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Sideways and Backwards: A Broken Patent Process


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: May 7, 2014 @ 8:00 am
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Mark Twain wrote that a country without a good patent system is doomed to go only sideways and backwards.

Recently when looking at some new Hewlett-Packard patent applications and patents we stumbled on an interesting patent that issued on April 22, 2014. U.S. Patent No. 8694327, entitled Electronic Warranty System and Method, protects a method of applying a warranty to printer cartridges so that the warranty data is stored within the printer itself. This system offers a major improvement over organizational shortcomings to traditional warranties, or at least it did back when it was filed in 2002.

When reading patents it is not at all unusual for a patent to be issued a number of years after the original patent application was filed, but it isn’t every day that you see a patent issue more than 12 years after it was originally filed. Yet, that was exactly what happened with respect to the ’327 patent application to HP. Worse yet, after HP successfully prevailed on claims in an appeal to the Board the case goes back to an examiner who for the first time raises a rejection never before made, while still continuing to make additional obviousness rejections. In short, this reads like the story of an application that examiners never wanted to issue in the first place.

Had the applicant been a small entity or individual it wouldn’t have issued. It would have been buried. Once upon a time Directors and Commissioners of the Patent Office used to believe that burying an application that should issue was as bad, if not worse, than allowing an application that shouldn’t have issued. Oh how the times have changed in this anti-patent world in which we live where it is better to not issue patents that should issue as long as we don’t accidentally issue something that might be embarrassing. And we seriously wonder why it feels like a recession never ended?

Let’s face it, aside from the unfortunately brief Kappos tenure at the USPTO the Patent Office has been anti-patent for the last 10 to 12 years. When it takes 12 years to get a patent issued, which is unfortunately not rare, opportunities are lost, investment doesn’t materialize, jobs are not created and the innovation lingers providing no benefit to the economy. Anyone with a sense of history and open eyes can see that the anchor holding back the economy is the Patent Office. Aside from this past recession every recession has lead to unprecedented growth in innovation and job creation. But if you can’t get patents, or the PTAB is there to take them once they become valuable, what exactly is the engine driving the innovative economy?

The aforementioned HP application was first filed back in August 2002, and after nearly 5 years of prosecution HP filed a Notice of Appeal, which isn’t unusual even if 5 years does rightly seem far to long. Nevertheless, HP filed that first Notice of Appeal on June 21, 2007, and their appeal brief just two months later on August 21, 2007. Ultimately the Board affirmed in part and reversed in part the examiner. In the decision the Board concluded:

We conclude that the Appellants have not shown that the Examiner erred in rejecting claims 1, 5, and 9 under 35 U.S.C. 103 as unpatentable over Kubota. We conclude that the Appellants have shown that the Examiner erred in rejecting claims 31, 32, 35, and 38 under 35 U.S.C. 103 as unpatentable over Kubota.

As a result of this Board decision, certain obviousness rejections by the examiner, call her Examiner #1, were found to be inappropriate. As you might expect that the case would go back to the examining corps, but the case went to a different examiner — Examiner #2. Still,  you might think that there would be be smooth sailing to the finish line. Unfortunately for HP, the case did go back to the examiner, but the examiner continues to reject the claims HP sought.

In the Non-Final Action after the first appeal in this case, Examine #2 rejected claims 32, 35 and 38 again, this time for failing to comply with the written description requirement. This seemed particularly odd given that Examiner #1 had never raised a 112 rejection. So why did it arise for the first time after HP successfully appealed certain rejections? Worse, perhaps, Examiner #2 also continued to fashion obviousness rejections of the claims HP prevailed in at the Board.

HP did not seem to appreciate this late 112 rejection, although they responded in a very professional manner, providing specific page and line citations for where the terms of the claims actually found support in the specification. HP addressed each of the rejections without saying what they must have really felt, which was that Patent Examiner #2 simply was never going to let them have a patent on any claims even after they prevailed on appeal.

Ultimately, in the final rejection Examiner #2 relented on the obviousness rejections, but continued to cling to the late 112 rejections saying that the specification simply did not demonstrate compliance with the written description requirement. At this point HP had to realize they were never going to convince this examiner to issue a patent. Rather than respond after this final rejection, HP immediately appealed the case in July 2010.

On this second appeal HP ultimately prevailed. On appeal the examiner took the position that the specification was “silent regarding the communication of a warranty to a device (e.g. printer) when the warranty unit is embodied on a printer cartridge and the cartridge is ‘inserted’ into the device.” After going through the specification teaching relative to the warranty and communication of the warranty, the Board simply disagreed with the examiner, finding ample support. The Board concluded: “In our view, these statements in the Specification, among others, provide sufficient detail so ‘that one skilled in the art can clearly conclude that the inventor invented the claimed invention… as of the filing date sought.’”

The case was sent back to the examiner, but this time to a different examiner, oddly enough back to Examiner #1 who had been the one assigned previously, who issued a Notice of Allowance on February 2, 2014, which resulted in the patent ultimately issued April 22, 2014.

As is typical when you see an application that takes this long to issue, there was a prolonged prosecution in the first place followed by a lengthy appeal process. Of course, this type of prolonged route to a patent benefits no one, and leads to those unfamiliar with the patent system to inappropriately criticize the system for issuing a patent on something that may well have been known for a decade or longer. Such criticism is unfounded, because in a situation like this is would be wholly irrelevant even if it were true that the invention disclosed were known for a decade because the patent application was filed August 29, 2002, at a time when the U.S. was a first to invent system, so the critical date would have been well before the filing date when the invention was actually conceived. Still, games played at the Patent Office and unreasonably long prosecution paths create a problem both for the patent applicant and for the patent system as a whole.

Furthermore, what if this applicant were a small business or individual? Had this applicant not been HP and instead a small company, would any patent be obtained despite the fact that the Board twice reviewed the claims and twice disagreed with the patent examiner? Of course not. Had this application been filed by an individual or entity with few resources the application would have been abandoned. Buried by a patent process that couldn’t care enough to administer justice in any kind of a timely fashion. That is rather pathetic. Getting a patent issued should not have taken 12 years, and resolving the application should not have taken more than 5 years after the first appeal was successful!

In this situation the most problematic event is the 112 rejection that comes up for the first time only after the Board sides with the applicant on the first appeal. The Patent Office preaches compact prosecution, but this case clearly shows that compact prosecution doesn’t happen in all cases. Principles of compact prosecution demand that rejections be raised so an applicant can address those rejections. There is nothing to be gained by any examiner raising some rejections, being overruled on appeal, and then having additional, new rejections raised for the first time. This is how and why there is a very real perception that some within the patent examining corps simply don’t want to issue patents.

At some point in time title to a patent needs to settle and ownership be certain. What the Patent Trial and Appeals Board (PTAB) is doing relative to post grant challenges strikes me as terrible. No patent is safe, and Chief Judge Rader is right to call the PTAB a “death squad.” See, for example, PTAB Death Squads: Are all Commercially Viable Patents Invalid? Equally problematic, however, are the games that are sometimes played during prosecution. The goal posts keep moving, new rejection after new rejection surfaces, and in this HP case even when an applicant prevails on claims on appeal they continue to have those very same claims rejected and have to appeal a second time. This is not right, it is not just. Fairness demands that patent examiners, as decision makers, raise all grounds of rejection at the earliest point possible. If a ground of rejection is not raised then that ground of rejection should be waived. Continually moving the goal posts and unnecessarily prolonging patent prosecution, turning it into nothing more than a war of attrition, is no more acceptable than the PTAB killing every claim they review. Fairness unfortunately doesn’t matter in most government processes, but it should! There is no reason the Patent Office has to operate this way.

At the end of the day the patent system suffers, and as the patent system suffers so will our economy. As Mark Twain (aka Samuel Clemens) wrote: “[A] country without a patent office and good patent laws was just a crab that couldn’t travel anyway but sideways and backwards.” A patent process that is calculated to bury allowable claims unless 12 years and hundreds of thousands of dollars are invested and a PTAB that indiscriminately kills patent claims does not bode well for the country. Given the anti-patent climate that vilifies innovators and treats them like they are evil will mean that we are doomed to travel only sideways and backwards, just as Twain so eloquently explained.

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Posted in: Gene Quinn, Government, IP News, IPWatchdog.com Articles, Patent Prosecution, Patents, USPTO

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.

 

31 comments
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  1. The correct and fuller Mark Twain quote is this:

    “That reminds me to remark, in passing, that the very first official thing I did, in my administration — and it was on the very first day of it, too — was to start a patent office; for I knew that a country without a patent office and good patent laws was just a crab, and couldn’t travel any way but sideways or backways.”

    I prefer “backways” which is more folksy – an effect that Twain was anxious to achieve.

    From a European procedural viewpoint there are procedural violations here. At the first office action an applicant should expect to be informed of the full range of objections to patent grant. Finding fresh objections after a case has gone to appeal is awy out!

  2. I should have written way out!

  3. Death squads repealing 76% of patents they issued. The Supreme Court looks like it will have to nullify billions of dollars worth of software patents because they never should have been issued in the first place because it went against federal laws. With all the hubub these computer companies have caused with patent reform, it;s hard to feel sorry for any of them. Which country is not traveling sideways and backways with regard to patents?? I would like to file a patent there.

  4. Can I put it the other way around: which countries besides the USA are travelling backways? What is the perception in that regard, at the moment, in the USA?

    Some countries always were anti-patent. But which jurisdictions beyond the USA were pro-patent but are now seen inside the USA to have flipped, to become anti-patent?

    But apart from that, M. Carey, don’t be too pessimistic. To every force there is an equal and opposite reaction. The USA is deeply proud of its uniquely “strong” patent system. Strong anti-patent forces are an inevitable corollary of that, aren’t they? That These anti-patent forces are more evident than ever is evidence that the US patent system is stronger than ever. Or not?

  5. I read about this type of prosecution history more and more, and I see it more frequently in PAIR.

    There really is not much downside for a patent examiner that gives an applicant a hard time out of maliciousness, ideology, incompetence, or laziness.

    IANAL, but if I were counsel to HP, and I saw patent prosecution costs go up unjustifiably or corporate strategies hindered because of unreasonably long patent prosecutions, I might recommend filing a Bivens Complaint. It seems almost precisely the situation that Bivens Claims are supposed to address.

  6. Look at 8075185 which demonstrates the incompetence on both sides of the fence.

  7. This patent is actually a fairly limited variation of an invention which goes back about 5 years earlier than its’ filing date (see US patents US6240286, or US6208853, for example ) The idea of encoding a warranty in a device memory and automatically transmitting the information the first time the device is turned on goes back to the mid 90s. This patent specifically limits the invention to encoding the data in the ink cartridge. If HP chose to encode the information in the printer itself, they would not have a novel invention.

  8. because they never should have been issued in the first place because it went against federal laws

    M Carey, please validate this “opinion” with something grounded in current law.

  9. MaxDrei,

    I continue to be befuddled by your odd sense of logic: “That These anti-patent forces are more evident than ever is evidence that the US patent system is stronger than ever. Or not?

    Have you not been paying attention? The AIA, pushed hard by these anti-patent protagonists, have greatly weakened the US patent system.

    Joachim,

    You could not be more wrong about “There really is not much downside for a patent examiner that gives an applicant a hard time out of maliciousness, ideology, incompetence, or laziness.

    The downside is evident in the current backlogs at the Office. As my namesake little “a” anon often points out at Patently-O, if one takes the Reject-Reject-Reject era allowance “Quality” indicator grant rate chart (the epitome of your ‘examiner gives applicant a hard time”), flips it upside down and adds the appropriate time delays for processing, the level of correlation is startling.

    Benny,

    The term I think you are looking for is “Obvious.” Your statement should read “they would not have a[n obvious] invention” instead of “they would not have a novel invention.

  10. How is the backlog a downside for an examiner? Does it affect salary or promotion? It looks more like a downside for the applicant.

  11. Anon,
    The term I was looking for, and used, is “novel”. I am not in a position to state that a self-registering device would have been obvious in the mid to late 90′s. It would not have been obvious to me. But, by 2002, you would have had to come up with a variation on the theme to get a patent.
    As an aside, having read the patent I still don’t see how encoding the information in the cartridge is more useful than encoding it in the printer, unless it is used to invalidate the warranty when a non-original cartridge is installed.

  12. It appears to have been part of a strategy to prevent refills and knock-offs. The strategy also seems to have worked.

  13. Benny – you continue to show ignorance of the law, and it does not help your credibility to be proud of that ignorance.

    “Novel” has a distinct legal meaning and you are not using the word correctly.

    It is one thing to inadvertently be a clown – it is another to purposefully don those clown shoes.

  14. Joachim,

    ANYTIME a governmental service is geared to the benefit of the government and the government workers in that system – at the expense of who that system serves (not just the inventors, but the larger public as well), you have a serious problem.

    That I have to point this out to you is itself alarming.

  15. Anon,
    The legal concept of novel is not difficult to grasp. At the time HP filed the patent application, a device with on-board encoded warranty data had already been patented, therefore placing the data in the printer would not have been novel. Placing the data in a separate, insertable device, as in this case, apparently was novel.

  16. For something that you admit to “not being difficult to grasp,” you still have it wrong Benny.

  17. There are two different complaints here.
    First, the PTO failure to prosecute patent applications in original filing date order, which I have complained to the PTO for many years. Dave Kappos and Bob Stoll did finally address the PTO backlog of ancient “submarine” applications that were getting patent terms for 17 years from issue date after interminable prosecution delays, and got those numbers down from more than 2000 to a few hundred. I have no idea what the PTO has done since, and I can only hope that adverse publicity like this and the Gilbert Hyatt lawsuit in the NV D.C. will inspire current PTO management attention, especially case transfers to examiners who will take fast and proper action.
    Secondly, the high claim rejection rate in post grant IPR’s is almost entirely due to the fact that the kind of patent claims being examined in most IPR’s simply did not have the best prior art cited and effectively applied to them during their original prosecution. Nor should that be at all surprising to anyone with real knowledge of PTO application prosecution, notwithstanding one judge’s inflammatory “death squad” remark. Many thousands of dollars are spent by the petitioners on very thorough IPR prior art searchs and petitions, versus a mere few hours of examiner computer searching time on the original applications. [Also, PTAB APJ's are patent attorneys who can read claims,]

  18. Thanks Maxdrel, it is hard to be optimistic, although I am hoping for the best with the patent reform. Anon- i read an article that stated in 1998 the federal circuit court basically overruled the Supreme Court decision to have severe limitations on software patents in the case of State Street bank which triggered a flood of soft ware patents. As far as i know , a lower court cannot over rule the Supreme court decisions, so the patent office should never have issued those patents, But in this side ways , back ways world of patents, who can say?

  19. M Carey,

    “an article” is awfully vague, and there is plainly a lot of crap and misinformation on software patents out there.

    Without more, I am afraid I do not know where to begin to disabuse you of any misconceptions that you may have – and it appears that you them in abundance.

  20. Anon – The article was in the Washington Post by Timothy Lee. I think it is pretty reputable and seemed free of
    misconceptions. But anything can happen. Anything can happen, but without the software patent trolls
    gumming up the works in the patent office, this country will be better off.

  21. M Carey,

    Timothy Lee is one of the most ill-reputed “journalists” out there. I would give zero credence to anything he writes as a starting matter.

  22. I think this is the article under discussion.

    http://arstechnica.com/tech-policy/2012/09/how-a-rogue-appeals-court-wrecked-the-patent-system/

  23. I concur with Anon. It is well known that Timothy Lee is anything but reputable when it comes to his writing about patents. His articles are all full of misconceptions, and in at least some cases he is objectively wrong. For example, Lee has written that the Federal Circuit ignored the Supreme Court and is responsible for software patents being issued despite the Supreme Court saying software is patent ineligible. That is, of course, a lie. The Supreme Court has rules that software is patent eligible in at least several cases. Furthermore, Martin Goetz (a guest contributor here on IPWatchdog) is widely known to have been issued the first software patent back in 1968, which was approximately 15 years before the creation of the Federal Circuit. Thus, in my opinion, when someone so carelessly gets easily verifiable factual information incorrect you really cannot take anything they say at face value or treat it as fact.

    For more on this see:

    http://www.ipwatchdog.com/2012/10/03/lies-damn-lies-and-media-hatred-of-patents-and-the-cafc/id=28389/

    http://www.ipwatchdog.com/2012/10/05/all-in-doubling-down-on-erroneous-attacks-on-the-federal-circuit/id=28588/

  24. Gene, Good to know.

  25. @Anon – You are the one who has it wrong. Benny was stating that, were it not for storing the information in the cartridge itself, each and every one of its elements would have been described in prior art (Benny even lists the prior art in his post). This means that the patent would have lacked novelty under 102, not that it would have been obvious under 103.

  26. @ Benny “As an aside, having read the patent I still don’t see how encoding the information in the cartridge is more useful than encoding it in the printer, unless it is used to invalidate the warranty when a non-original cartridge is installed.” This would suggest that the “invention” is a non-patentable abstract idea/business method hidden behind technical claim jargon.

  27. A tremendous number of patents have been granted for devices, systems, and methods that are not particularly useful. (The idiomatic phrase “useful arts” does not mean “usefulness” but really refers to “technology”.)

    The device and system makes it possible to register for warranty not at the cash register but at installation. The device and system does not require the use of a separate dongle device.

    The patent claims nothing like a law of nature or (to use the term loosely) an abstract idea like the Pythagorean theorem or the law of supply and demand.

    While some argue that business methods should not be patent eligible, the issue is not yet resolved.

    Business methods are patent eligible.

  28. Joachim @ 27,

    The Useful Arts most definitely does not mean the technological arts. Even if you allow the definition of “technological” to float untethered.

  29. J May @ 25,

    Review the definition of novelty, please. You shoot yourself in the foot by admitting that an element was not contained in the single source.

  30. To me “useful arts” seems to be an obsolete idiom for technology in contrast with science.

    http://en.wikipedia.org/wiki/Useful_art

    Useful art, or useful arts or technics, is concerned with the skills and methods of practical subjects such as manufacture and craftsmanship. The phrase has now gone out of fashion, but it was used during the Victorian era and earlier as an antonym to the performing art and the fine art.[1]

    The term “useful Arts” is used in the United States Constitution, Article One, Section 8, Clause 8 which is the basis of United States patent and copyright law:

    “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;…”

    In the clause, the phrase “useful Arts” is meant to reference inventions, while “Science” is meant to reference human knowledge, including[citation needed] that which is encompassed in literature and the “fine arts”.

    In his dissenting opinion in In re Bilski,[2] Judge Mayer criticized the majority for not addressing the preliminary issue of whether the claimed invention was within the useful arts. In Mayer’s view this should have been dispositive, because he considered the claimed business method not to be within the useful arts. In the same case, Judge Dyk filed a concurring opinion to similar effect.[3]

  31. Ted,
    It could also be a design around the previously patented method of encoding the warranty information in the device itself.