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Patent Reform: Post Grant Review Musings


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
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Posted: September 4, 2011 @ 4:01 pm
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USPTO Headquarters, Alexandria, Virginia

Once upon a time I used to not get worked up at all about proposals for patent reform, because after all they almost always didn’t seem to go through, or even if they did what was passed was hardly what was suggested.  Then, my good friend John White told me about six years ago that this time patent reform was going to happen, it was just a matter of time.  Since then I have written numerous articles on proposed patent legislation, followed the issue, reviewed transcripts from Congressional hearings and have watched multiple Congressional hearings streaming online, even while on vacation one year.  The end result is that not much has changed… at least not yet.

We have heard this all before, and to some extent it does sound a little like a “chicken little mentality” has captured the imagination of policy wonks and patent attorneys alike, but it is hard to deny the fact that there is growing momentum for real reform at the United States Patent Office.  Sadly, what the United States Senate will vote on Tuesday, September 6, 2011, does not represent that real reform that so many are hoping for.

On Tuesday, September 6, 2011, the U.S. Senate will hold a vote on whether or not to end debate on patent reform, the so-called America Invents Act.  In February the Senate passed S. 23, its version of the America Invents Act, by a vote of 95-5.  Then in June the House of Representatives passed its version of the America Invents Act – H.R. 1249 – by a vote of 304 – 117.  The House version was not identical to the Senate version, hence the need for the Senate to vote again.  Unfortunately, the House version added some bad things (i.e., prior user rights and modifications to post grant review) and stripped the one thing that everyone characterized as true reform; namely the guarantee that the Patent and Trademark Office would be adequately funded.  The prohibition against Congress siphoning off funds and treating the USPTO as a government piggy-bank was removed by the House.  See U.S. Patent Office Pays More Taxes then General Electric. It seems virtually certain the Senate will accept this clearly inferior piece of legislation, undoubtedly claiming a victory.  But a victory for what and for who? I suspect that will go unanswered in the celebratory aftermath.

One common thread of the talk about patent reform has been the all to familiar reality that patent litigation costs have skyrocketed.  While this has certainly been good for patent litigators and law firms, it has not really been all that helpful for businesses, particularly small businesses.  There is growing concern that the threat of costly patent litigation is deterring small hi-tech companies from engaging in research and development. The reason, of course, is that many entrepreneurs and small businesses simply do not have the resources to deal with even minor law suits.  So what is the answer?  One answer seems to be to create a new post-issuance review procedure, which in my opinion has real potential to backfire in a big way!

Of course, post issuance review at the Patent Office is not at all new.  There does exist such a procedure, which currently takes the form of one of two types of reexamination proceedings, but such proceedings are so constrained by what can be considered that they are under-utilized.  On top of that, they are cheaper in terms of legal fees so there is a question among some whether some patent litigators steer their clients away from reexamination, but that is another story for another day.

So how could a new and allegedly improved post-issuance review process work where reexamination has been lackluster at best in terms of use and obviating the need for litigation?  That is a good question, and one that does not seem to get asked much, if at all.  Rather, it is assumed as if it is plain on the face of the legislation that another avenue to challenge a patent is a good idea, will result in high quality patents, will obviate the need for litigation and otherwise make a better patent system.  But where is the proof?

Why would we expect a new post-issuance review to work any better than the current prosecution process?  Why are we to expect the Patent Office, which is certainly not equipped to handle litigation-like proceedings, could adequately and appropriately resolve issues of patentability in a post grant review proceeding when they are so horribly under-funded?   Why would anyone think this is a good idea?  Simply stated, the America Invents Act layers on more and more responsibility for the USPTO but without any additional funding.  For years the federal government has been notoriously adept at layering unfunded mandates onto the States, but with this legislation they will layer unfunded mandates onto the USPTO; an agency that accepts absolutely no taxpayer funding.  Yes, the USPTO runs itself on a percentage of the user fees it collects, with 5% to 10% getting kicked up the chain back to the Treasury Department.  Yes, Uncle Sam gets a “taste” of every dollar collected by the USPTO, siphoning off user fees every year, leading to an embarrassingly large backlog that has stifled job creation in the United States.

There is, however, going to be substantial disagreement with respect to how post-issuance review reform becomes implemented once the legislation finally passes and is signed by President Obama.  The Patent Office will have its hands full writing rules and regulations to implement the America Invents Act, so no one will really know what to expect in terms of process until that rulemaking process has completely unfolded.

While many do understand the importance of some type of meaningful change to the status quo, many also fear that any change in the system could easily wind up favoring large corporations with deep pockets.  Still others fear that anti-patent groups will tie up patentees in a bureaucratic process that will significantly reduce the usefulness associated with seeking a patent.  It seems virtually certain that the work load created by another post-issuance review process will only further bog down the Patent Office, which is already the No Patent For You In a Reasonable Period of Time Office.

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Posted in: Congress, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Reform, Patents, Reissue & Reexamination

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

23 comments
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  1. Any inter Partes proceedings on the validity of a patent claim that is any good at all is an esoteric business, inherently very expensive and inevitably very time-consuming. If it is starved of resources it will be worse than useless.

    At the EPO there are enough resources but that’s only because the EPO runs under a civil law (not English common law) operating system, in which any distinction between evidence and attorney argument is hard to discern. An EPO decision to revoke the patent is terminal. No appeal available.

    At the EPO, it is unwise to oppose and lose. The patent comes out of it with an enhanced presumption of validity. That is what keeps the numbers of oppositions down, even though they are the last chance to attack an issued patent centrally, and blow it away in all of the up to 42 countries it covers.

    What has worked well at the EPO, these past 30 years, is therefore not going to work at the USPTO. Sorry.

  2. Gene-
    Actually a cloture vote is scheduled for later this afternoon as opposed to Tuesday. That will most likely be approved, which will limit any debate to less than 30 hours, and the Senate will not be able to take up any other matters until Patent Reform has been voted either up or down. The only chance I see for refusal by the Senate is if they are annoyed by the House insisting on continuing to be able to *appropriate* USPTO funds at their whim and wishes, which is a very sad commentary about the motives of some of our elected officials. A hundred million per year is an incredibly small drop out of the Federal budget, and they still insist on stealing mine and others’ filing fees!? I think I will watch it on C-Span later today, which will probably be very depressing in my case. I just recently filed a formal application in the belief that a patent might be of some value to my efforts to profit from my efforts. It looks as if I might have chosen exactly the Wrong time to try to prove that I am actually an inventor. But what the heck… the Mulberry tree next door is loaded with berries, so I think I will whip up a batch of Moribund Mulberry Kook-Aid to help smooth off the rough edges of our new reality.

    Best regards as always,
    Stan~

  3. Assuming passage, and after the dust and media hype has settled, I think many of the doom and gloomers predicting “the end of the [patent] world” will be surprised how little their normal patent practice will be affected, once they actually read it.
    For example, as noted above, post grant review will be very expensive. It will also limited to only 9 months from issuanace [long before most patents are ever asserted] and will be far more dangerous for requestors than any EPO opposition, because it will have total legal estoppel against raising any possible invalidity defenses later, even for defenses not raised in this opposition. Post grant review after 9 months from issue is basicly the same as present inter partes reexamination, but will have a HIGHER hurdle to even initiate, and will be run by Board APJ’s, who are attorneys, which should provide faster and better protection against unfounded reexamination requests.
    The exising “prior user rights” defense statute has never been successfully used, and the wider (patents) scope of the new one does not eliminate any of its extensive proof limitations, and still is purely personal and cannot invalidate any patents. It is not nearly as good a defense as 102(g) [being eliminated] already provides in most such cases.
    The largest practice change [occurring only gradually, due to the long transition period] seems likely to be for the small minority of practitioners who have been missusing Rule 131 by slipping legally defective and/or insufficient declarations past some clueless or careless examiner to get claims allowed over prior disclosures and prior inventors, instead of arguing patentable distinctions. Also, some references prior art dates are going to become earlier in time, as well as no longer being so easily “swearable behind.”

  4. After looking around a bit, I found this=> http://thomas.loc.gov/cgi-bin/query/D?r112:3:./temp/~r112yuIRuk:: It supposedly is to occur on the 6th, but I heard that the cloture vote will actually happen this afternoon at about 5:30 Eastern time. Probably meant as a surprise brought to us by Senator Leahy I would imagine, but that is just a guess on my part of course. Vermont- The IBM state, with assistance from a software development company located in Redmond, Washington. I think I will stir some Alum and perhaps a bit of arsenic into my MM kook-aid, so that I will be able to go quietly into the future.

    Stan~

  5. Paul-
    I sincerely hope you are right about PGR, which at least is limited in this version of Patent Reform. An earlier version of Patent Reform would have allowed PGR for the entire life of the patent, if granted, which would have been a complete nightmare for the USPTO if enacted into law.

  6. Stan (et al) to make you feel even better, I think you are underestimating the ability and cleverness of USPTO legal staff to write enabling rules that will limit and reduce USPTO workloads, including making PGR more difficult for requestors. Some of the PGR provisions give the PTO considerable rulemaking authority and requirements.
    The new limited term reexamination for “business method” patents presents a few serious PTO rulemaking and enablement challenges.
    The real USPTO “nightmare,” as you put it, will be the rulemaking for, and the operation of, the new reexamination for patent owners to eliminate any and all inequitable conduct issues completely ex parte! A very pro-patent-owner system added late in the game which few people seem to have noticed or absorbed.

  7. I believe that an exhaustive cloud-sourced prior art search being required as a prerequisite to litigation would be more effective than PGR at filtering out bad patents.

  8. That depends upon what you mean by *bad* patents. If a patent is improperly granted due to a lack of resources or ineptitude at the USPTO, it is not per se a *bad* patent. Just born out of wedlock, so to speak, because the PTO failed to examine it closely enough to discover that it was not really new and novel. However the *child* was born has very little to do with it’s intriinsic value though.

  9. Yes, intrinsic merit and patentability (non-obvious novelty) are by no means the same thing. Both contribute to commercial value. A “bad” (improperly granted) patent confers commercial value that is undeserved and potentially robbed from others through litigation based on it.

  10. Do any here seriously think that indepenent inventors have the slightest chance of litigating anything at all? If I was seeing sales of thousands of units per year I might have been able to muster some sort of objection to an infringer, but the America Invents Act will take that option away for the most part. At least I have already filed an application, sans publication, so that nobody else can become the First Inventor to File an application for MY invention. Perhaps some of the attorneys that attend here should be looking into what Derivation proceedings entail. Talk about your basic nightmares! Absolutely zero discovery possible, unless your opposing attorney happens to be your uncle Jack or whatever. Despite Dennis Crouch lamenting the lack of new law students, the passage of the America Invents Act should make patent litigation a very lucrative field. Like the old saw aboot attorneys from years past: A man between two attorneys is somewhat like a fish between two cats. All that is uncertain is which attorney gets the bigger bite of the fish.

  11. A fish between two cats? Good but the one I like better is the cartoon, sold these past 200 years or so in London’s Inns of Court district. It depicts a cow being milked by an enormously fat man sitting on a small milking stool and grinning widely. Clearly he is the lawyer. One emaciated fellow, hanging on to the horns, is pulling the cow in one direction. Another pitifully thin man is pulling the cow’s tail in the other direction. Clearly, neither has any hope of budging the cow, in either direction, by a single inch.

    Refereeing this tug of war is another enormously fat, wealthy and complacent grinning man wearing splendid robes and sitting high on an ornate chair. I’ll leave you to guess who he is.

    Has anybody got a fridge magnet like mine, which asserts that it is the highest duty of a lawyer, to protect his client as much as he can, from the depradations of other members of his profession?

  12. Looks like the cloture vote will be at 6 PM Eastern time and viewable on C-Span 2 http://www.c-spanvideo.org/schedule

  13. “Do any here seriously think that indepenent inventors have the slightest chance of litigating anything at all?”

    Stan,

    Not unless that “independent inventor” can get their litigation counsel to accept the case on a “contingency fee” basis. That’s one of the great fallacies of the AIA: it will likely hamper the “innocent” who aren’t the problem, but will likely do precious little to deter those who are.

  14. [...] 1. Patent Reform: Post Grant Review Musings (IPWatchdog) [...]

  15. We needed a reform of our health care delivery system, and got Obamacare.
    We needed a reform of the financial system and got Dodd-Frank.
    We need reform of the patent system and will get the so-called America Invents Act.

    Does anybody else see a trend here?

  16. One difference is that the first two (Obamacared & Dodd-Frank) were put through by Democrat majorities. AIA has broad bi-partisan support (although less from Republican than Democrat patent practitioners per Dennis Crouch’s latest survey). I think that’s because it’s a government program (which Democrats like) but also caters to big business (which Republicans like). As for the American ideal of the self-reliant rugged individualist (small inventor/entreprenuer), they never figure into the poltical calculus any more.

  17. I agree American Cowboy. I would have liked to see the Patient Protection and Affordable Care Act and the Wall Street Reform and Consumer Protection Act go much further than either of them did (single-payer system, Medicare discount on prescription drugs, increased stockholder policing of exec pay, etc etc). Same with the AIA. I wish it would go further by guaranteeing the USPTO could keep its self-funding. But each time Republicans have blocked these needed reforms.

  18. If it’s a partisan issue…

    Granted, Republicans blocked the PTO funding, which was objectively bad.

    But how can you say that single-payer is a needed reform? Also, SarbOx and other Wall Street reforms have done nothing to reform Wall Street and have put tremendous pressure on those companies that create jobs. In fact, the IPO market has pretty much vanished as a result of over regulating growing companies. As for Medicare discount on prescription drugs… exactly who pays for all that stuff?

    It is objectively incorrect to unilaterally blame Republicans for what is wrong with government. The Dems are equally, if not more, to blame.

    -Gene

  19. Gene- how dare you question my political conclusions! I’m kidding of course; I was playing devil’s advocate to show that one can spin legislative failures any way one likes. In the case of the AIA, I hope both parties get egg all over their faces (of course the banking lobby will be on hand with warm towels and silk handkerchiefs to quickly clean them up)

  20. I suppose I should apolgize for raising healthcare an financial reform since it led to some of the usual political p***ing match.

    My point was, regardless of which party you like, Congress seems to be incapable of passing legislation that is more helpful than hurtful, on any topic.

  21. You can watch Sen Leahy live here re Unleashing American Innovation:
    http://www.c-span.org/Live-Video/C-SPAN2/

  22. this will “unleash, unleash, the genius of the American people” according to Leahy

    yeahs & nays on the Judge Donald nomination is ongoing, cloture on 1249 to be voted on later tonight

  23. Step back-

    Was your last post at 5:37 Eastern time? I just got home from work and it is 8:15 Pacific time here. Any cloture vote yet? Right now they are discussing Post office finances on C-Span.

    Stan~