My 2010 wishes for the U.S. Patent Examiner

EDITORIAL NOTE: What follows is a portion of a longer essay by Ron Katznelson, which contains more information including statistical data on the work of the U.S. Patent Office. It is published first here as an article with the permission of Dr. Katznelson.

When asked what wishes pertaining to patents I have for the New Year, I began thinking about the large number of problem areas for which I wish fundamental change, improvements and solutions. The problem list grew longer but all have a single common underlying cause. All of the problems would likely not have developed had the U.S. patent office been functional and timely in granting quality patents. For the most part, past actual and perceived USPTO dysfunction stem from long-term failure to invest in our Nation’s patent examiner corps. This is the reason that for this New Year, I make my wishes for the USPTO Patent Examiner.

I wish that 2010 became the year during which we have a new and different conversation on the role, status and skill level we should expect from USPTO examiners. I wish that this conversation would lead to the national realization that we have severely under-funded, under- resourced and under appreciated the role and status of the patent examiner profession. Although the implications of my wish may appear radical and expensive to some, I believe the conversation should focus on three fundamental elements. The first is the recognition that proper examination of patent applications for inventions in leading areas of technology requires professional knowledge and expertise in the art comparable to, if not exceeding, that of inventors in the field. The second is the recognition that basic changes in examiners’ working conditions, production goals and incentives are required to ensure that examiners have adequate time for examination and for acquiring technical knowledge, and that they are easier to recruit and retain. The third component is the proper alignment of examiner quality measures and incentives with the societal costs of patent examination errors. In addressing these issues, I cite historical facts and policy practices of previous USPTO administrations in order to highlight what I believe to have been mistakes that should have been avoided, and I wish would be avoided in the future.

(1) Examiners as knowledgeable scientific and technical professionals

Patent applicants respect their examiners. I believe that examiners should be able to earn our elevated respect and recognition as peers. When prosecuting my patent application, I expect an examiner who is well versed with the latest developments in my field and one who comprehends the problems my invention solves. A way to achieve this goal is to attract top technical experts to become patent examiners, an area in which the USPTO has had limited success. In order to develop and retain the expertise in the examining corps, it is essential to provide examiners with more time to specialize in their fields, the same way that their peers do: reading the technical literature, participating in conferences and attending technical trade shows. In my view, the examining corps expertise should rest on two “pillars:” examiners should first be scientists, engineers or technical experts in their art area, and second be specialists in patent examination procedures. While many examiners currently fit both of these “pillars,” the USPTO today lacks the resources to ensure and foster the former. U.S. patent examiners’ expertise, proficiency and professionalism should be regarded as a national asset worthy of investment to no lesser degree than recent national infrastructure investments under the stimulus package, as I elaborate below.

(2) Examiners’ workload and production goals

I wish that in 2010 the USPTO would commence a thorough review and conduct serious statistical performance studies and measurements in order to design a better examiner production-goal system. The following historical facts are worth mentioning. Recent USPTO annual reports and GAO studies attribute the current examiner production goal system to a 1976 agreement with the Examiners’ Union. The goals were set after a “study” that apparently had been kept unpublished. However, the 1976 USPTO Annual Report mentions that the ’76 production goal system had provided for a 6% increase in the average time for a disposal, setting the corps’ new average goal at 19.5 GS-12 equivalent hours. I could find no evidence that the workgroup quotas set then were based on any measurements or objective performance facts. These objective performance facts might be examination error rates under different time allotments, choosing the shortest periods that yield acceptable examination error rates.

As discussed below, the USPTO’s own measure of examination errors is one-sided, as it reports final allowance error rates but does not report final rejection error rates. Nevertheless, even by this allowance-error measure alone, the fundamental deficiencies of the Office’s production goals appear evident. This is shown in the figure above, where the average allowance error rate for each workgroup is plotted against the average allotted time per production unit (PU) in the respective workgroup. While not conclusive, these results are particularly suggestive: the broken trend line shows a definite indication that, on average, the examiner goal system fails to provide the minimum baseline time required in many workgroups regardless of technology. These results suggest a closer review of the goals set for workgroups in these low allotted-time categories. The conclusion is clear: examiners do meet their goals – but at the expense of quality.

(3) Alignment of examiner quality measures and incentives with the societal costs of patent examination errors

Societal costs of examination errors comprise of costs to applicants, to the Patent Office, to third parties and society as a whole. Erroneously allowing applications that do not meet the statutory patentability requirements or erroneously rejecting meritorious patent applications are both harmful to society.

Examiner rejection errors

(a) deny inventors their constitutionally directed statutory rights to their inventions;
(b) deny society the benefit of private investments in, and development of, otherwise patentable innovations; and
(c) deny society the benefit of disclosure and teaching of new knowledge and discoveries, thereby slowing innovation.
Examiner allowance errors adversely affect third parties subject to erroneously issued claims by
(a) inflicting unwarranted legal costs; and
(b) deterring downstream innovation that are erroneously deemed infringing.

There appears to be no shortage of scholarship and literature focused solely on the societal costs of examiner allowance errors. However, there is a glaring paucity of such sources on the societal harm of erroneous rejection of meritorious applications for patentable inventions. Furthermore, I am unaware of any quantitative assessments of the relative costs of these two types of errors so that a balance between the two can be considered.

In an upcoming paper, I prove the proposition that societal costs for making patent examination rejection errors are higher than the societal costs for making allowance errors. The proof of this proposition relies on the same societal cost-benefit analyses that lead many nations who had not found resources to institute a patent examination system to adopt instead a patent registration system, rather than abolish patents altogether.

The USPTO’s apparent presumption that allowance errors are far more important to control than rejection errors is contrary to fundamental economic principles of the patent system. The Office must augment its quality measures to include a second final action measure: Final Rejection Error Rate. Examiners’ incentive and supervisory programs should weigh this second metric with no lesser weight than that accorded allowance error metrics.

Director Kappos articulated what should have been the Office’s policy before his arrival: “Patent quality does not equal rejection.” The Office has recently started to move away from the excessive weight on allowance errors. This is a welcome move in the right direction, coming from a leader who had experienced in his prior position the draconian effects of previous USPTO policies. It is not enough, however, to merely attenuate examiner costs for making rejection errors. The Office should pursue a balance in weighing these errors with rejection errors. Thus, it is my hope that the recent changes would be followed by a fresh review of the Office’s quality programs, and that measures of final rejection error rates would be instituted and that the Office will use them to balance its examiner incentive and performance appraisal system.

(4) Conclusion

My observations and recommendations above are all about empowering U.S. patent examiners by investing more resources in their operations and by allotting more time for professional development. Management is working hard on increasing the ranks of the corps. Actions should also facilitate examiner’s quality work by balancing their incentives. Growing patent backlog damage had been done over the last decade and the Office’s new management cannot be expected to fix it overnight. The overarching and laudable goal of reducing pendency should not translate into extreme diversion of USPTO resources narrowly for the sake of reducing pendency, regardless of collateral outcome adverse to the examiner corps. It will take years to rebuild the corps and overcome the backlog harm. My 2010 wish for the U.S. Patent Examiner is that we start this year.