Examination — with each tier having different provisions for proof of infringement and damages and different evidence standards for the presumption of validity. Such a tiered system would grant a level of protection that corresponds to the level of examination that was earned from either a significantly more robust initial examination or a post grant reexamination or review.

The current examination practice would be continued for granting a Normal Examination patent. Such a Normal Examination patent would be presumed valid but could be challenged as invalid either in court or at the USPTO based only on a lower “preponderance of the evidence” standard. Instead of the current approach based on a trespass theory of infringement, a Normal Examination patent could require the patent owner to prove infringement based on a higher level of theft, like the proof required for copyright infringement. A Normal Examination patent could have reduced damages such as only a reasonable royalty, not enhanced damages, and damages could start only upon actual notice, not constructive notice. While a Normal Examination patent would offer a lower tier of protection, it could still allow an inventor to prevent someone from knowingly stealing their invention. It would also allow an option to seek an Enhanced Examination patent by way of reexamination.

If a patent applicant desired a more robust tier of patent protection, the applicant could pay a significantly higher fee to enable the USPTO to spend more time and resources for examination before granting an Enhanced Examination patent. In addition, if a granted Normal Examination patent were to survive a reexamination or review proceeding, the resulting patent could be considered an Enhanced Examination patent as a reward to the inventor for surviving one of these proceedings. Consistent with the increased effort spent on examining or reviewing the patent, an Enhanced Examination patent would have a presumption of validity at the higher clear and convincing evidence standard, with proof of infringement and damages requirements that are the same as under current law.

An advantage of adopting such a tiered protection system could be a reduction in the due diligence burden now placed on third parties by limiting most clearance reviews to only Enhanced Examination patents. Similarly, concerns about patent assertion entities could be addressed by requiring any patents effectively assigned outside of a company merger or acquisition to be reexamined or reviewed in order to become Enhanced Examination patents before such patents could be enforced.

Increase Focus on Continuation Applications. Capping the number of resubmission applications as proposed in the Editorial Board’s opinion was already proposed by the USPTO and rejected by the courts in 2007. Instead, the USPTO could use its fee setting authority to significantly increase fees for non-divisional continuation applications. Increased examination focus on such continuation applications is both warranted and worthwhile. Multiple studies have found that of patents asserted in litigation a higher percentage of such patents are child continuation applications vs. the originally filed parent applications, and that current USPTO practice examination of such child continuation applications by the same examiner who examined a parent application may be more superficial. Having the USPTO increase fees for such child continuation applications would allow for more thorough examination, such as by a panel of three examiners rather than one examiner. Alternatively, Congress could require that a child application be examined as an Enhanced Examination patent application, instead of as a Normal Examination patent application.

Define and Measure a Quality Patent. Even after decades of criticism surrounding poor-quality patents, the USPTO has yet to define what is meant by “quality” in a way that can be used to objectively distinguish bad patents from good patents. The only measures of quality which the USPTO had used in the past relate to the process of examination, not the outcome of that examination. The new director should be committed to providing the public with a defined set of objective standards and targets, including outcome results, by which to measure the quality of patents being issued.

A Need for Objective Standards

The Editorial Board’s opinion emphasizes the need to get the public involved, but there are already numerous ways for the public to provide feedback. The challenges for improving patent quality do not stem from a failure to generate input from the public. Rather, the lack of consistent funding and management teams has hindered the ability of the USPTO to make the continual improvements of IT tools, for example, needed to keep pace with ever-increasing workloads and mountains of prior art. Implementing innovations to the examination process also requires successfully working with the Patent Examiner union leaders to identify and implement reform that can set realistic, transparent and objective examination quality standards.

Saving America’s patent system must start with finding a generally agreed upon initial set of objective examination quality standards that include outcome standards. For if you cannot measure something, as Lord Kelvin said, “your knowledge is of a meagre and unsatisfactory kind.”

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10 comments so far.

  • [Avatar for Brad Pedersen]
    Brad Pedersen
    April 29, 2022 07:28 am

    Julie

    Thanks for your comments and also for your timely article that explores in depth the internal quality issues at the Patent Office. I strongly agree that the internal PTO process quality standards, while admirable in their goals, are a multi-layer set of devil in the details challenges in terms of complexity and compliance. Even so, there is an opportunity now for the new Director to turn around the stampede.

    You can’t improve what you won’t measure, and I think Greg and Greg are on the right path about how to at least set some kinds of objective “outcome” standards by which goals could be set and measured.

    Having a better set of prior art that includes NPL and web-sources is critical, and one kind of outcome standard could be whether or not granted patents included these kinds of sources in their examination. Setting an art group examination goal of the percentage of granted patents that meet this kind of easily evaluated binary test (NPL/web art – yes/no) is one example of of the kind of objective outcome standards I would like to see the Director consider.

    Identifying what was considered to be the closest relevant art during examination is a practice that the EPO does better than the USPTO by having examiners determine the most relevant art for each application and then typically having applicants comment on the relevant art in the Background of the patent. Whether something like this is or is not done in a granted US patent is another example of an objective outcome standard around which target metrics could be created for each art unit.

    My 2010 comments on how to improve examination that are at the hyperlink “provide feedback” suggested numerous examples to improve the quality, timeliness and relevance of the prior art data sets used by examiners. Since then, we have greatly improved the kind of AI search ranking relevance tools that could be used to rate the relevance of the art cited during examination. Accurately identifying a smaller set of the closest relevant prior art has always been a “hard” problem, but today Google Patents does some aspects of this with their “Similar Documents” section. Creating a relative comparison score between the (i) the art cited and applied by during examination, (ii) the other art cited but not applied during examination, and (iii) the art in the Similar Documents section of Google Patents, is another example of an objective outcome standard for helping to improve the relevance of the art used during examination.

    Most importantly, tracking how many granted patents from each art group in each fiscal year survive the different types of post-issuance challenges would be a challenging, but critical baseline from which to begin to measure Patent Office progress in improving the quality of examination.

  • [Avatar for Greg Aharonian]
    Greg Aharonian
    April 28, 2022 02:02 pm

    I have been measuring (software) patent quality for 25 years. In general, the quality/validity/value of most software patents has remained so low (no one does prior art searching, and no one knows how to write 101-rejection proof claims because of the total incoherence of case law), that it is clear that no one really wants a honest measure of patent quality. Otherwise corporate America would be yelling at Congress to order the USPTO to offer an honest measure of patent validity. Congress doesn’t, because corporate America hasn’t.

    So it doesn’t matter if we have a one-tier or two-tiered exam system, using one set or two sets of eyeballs (and all of the other gimmicks tried in the past), if no one wants quality (which most don’t, other than the biopharma companies).

    Here are some partial definitions. A patent examined in light of no non-patent prior art (over 50%) has little-to-no validity. A patent that is not enforceable has little-to-no validity (over 50%, thanks to caselaw). A patent that has multiple claim term enablement problems (over 50%) has little to no validity. If you have a judge addicted to FlookPuke, all software patents have no validity because they are prior art to themselves. Make the slightest grammatical error in your claims (ChefAmerica), you have zero quality/validity.

    Easy for the USPTO to measure validity/value this way (I have a 1000 lines of C code to do it – I will donate it to the USPTO). But they don’t, since no one wants them to. No one really wants patent quality to be measured honestly. I have seen no evidence of this in 25 years.

    Here is one of the consequences. If someone was to donate to me $500 million a year (this is a real hypothetical), I would pretty much insure the entire country against at least 98% of all patents — for free. Since about $5000 million is spent each year getting these patents – ten times as much, it is clear most patents are of such low quality/validity that they can be so easily, and profitably, insured against for much less money than was spent on acquiring them. In short, they are all worthless, all of low-to-no quality. Want to measure that?

    So be careful when you ask for honest measures of patent quality. Some of us know the exact, dire, financial consequences of such honesty.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    April 27, 2022 06:39 pm

    “The new director… hasn’t… [provided the public with a defined set of objective standards and targets] because it can’t be done… in large part because all stakeholders don’t / can’t /refuse to agree on what the standards and targets should be.”

    I agree 100% with the above. To my mind, a “high” quality patent is one that survives validity challenge when asserted, and a “low” quality patent is one that does not survive validity challenge. I will cheerfully admit, however, that there are dozens of equally useful and reasonable definitions of “high” and “low” quality, depending on one’s perspectives.

    As long as we are quibbling about definitions, however, what does it mean to say that the U.S. Patent System formerly occupied the “World-leading, gold-standard position.” What does it mean for a patent system to be “world-leading” or “gold standard”?

  • [Avatar for Pro Say]
    Pro Say
    April 27, 2022 06:03 pm

    Thanks Brad.

    Yet . . . what is most needed to keep pace with the exponential increases in knowledge and innovation is . . . simply to return the U.S. Patent System to the formally World-leading, gold-standard position it held prior to the innovation-crippling, extrajudicial eBay, KSR, Mayo, and Alice SCOTUS decisions . . . the CAFC’s extrajudicial expansion of Mayo / Alice . . . and Death Squad PTAB “trials.”

    Congress could return the gold medal to its rightful place with a single bill.

    Just. One. Single. Bill.

    Different tiers of utility patents? Respectfully, such a structure would do nothing but even further multiply the complexity of all aspects of our patent system; from examination (just ask the Examiners) . . . to Board appeals (just ask the judges) . . . to the new Arthrex-driven Director reviews (just ask the Director) . . . to District Court trials (just ask the judges) . . . to CAFC appeals (just ask the judges) . . . and to SCOTUS petitions (just ask the judges).

    Complexity kills.

    Be afraid of any such two-tier structure.

    Be very afraid.

    And regarding: “The new director should be committed to providing the public with a defined set of objective standards and targets, including outcome results, by which to measure the quality of patents being issued.”

    Sorry, but it hasn’t been done . . . because it can’t be done . . . in large part because all stakeholders don’t / can’t /refuse to agree on what the standards and targets should be.

    The author suggesting such a set of patent standards and targets (including the necessary distinguishing between “good” and “bad” patents) would be welcome.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    April 27, 2022 05:40 pm

    “Patents and copyrights are the only enumerated ‘rights’ initially set forth in the Constitution, rather than the Bill of Rights.”

    This is a nigglingly small point, but the above is not true. Art. I, §8, cl. 11 provides that Congress may “grant Letters of marque and reprisal.” Besides, Art. I, §8, cl. 8 does not actually “enumerate” any rights. It provides authority for the Congress to create such rights, but no such rights exist merely on the authority of the Art. I, §8, cl. 8 text.

  • [Avatar for Julie Burke]
    Julie Burke
    April 27, 2022 04:22 pm

    Hi Anon- Feel free to contact me on LinkedIn to discuss the USPTOs new two-tiered examination system. I am grateful LAW360 saw merit in publishing the article, which belongs to them for 90 days.

  • [Avatar for Anon]
    Anon
    April 27, 2022 03:48 pm

    Julie Burke,

    Do you have that published elsewhere – Law360 is behind a paywall for me.

    Maybe a summary?

    Thanks,

  • [Avatar for Anon]
    Anon
    April 27, 2022 03:33 pm

    I had to pause at this point:

    Congress is granted the power to create a system of intellectual property rights that serve as a kind of insurance for profits that encourages businesses and individuals to take the risks required to bring new ideas to market

    This may be one desirable aspect, but by no means was the US patent system so envisioned to be LIMITED to such a “must make” mindset.

    With the (severe) amount of propaganda that abounds in this day and age of the Efficient Infringer, we ALL must be diligent in avoiding rhetoric that drifts to such “must make” views.

  • [Avatar for Julie Burke]
    Julie Burke
    April 27, 2022 12:33 pm

    In response to Brad’s earnest and considered proposal for a two-tiered patent examination system, I’d caution the IP community to be careful of what they wish for.

    As a former TC1600 QAS, I was often dismayed by USPTO career leadership openly boasting that they could poorly implement any good idea.

    Least we forget, a two-tiered patent examination system was imposed on America’s inventors once before under the name of SAWS.

    In my LAW360 article, coincidently published today, it appears the USPTO has jumped the gun and quietly begun to implement another two-tier examination process, without any clear notice or public comment.

    Please see

    https://www.law360.com/ip/articles/1482284/a-quiet-change-at-the-uspto-creates-a-2-tier-exam-process

    I would take Lord Kelvin’s apt adage one step further. Our knowledge will remain “of a meagre and unsatisfactory kind” as long as the USPTO continues to be less than fully accountable and transparent to the inventors, innovators, owners, and patent practitioners whose patent application fees fund their antics.

  • [Avatar for Julie Burke]
    Julie Burke
    April 27, 2022 12:12 pm

    Thank you Brad for this timely and important post. As a former USPTO Quality Assurance Specialist I totally support your proposal for the establishment and implementation of initial objective examination quality standards which include outcome standards.

    Unfortunately, the USPTO leadership has been rushing headlong in the exact opposite direction by watering down the Quality Element of the Examiner’s Performance and Appraisal Plan. Please see

    https://ipwatchdog.com/2021/07/01/usptos-roadmap-improved-patent-quality-lead-lake-wobegon/id=135152/.

    Time to turn this stampede around?

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