PTO Oversight Should Focus on Patent Quality

Share |

The difference between a well and poorly drafted patent claim is—with apologies to Mark Twain—the difference between “lightning” and “lightning bug.”  A significant part of the patent troll problem comes from the fact that in too many instances—primarily involving computer software or networking technologies—overbroad or unclear patents are issued, and then used to bully alleged infringers into settlements.  Non-practicing entities (NPEs, or patent trolls) use the expense of litigation combined with procedural defects in the patent statute to extort settlements from technology companies, retailers, grocery stores, and any other person with an internet connection.

The costs of patent litigation are extremely high.  According to the AIPLA, the cost of litigating a patent claim to conclusion is $2.8 million, and well over $1 million just to get through the discovery phase.   Yet according to GAO, roughly half of patents that get tested in court get invalidated. (GAO Rep. No. 16-490, at 11 & n. 24­).   The attempted enforcement of poor quality patents—particularly in the technology arena—represents a serious drain on innovation, and improving patents at the agency level will result in far fewer wasteful trips to the courthouse.  To her great credit, the current head of the Patent and Trademark Office, Michelle Lee has made patent quality a focus of her tenure, and Congress should ensure that PTO’s quality focus continues after her stewardship ends. 

On 13 September, the House Judiciary Committee’s Subcommittee on Courts and Intellectual Property will be holding an oversight hearing on the Patent and Trademark Office (PTO).  Given the importance of the work that the PTO does, Congressional oversight is necessary, appropriate, and helpful. A flurry of recent reports warrants Congressional dialogue: a Government Accounting Office (GAO) report on PTO’s ability to monitor and evaluate the work of patent examiners, another GAO report on defining patent quality and examiner incentives, and a third by the PTO’s inspector general examining instances in which patent examiners had claimed to have worked—but didn’t.

These reports identify a number of questions about PTO’s internal processes and ways they might be improved.  Despite the Secretary’s efforts, problems persist.  For example:

  • PTO has no consistent definition of a “quality patent”, (16-490, at 1) which we would define as one that a court would uphold as meeting the statutory standards for clarity, novelty, and usefulness.  
  • Roughly seventy percent of examiners feel that they have inadequate time to examine prior art.  (16-479, at 22).
  • Examiners’ performance—and compensation—is determined by the number of patents they clear within a set amount of time.  More experienced examiners face higher quotas, and there is a belief that these pressures can create incentives to issue lower quality patents. (16-490, at 25).
  • The volume of prior art in the software and communications disciplines, combined with lack of clarity in the applications themselves, makes prior art difficult to find.  Those problems are compounded by the examiners’ incentives created by the quota system, which can cause them to rush examination of the prior art.  (16-479, at 21-22).
  • Examiners have limited access to available Patent Trial and Appeals Board information, receiving limited feedback on why particular claims were invalidated.  (16-490, at 29-30).  This makes it difficult for them to improve their performance. 

Finally, PTO’s inspector general found that examiners submitted unsupported time for hours that they did not work, resulting in at least an $8.6 million loss for the PTO.  (IG Rept at 9).   Like any large organization, PTO’s management can be improved, but we believe that it is important for Congress not to lose sight of the importance of a focus on patent quality.  The amount that PTO is estimated to have lost by paying for unperformed work is less than the cost of litigating just four bad patents to conclusion, and a few basis points of its $3.2 billion budget.  Nor should Congress lose sight of the fact that over seventy percent of examiners engage in uncompensated overtime, and that substantial chunks of the problematic unsupported claims to time worked can be attributed to a small group of examiners.  (16-479, at 22; IG at 2-3).  

It might be tempting for the Judiciary Committee to focus the bulk of its inquiry on these fairly straightforward personnel problems. To be clear, paying people for work that they did not do is not something that Congress should excuse.  That said, a disproportionate focus on these issues would be a mistake.   The reports raise a number of questions that could use exploration, and which are not easily answered.  For example: 

  • Initial indications suggest that the sharing of information and prior art between PTO and its EU counterparts has led to some improvements.  Should cooperation be expanded and if so, how?

  • The current incentive system for examiners creates obvious problems in causing examiners to rush.  What is the best way to fix it?

  • How can PTO improve its examiners’ access to non-patent prior art like instruction manuals and journal articles?  How should it improve its examiners access to PTAB data?  How should examiners use that data?

  • Is there any problem with defining a quality patent as one that a court would uphold?  If so, why has that definition not been employed up to now, and how could that definition be best implemented?  What can the agency do to better educate examiners on that standard?  Will there be institutional resistance to that standard? Why or why not?

  • The GAO identified a number of policies that may have less-than desirable effects on patent quality, including compact prosecution, unlimited patent claims, and endless requests for continued re-examination.  (16-490, at 30-31).  Which of these—if any—does PTO view as a priority, and what is its plan to address them?

Answers to these questions will require careful study by both PTO and the Committee, and do not lend themselves easily to sound bites. It is our hope that Congress maintains its perspective on the importance of issuing quality patents, and finds ways to entrench that ethos in the PTO in a way that outlasts any one administration.  



Christopher Christopher Mohr is General Counsel and VP, Intellectual Property Policy & Enforcement at SIIA.