Patent Blame Game: Are 70% of U.S. Patents Really Defective? | IPWatchdog Unleashed

This week on IPWatchdog Unleashed I do not have a guest, I want to take this opportunity to share my thoughts on the complex intersection between patent quality, patent examination and the Patent Trial and Appeal Board (PTAB). My interest in speaking today about this confluence of important issues is triggered by the confirmation hearing last week for John Squires, who is President Trump’s nominee to be the next Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).

The Squires confirmation hearing took place on Wednesday May 21, in front of the Senate Judiciary Committee. Honestly, the hearing was rather bizarre from the very start for a number of reasons, not the least of which was because of the other nominees who shared the stage with Squires. Generally, the nomination and confirmation of a new USPTO Director is not political–at least in the traditional R vs. D sense. Unfortunately, Squires’ non-political confirmation hearing was grouped with the very political confirmation hearings for several nominees for high-ranking positions at the Department of Justice. So, political grandstanding because of the presence of DOJ nominees did needlessly taint the Squires confirmation process from the get-go.

Nevertheless, in the little time Squires was given to speak he said his focus will be on making sure patents are, in his words, “born strong”.  The importance of stronger patents was tied to the fact that there is such a high error rate, as evidenced by the outcome of inter partes reviews (IPRs) at the PTAB. What Squires said in this regard was in response to a question from Senator Cruz about the PTAB. Squires commented: “If you look at the data, the concerns are in plain sight. IPRs have a 68% defect rate; if the American patent system was a factory, 68% of the products we put out are found defective in a later proceeding.”

This response to Senator Cruz has more than anything caused the greatest concern. By focusing on better quality examination, some think Squires was saying that he believes the U.S. patent system is suffering from the issuance of low-quality patents, which is like fingers on the chalkboard for patent owners. The reason this is so grating is because the debate surrounding patent quality in the United States has historically focused on the notion that the Patent Office is letting too many bad patents slip through, a notion that has been promoted by a cast of characters and high-profile companies that have championed the very existence of the PTAB, as well as the creation and use of various procedures that have made it ever more easy to strip patents away from patent owners.

Of course, the problem with the low-patent quality narrative is that it just isn’t true.

Every year the Patent Office engages in a rigorous annual review of the work of patent examiners, and that review demonstrates that, year after year, the Office finds that examiners consistently provide A or A+ work across all major metrics. And we also know the low-patent quality narrative is a myth because of an independent analysis conducted by the Sunwater Institute that was published in September 2024. The Sunwater report concludes that examiners are far more likely to reject patents that should have been issued than they are to issue patents that should have been rejected. But the existence of this myth about widespread, low-quality patents has cause great pain to innovators who themselves invent, own and then commercialize their innovations.

This history, which is full of deep-seated emotion and a sense of betrayal, is why some who listened to the Squires confirmation hearing last week became concerned—having almost a flashback to everything that has transpired over the last generation leading up to this moment. These patent owners have been kicked again and again, with many having lost everything. And they have seen how the low-patent quality argument insidiously infects debate on patents. So, it is understandable that this group is skeptical.

But does Squires believe the Patent Office is really issuing low quality patents and that is the problem? Or does he believe the PTAB is aggressively overactive and should focus on error correction only where there is obviously a mistake? Given how little time Squires was given to speak, and how he was repeatedly asked irrelevant “gotcha” questions, it is impossible to really know what Squires believes, which is why the responses to the written questions he receives will be extremely important.

I’m told that Squires is a strong believer in the patent system and U.S. patents and like Commerce Secretary Howard Lutnick is not a fan of the PTAB invalidating so many patents. So, it should be an easy answer for him to answer the questions he receives and say that it is simply not plausible that 7 out of 10 of the most valuable U.S. patents—those patents that are actually worth fighting over and spending millions of dollars to litigate—are completely and totally defective. He can and should also say that the high defect rate suggested by PTAB final written decisions suggests there is a fundamental problem with the approach of the PTAB, not that patent examination quality is unacceptably poor.

Patent owners are no doubt hoping Squires will signal in his written responses that he too is a believer in the U.S. system and U.S. inventors, that while patent examination can always be better and will be streamlined through the use of new tools, the patents being issued today by the Office are good and reliable, patent examiners do a good job, and it is time for the PTAB to recognize that never-ending challenges to patents must become a thing of the past.

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