During the State of the Union address to Congress in January 2014, President Obama called for passage of a patent reform bill that would allow businesses to stay focused on innovation, not litigation. Today, in what was billed as part of the “Year of Action: Making Progress Through Executive Action,” the Obama Administration highlighted progress made on previously announced executive actions, and also announced three new actions to further respond to the President’s desire to increase patent quality.
Currently the President is under fire for Executive Actions, which is something that he railed against when he was Presidential Candidate Obama in 2008, but increasingly embraces. The criticism of the President with respect to Executive Action has heretofore been related to the fact that through executive fiat the President has single handedly re-written laws passed by Congress. Of course, there is no Constitutional authority for the President to re-write laws, but that hasn’t stopped him, at least with respect to the health care law.
No such re-writing of law seems to be implicated in the Executive Actions announced today relative to the patent system. In fact, the Executive Actions on the patent front are largely much ado about nothing and seem most intended to grab headlines. Still, there are a few items that make perfect sense, such as the USPTO working with industry to train patent examiners on cutting edge scientific developments and an expansion of the pro bono program. Still, other initiatives claim to address patent quality but I can’t for the life of me understand how that could be possible. How accurate ownership records kept after the issuance of a patent will help patent quality is a mystery to me, and unexplained by the White House.
Beginning first with the update on previously announced Executive Actions —
The Obama Administration today explained that the United States Patent and Trademark Office (USPTO) recently published a draft rule to ensure patent owners accurately record and regularly update ownership information when they are involved in proceedings before the USPTO. The White House says that this action item will improving the quality of patents issued, which is simply not true. There is, however, a wide disparity and lack of uniformity in the examination process that does lead to unnecessarily low patent prosecution quality, but any fair observer would notice that this means that there many situations where real innovations are denied patents. Of course, the politically correct thing in the climate fostered by the President and leaders in Congress is to vilify patent owners and patents generally. So “patent quality” is code for “we need to issue fewer patents.” But still, it is an unexplained mystery how accurate information about ownership will lead to patents being of a high quality or the examination process leading to better decision making.
Greater transparency should provide key insights into and perhaps minimize abusive litigation tactics of shell companies. But shell companies are not only used by so-called patent trolls. Shell companies are used to harass competitors by large Silicon Valley technology companies, essentially employing the logic that what is bad for my competitor is good for me.
Of course, greater transparency comes with a price. It will cost more to investigate portfolios and pay attorneys to file documentation. This sounds easy enough but given all the patent sales, company acquisitions and mergers that go on in the technology sector it is not always easy for a company to know what they own. Thus, greater transparency sounds great in theory but may well be impossible in practice, or at least quite expensive in practice. It is also a double edge sword for practicing companies who have enormous patent portfolios.
Making Patents Clear
The President previously announced an initiative to make patent clear. Patents are not easy to read, but that has far more to do with the development of case law and evolving statutory requirements over the past several generations. Therefore, before we even consider the philosophical question about what it would mean to be “more clear,” there is no magic wand for the President to waveto make patents more clear.
Nevertheless, the White House explained that the USPTO has developed and implemented a training program to help its examiners rigorously examine so-called “functional claims” to ensure that at least those claims are clear and can be consistently enforced. This sounds wonderful, and new to the uninitiated, but the problem is that functional claiming has been around for decades. There is a great body of case law surrounding the topic, examiners handle these types of claims all the time, and this really wreaks of the White House blaming patent examiners for the perceived problems. While there are some patent examiners that refuse to issue patents and others that refuse to deny applicants, the overwhelming majority of patent examiners are hard working and do a good, fair job. However, and perhaps tangentially, according to some patent attorneys, the anti-patent mantra from the White House and Congress is impacting in a perceptible way the relationship between the examiner and applicant, with more and more examiners unwilling to issue patents in particular technology spaces. Sadly, addressing this issue, which deals with unequal treatment and lack of uniformity, isn’t a top priority.
According to the White House in the coming weeks, the USPTO will launch a pilot program that uses glossaries in patent specifications to promote patent clarity. IA patent glossary may not be a bad idea, but let’s not fool ourselves. This will either lead to more narrow rights granted, lead to greater cost to prepare patent applications or more likely both. Further, how the Courts will interpret patent claims in this new regime is unclear. Will the Courts do away with or modify the ordinary plain meaning law built up over generations even without a statutory change enacted by Congress? That seems doubtful, so I’m not sure what this really accomplishes except perhaps inject greater uncertainty.
Protecting Main Street from Abuse
According to the White House the USPTO today launched an online toolkit aimed at empowering consumers with answers to common questions, information about patent suits, and details about specific patents. The toolkit will include information and links to services and websites that can help consumers understand the risks and benefits of litigation or settlement, and pick their best course of action.
Information is great, but exactly how a Frequently Asked Question section of USPTO.gov will help is unclear. It seems a little like rearranging the chairs on the Titanic and acting like that will help. Instead the Obama Administration should inquire as to why things have so dramatically changed and patent owners are targeting smaller and smaller businesses.
In some situations it is being done by nefarious actors who send fraudulent and misleading demand letters claiming infringement of dubious patents, but the New York State Attorney General has shown how State AGs can put an end to that using consumer protection statutes. There is no need to engage in the clearly unconstitutional legislation passed by Vermont. As I told representatives from the Vermont government prior to passage of their legislation the way to move forward is through consumer protection, which has now been borne out.
In other situations small businesses are being targeted by patent owners because those larger companies that are infringing patents are doing so without care or consequence. Attempts are made to contact larger companies by some patent owners and those letter are simply discarded. Anyone who goes to any one of the many industry programs that discusses patent litigation problems hears attorneys from large corporations practically giddy as they gleefully announce to the audience that they merely circular file demand letters and licensing inquiries. Of course, they then have their lobbyists tell Congress that they need help because they get sued even before they are approached. So far they have had the argument both ways, and this has lead some patent owners to turn up the heat and sue smaller companies that the larger companies are in many cases legally obligated to indemnify. In short, some of this is a litigation tactic necessitated by the business processes of certain large technology companies.
Expanding Outreach & Focused Study
The White House announced today that the USPTO is expanding its Edison Scholars Program, which brings distinguished academic experts to the USPTO to develop and make available to the public more robust data and research on issues bearing on abusive litigation. While I think more data and statistics are a great thing, the independent sources show that patent litigation is not the problem it is made out to be. The only “studies” that show that there is a tremendous problem are published using proprietary data that is simply not available for inspection. On the other hand, the studies that use openly available public data come to different conclusions, namely that patent litigation is not particularly problematic or alarmingly on the rise. It is as would be predicted, and was predicted, when Congress enacted reforms in the America Invents Act (AIA). Reforms required more patent infringement lawsuits to be brought because the number of defendants per lawsuit were reduced.
Strengthening Exclusion Order Enforcement
Previously the Obama Administration promised to make the enforcement of exclusion orders issued by the International Trade Commission more transparent, effective, and efficient. No news on that action item yet, although the White House announced today that the Office of the U.S. Intellectual Property Enforcement Coordinator launched an interagency review and will, in the coming months, deliver its recommendations.
Now the three new executive actions announced today to ostensibly strengthen the quality and accessibility of the patent system —
Crowdsourcing Prior Art
To help ensure the highest patent quality, the USPTO announced a new initiative focused on expanding ways for companies, experts, and the general public to help patent examiners, holders, and applicants find relevant prior art. Essentially, the USPTO will explore a series of measures to make it easier for the public to provide information about relevant prior art by refining its third-party submission program and exploring other ways for the public to submit prior art to the agency. The USPTO will also update its guidance and training to empower examiners to more effectively use crowd-sourced prior art.
While this isn’t a bad idea, if Executive Action is necessary here it is because of the failure of the public to come forward with prior art. In short it is because of the failings of the third-party submission program created by the AIA. Third party submissions authorized by the AIA became possible only on September 16, 2012, so we are less than 18 months into this experiment and tweaks are necessary? The answer is yes because very few third party submissions have been filed. In fact, during the first 15 months one could make a third party preissuance submission there were only 1,228 such submissions filed, while at the same time there were never fewer than 584,998 applications at the Patent Office awaiting first action. The number of applications third party submissions could be filed in would be much, much higher since a third-party submission can be filed prior to the earlier of: (1) The date a notice of allowance; OR (2) The later of: (i) 6 months after the date on which the application is first published by the USPTO, or (ii) The date of the first rejection of any claim by the examiner.
Crowdsourcing the Patent Office will likely make headlines and give opportunity for a lot of self congratulations. The reality, however, is that users of the patent system are simply not interested and aren’t using the tools available. Thus, the Obama Administration has a very heavy lift here.
More Robust Technical Training
The Obama Administration also announced that the USPTO is expanding its Patent Examiner Technical Training Program to help patent examiners keep up with fast-changing technological fields by making it easier for experts to provide relevant technical training and guidance to patent examiners.
I am all for this initiative. Once upon a time this type of training was commonplace. Corporations would come together to train patent examiners on the basic science of the next wave of innovation. Competitors coming together to help bring patent examiners up to speed not he latest and greatest scientific advances is a win-win situation for everyone. This is something that actually can work because it has worked in the past.
Pro Bono and Pro Se Assistance
The Obama Administration also announced today that the USPTO will dedicate educational and practical resources to assist inventors who lack legal representation, appoint a full-time Pro Bono Coordinator, and help expand the existing America Invents Act pro bono program to cover all 50 states.
I think the expansion of the pro bono program is perfect fine and makes a lot of sense. I have wanted to write about the pro bono program and profile the excellent efforts of the USPTO on this initiative for a long time, but for reasons I don’t fully understand I have not been able to get much information about the program other than it exists. Hopefully this initiative will also include an outreach component and the Obama Administration will promote a good program that helps people.