How to Improve Patent Quality for Everyone—Fast

Patents require reliability so they can incentivize investments in new technologies, their primary though little-noticed function. Today, U.S. patents are so often invalidated that investors such as venture capital firms are losing trust in them. Corporate CEOs face the same problem: your right to exclude others from copying your invention can instantly and unpredictably evaporate at any point in the patent’s 20-year lifespan. As a result, our nation faces a crisis of underinvestment in the advanced technologies of the 21^st Century, such as Quantum Computing, 6G telecommunications and genetic medicine.

China and European nations have largely avoided this mistake, just as they have avoided the morass here that makes predictions regarding eligibility nearly impossible. In addition, they routinely issue injunctions once infringement is proven, as we formerly did ourselves but no longer do. But America’s biggest self-imposed handicap of all is that the patents granted by the U.S. Patent and Trademark Office (USPTO) are not sufficiently dependable.

Both external and corporate funders assess risks they face in light of possible later rewards from successful products. Only if the risks are low enough do they make the upfront investments in R&D. After all, tech investments are inherently risky because most efforts at innovation fail to produce sellable products. In the case of medical products, the risks are even higher because of the appropriate but huge expense needed to convince the Food and Drug Administration (FDA) of their safety and efficacy via three successive stages of clinical trials. Unknown to most policy makers, most drug candidates fail in the lab and of those that are worth putting into clinical trials, a large majority likewise fail. To offset such multiple risks requires reliable patents.

The U.S. Patent Disadvantage

Defending patents in the era of the America Invents Act (AIA) is doubly difficult, because asserted patents are attacked first at the Patent Trial and Appeal Board as obvious in light of printed prior art. Then, those that survive are later challenged in court on additional grounds such as ineligibility and inadequate disclosure as well as for obviousness under unpublished prior art and sometimes newly-discovered published prior art.

At the Patent Trial and Appeal Board (PTAB), the majority of challenged patents fail and in court another one-third do. In fact, at the PTAB, 85% + experience invalidity of at least one claim and 65%+ see all claims nullified. As I have written before, the lower burden of proof than courts apply helps explain the far higher invalidity rate at the PTAB. Plus, at the PTAB anyone can file, even those not threatened with suit. No reason need be presented. Any motivation is acceptable. If there is any presumption of validity, it is a very weak one.Given these official statistics, one can only conclude that the patent office issues far too many invalid patents and patent claims due to deficiencies in examinations. My personal observation is that, just as defendants often charge, many, many patents contain some overbroad claims even if other claims are plainly valid. Clearly, examinations must be upgraded. But with half a million applications filed each year, the task before the 8,000 examiners is daunting, and their time per application is necessarily limited. The task is made even harder when so many examiners are young and have limited examining experience and so few are lawyers. Collecting all relevant prior art, then analyzing it compared to the claims in light of the case law presents yet more challenges.

A Good Solution That Can Be Immediately Implemented

What can be done to increase the quality of issued patents so they can survive the gauntlet described above? Improving patent quality along with reliability would actually help both owners and infringement defendants. But how to achieve this progress has confounded many reformers. Expecting more examiners or more time per application is unrealistic, I think. Some observers wonder if Artificial Intelligence systems can rescue the process and yield stronger patents. I sense that, if that ever occurs, it will be many years off in the future.

With present resources, however, big improvements are possible if the examiner actions are re-sequenced to focus first on section 112’s requirements that claim scope must not exceed the enabling and describing scope of the specification.

The point of this sequence is to arm the examiner with a basis to demand narrowing claim amendments. Once claim scope is reduced until commensurate with the scope of disclosure, everything becomes easier, including analysis under section 103. Better still, defendants would not be sued on overbroad claims and owners would benefit because patents would become more reliable and invalidation rarer. Trust by financiers would grow steadily over time. Because the examiner can issue a final rejection if applicants decline to narrow, most applicants will comply. But because it is new, examiners will only enforce this use of their existing power if so directed by management.

I believe the Acting Director and Acting Commissioner of Patents could immediately issue such instructions. If it is necessary to await the arrival of a confirmed Director, so be it. With the Commerce Secretary now confirmed, perhaps the wait would not be long. When I suggested this exact course of action to the predecessors of these two acting officials, my proposal was brushed aside. Unlike those officials who had no experience inside the USPTO, however, the current pair have decades of inside experience. That gives reason to hope for early and effective reform of examination procedures.

If further training of the examiner corps in the fine points of the case law interpreting section 112 and claim construction is deemed needed, let it begin. To retrain all 8,000 examiners fully will, of course, take a long time because their efforts must prioritize shrinking the enormous, harmful and unprecedented backlog of applications awaiting analysis and first fffice actions. But use of the new procedure could start right away.

The only alternative path to progress is, I suggest, surely futile. That would be to persuade applicants and their prosecuting counsel to stop deliberately presenting overbroad claims. But prosecutors believe they burnish their standing with clients by obtaining expansive claims. That such claims will likely be invalidated many years later does not much concern them.

Two Steps to Reclaiming the Gold Standard

Realistically, then, the only practical way to improve patent quality and reliability is via section 112. If that were done, we could expect invalidation rates everywhere to fall, continually. Trust by financial officials would steadily grow and so would tech investments.

A complementary initiative would be for the Office to publicly support passage of the PREVAIL Act to reform and rebalance PTAB procedures. With just these two steps, America’s patent system can regain its former position as the global “Gold Standard.”

The alternative involves China dominating the technologies of the future. How can we allow that by our paralysis and inaction?

Image Source: Deposit Photos
Author: donscarpo
Image ID: 7784663