Despite Ongoing Efforts, USPTO Still Faces Patent Quality Issues

The US Patent and Trademark Office continues to face claims of low patent quality despite a major initiative to address the situation. The agency has been the subject of several critical reports by oversight agencies and recently defended its patent quality improvements before Congress. Patent practitioners say that while patent quality may not actually have worsened over the past few years, the USPTO’s ongoing lack of financial and other resources, and inconsistent judicial decisions, are among the factors causing problems.

The USPTO in 2014 launched the Enhanced Patent Quality Initiative (EPQI) to ensure the granting of high-quality patents. The initiative seeks to strengthen work products, processes and services, as well as how the office measures patent quality at all stages of the process, it said.

The agency also established a specific division in its patents operation that focuses exclusively on patent quality, Under Secretary of Commerce for Intellectual Property and USPTO Director Michelle Lee told the House Judiciary Committee Subcommittee on Courts, Intellectual Property and the Internet at a 13 September hearing.

The USPTO is also “committed to providing the most current and effective training for our patent examiners,” said Lee. It continues to invest in its Patent End-to-End system in order to improve the tools that support patent application examinations and replace legacy systems, she told lawmakers.

Lee’s testimony is here.

IG Faults Quality Assurance Programs

Despite these efforts, the USPTO has received low marks over the past two years from the Department of Commerce Office of Inspector General (IG) and the US Government Accountability Office (GAO).

In a 10 April 2015 report, the IG noted that in response to stakeholder concerns about patent quality, the USPTO in 2011 expanded its procedures to include assessments of the quality of its examiners’ initial search for prior art and whether preliminary decisions conformed to best practices. The agency also revamped the way it measured the quality of each examiner’s work through annual performance ratings, and began a more systematic collection of information about the patent decisions or cases reviewed by the program.

The IG audited USPTO quality assurance programs in 2015 to see if they were sufficient to prevent the issuance of low-quality patents. Its findings included that the office’s appraisal plan and policies were ineffective at measuring whether examiners were issuing high-quality patents; and that the agency wasn’t gathering data that could boost patent quality.

The IG recommended, among other things, better processes for gauging patent examiner quality efforts; independent quality review procedures to ensure consistent applications of new case law; and the use of available databases and systems to collect information on patent applications reviewed and errors found.

The inspector general’s report is here.

GAO Urges Better Patent Definition, Prior Art Searches

On 20 July 2016, the GAO (report available here: http://gao.gov/products/GAO-16-490) found that “district court filings of new patent infringement lawsuits increased from about 2,000 in 2007 to more than 5,000 in 2015.”

Most of those cases involved software-related and computer and communications technologies, with several stakeholders telling the watchdog that it’s “easy to unintentionally infringe on patents associated with these technologies because the patents can be unclear and overly broad, which several stakeholders believe is a characteristic of low patent quality.” The rise in infringement lawsuits could hamper innovation by blocking new ideas from entering the market, it said.

The GAO acknowledged that the USPTO “has taken actions to address patent quality,” most notably through the Enhanced Patent Quality Initiative (EPQI), but said there are additional opportunities for the agency to improve quality. It made several recommendations, among them that the USPTO “develop a consistent definition of patent quality” and set measurable, quantifiable goals and performance indicators related to patent quality.

In a second report published the same day, http://gao.gov/products/GAO-16-479 the GAO recommended ways for the USPTO to ratchet up patent quality through use of the best available prior art. Among other things, the watchdog said the agency should develop a strategy for identifying key sources of non-patent literature, set goals and indicators for prior art search quality, and collect enough information to assess prior art search quality.

The USPTO “concurred with all of the recommendations” and has already taken steps to address the issues through the EPQI, Lee told House lawmakers.

Patent Decline or Not?

Patent attorneys and other practitioners gave mixed reviews on the state of USPTO patent quality.

During the patent prosecution stages, the PTO does a “pretty good job” with patentability but often has to shift quickly when there are changes in case law, such as the US Supreme Court decision on business methods in Alice Corp. v. CLS Bank International, said Fitzpatrick, Cella, Harper & Scinto (Washington, DC) patent attorney Justin Oliver, who chairs the firm’s PTO contested proceedings practice group.

There are also smaller course corrections driven by decisions from the US District Court for the Federal Circuit, he said in an interview. Despite that, the PTO does fairly well in reacting and explaining how it will adjust in light of case law changes, he said.

Baker Botts attorney Luke Pedersen, who chairs the firm’s Washington, DC intellectual property department, said patent quality is “very consistent.” Inconsistency is one way low-quality patents can manifest themselves, he said in an interview.

Attacks on low patent quality often focus on patent examiners, Pedersen said. One argument holds that patents are “too broad in the abstract” because examiners disregard prior art, setting the patentability hurdle too low, he said. Pedersen’s response is that that is a statutory critique, and that the USPTO is pretty consistent about applying patent laws according to the way they’ve been interpreted by the US Supreme Court and the Federal Circuit.

Those who complain about patent quality should talk to their legislators, he said. Another consistency issue arises from the fact that there are around 7,500 examiners, making it difficult to keep them all marching to the same tune, he added.

The agency is also criticised for patents it issues for which prior art was available but not checked, said Pedersen. His response: There will never be a point when the PTO will have the resources and funding needed to perform searches as extensive as those carried out by defendants before the Patent Trial and Appeal Board. “It’s a financial issue,” he said.

“I have been tracking patent quality for the 20 years I have been publishing PATNEWS,” said patent practitioner – and long-time USPTO critic — Greg Aharonian. Quality has likely worsened slightly, he emailed. Patents are still citing pretty much the same amount of prior art they did 20 years ago despite the existence of much more prior art now, and thus a lower probability that a particular invention is not in some prior art, he said.

Since most corporate patent applicants refuse to do prior art searching for their applications, and examiners are still being denied the time and resources to do competent searches, a good deal of relevant, patent-invalidating prior art is being missed, said Aharonian. Patent quality has also suffered because patent law firms are spending less time training new patent attorneys and reviewing their work before submitting it to the PTO, he said.

Patent trolls “drain $1.5 billion a week from our nation’s economy through baseless threats and bogus lawsuits, often based on overly broad patents,” the Consumer Technology Association said in a 12 September letter to the chairmen and ranking members of the House Judiciary Committee and the Courts, IP and Internet Subcommittee. CTA, many of whose members are small businesses and start-ups, welcomed the GAO’s conclusions on patent quality, and said USPTO reforms would be a “welcome step towards deterring patent trolls.”

The CTA letter is available here.

What To Do?

Patent quality has been an ongoing process in the USPTO for a long time, said Oliver. But there will never be a one-time fix, due to the large number of examiners, who all see things differently, and staff turnover, he said.

More money for better prior searches would help, said Pedersen. Moreover, more could be done to find consistency in Supreme Court and Federal Circuit decisions, he said. Many verdicts are overturned or modified by the Federal Circuit, and that court’s rulings are in turn often thrown out by the high court, he said. In addition, if patents are too broad in the abstract, there could be legislative fixes to make it harder and/or more expensive to get patents, he said.

Aharonian offered four suggestions to boost patent quality. First, he said, the USPTO should seek advice from outside experts (such as him). Then, the agency must “change its philosophy on what is a quality patent.” Its current definition mostly focuses on whether the issued patent satisfies all of the statutory requirements and the examiners’ guidelines, he said. “But that is dishonest,” because Title 35 of the United States Code doesn’t require the applicant to do any prior art searching, and the guidelines require an examiner to do some. So if any applicant spends one minute searching the prior art, and the examiner spends the same amount of time doing so, the USPTO “will say that that issued patent is of high quality,” he said. “It does not matter to the USPTO that there are 100 journal articles that completely invalidate the patent,” because that’s not part of the quality measuring process, he said.

Aharonian also urged the PTO to report on patent quality more honestly and accurately, saying that “you can’t improve patent quality unless you have the best statistics possible.” Finally, he told us, the PTO’s elimination of its comprehensive in-house libraries was a “huge mistake.”

There may be a path to better patents that has more to do with enforcement of patent rights, said Pedersen. As long as enforcement remains as lucrative as it is now, there is a large incentive for people to invest money in patents and overburden the system, he said. The less patents are worth, the fewer of them there will be, he said.

From 2005/6 to 2014/15, there was a “pendulum swing” against patent holders, Pedersen said.

A combination of legislative schemes and court decisions have made it harder to assert patent rights, and limited damage amounts, among other things, he said. That was in some respects an overreaction against patent holders which has now started to level off, he said.

There has also been a decrease in software patent filings and lawsuits, which has cut down on some of the PTO’s work, Pedersen said. As these changes filter through the system, the agency’s patent quality issues might be resolved to some extent, he added.

 

Image Credits: Wikipedia