The Myth of Patent Quality

By Neal Solomon
July 25, 2017

EDITORIAL NOTE: This is part 1 of a multi-part series that will publish over the next three weeks.

The U.S patent system has been under attack for about a decade. One of the main justifications for changing the patent system has centered on the issue of patent quality. According to patent critics, patents are bad or low quality, justifying major changes to the patent examination and review system.

I argue that patent quality is a proxy for attacking patent validity, which has a complex history. Patent critics, particularly market incumbents, obtain a free ride when the bar is set low to attack patent validity. The changes to standards for patent obviousness have been a core source of lowering the standards for patent validity. The recent Inter Partes Review (IPR) program has overzealously applied the weak obviousness standards, causing a broad range of problems for innovators.

The false big-tech narrative that attacks patent quality has unduly undermined the patent system, with numerous adverse consequences. The introduction of IPRs pushes patent validity determinations out of the federal courts, which enable due process, into a politicized administration agency that generally denies due process for patent holders after a patent is presumed to be valid from the original PTO examination and grant.

The introduction of after-grant reviews, based largely on the myth of patent quality, have been used to justify wholesale changes to the patent system that deviate dramatically from validity tests the courts have applied for over a century.

The increase in transaction costs to defend a patent in after-grant reviews and in enforcement, after challenging free riding efficient infringers, alters the economics for innovators and market entrants, with a tendency to diminish patent valuation. While once market forces were key determinates of an invention’s value, artificial factors associated with reproving patent validity that originate with the false narrative of bad patent quality, have altered technology economics and have ultimately diminished incentives to invest in technology, with adverse consequences to productivity growth and aggregate economic growth.

A Brief History of the U.S. Patent System

Originally conceived as a grant from the King of a monopoly to inventors as early as the 14th century, patent laws originated in Venice in the 15th century. Inventors were entitled to an exclusive right to their inventions, supplying the economic model for a temporary economic monopoly in exchange for a publication of an original invention. In 1624, the English Statute of Monopolies further developed a coherent mechanism for granting limited monopolies for inventors rather than relying on the whims of the sovereign. In contrast to the first patent laws in England, the French focused in 1791 on patent laws that emphasized the liberty of the inventor and the private property aspects embedded in the invention.

When the U.S. Constitution was ratified in 1790, one of the first laws of the young country was the Patent Act of 1790. Into the Constitution itself was embedded the intellectual property clause in order to supply inventors with “exclusive rights” to their discoveries for “limited times” thereby tracking both the British limited monopolies approach and the French private property rights approach. The Patent Act of 1790, just months after ratification of the Constitution, supplied a 14 year term of exclusive right in a patent because it often took many years to commercialize an invention. In addition, foreigners were not allowed to obtain a U.S. patent. Only the Secretary of State, the Secretary of War or the Attorney General were allowed to grant a patent. However, according to the statute, each patent application required examination in order to assess its originality and utility, which was time consuming. Only 55 patents were granted in the three years of activity of the 1790 Act.

Because of the complications of the first U.S. patent statute, Congress passed the Patent Act of 1793. The application process was simplified by seeking an examination from the Attorney General by a request to the Secretary of State. The standard of review was changed to “any new and useful art, machine, manufacture or composition of matter” and did not include the criteria of utility, which the market could resolve. The challenge of examining patents initially fell to the Secretary of State, Thomas Jefferson. Though he personally investigated some early patent applications, he eventually hired experts to examine patent applications for prior art and novelty. The demand for patent applications outstripped the supply of examiners and problems arose when applications were not sufficiently examined. For example, patents were eventually granted to devices and discoveries that were neither original nor useful. Consequently, many cases landed in the courts in fights over patent validity and infringement. Over ten thousand patents were granted under the 1793 Act.

The Patent Act of 1836 created the Patent Office, originally in the Department of State, required regular publication of patents to disseminate information to libraries nationwide, enabled a 7 year extension of the original 14 year term and allowed foreigners to apply for U.S. patents. In 1849, the Patent Office, with its own Commissioner of Patents, was moved to the Department of Interior, perhaps to free the Secretary of State to focus on international matters.

The 1836 Act saw the U.S. through the Civil War, the move from agrarian society to industrial economy, the World Wars and Great Depressions. Various statutory amendments and Supreme Court rulings modified elements of the 1836 Act, but this single statute was largely responsible for the dramatic growth of the U.S. economy by embedding property rights in patents that encouraged original invention. The U.S. democratized system of invention was contrasted with the European aristocratic system, whereby any workman on the shop floor could invent in America, while the European system was extremely expensive and exclusive only to the domain of the elite.

By the end of WWII, however, the 1836 Act was atrophying, thereby requiring an update from Congress. The Patent Act of 1952 created the first modern patent system that we would recognize today, with a Patent and Trademark Office in the Department of Commerce. In addition to novelty and usefulness, a patent was also required to be “non-obvious,” a concept invented to prevent inventors from patenting well-known discoveries.

In 1982, the creation of the Court of Appeals for the Federal Circuit in the Federal Courts Improvement Act consolidated federal appeals involving patents to a single appellate court. This consolidation of patent matters to a single court enabled national uniformity. During the 1980s and 1990s patents were highly valued and the U.S. is generally regarded to have witnessed an economic renaissance during this period largely because of the market dynamics enabled from the strong patent system. Productivity growth increased at high historic rates and the economy grew remarkably during this period, which led to the culmination of the Patent Act of 1999, the American Inventors Protection Act, intended to protect inventor rights.

With intense influence of the big tech cartel, Congress passed the Patent Act of 2011, the America Invents Act, which was largely written by large technology company lobbyists. With consensus from both parties, the congressmen followed the big tech narrative completely in order solve two main perceived problems in the patent system. First, the Patent Office was issuing bad software patents that were overly vague and impinged on big tech operations. Second, the problem of “patent trolls,” conceived very broadly as companies that did not manufacture goods but rather licensed patents, needed to be controlled.

The solution to these perceived problems was creation of a second window of patent examination in the Patent Office in the form of post-grant reviews, including Inter-Partes Review (IPR), Post-Grant Review (PGR) and Covered Business Method (CBM). All of these post-grant review procedures were organized in the Patent Trial and Appeal Board (PTAB) within the PTO.

CLICK to CONTINUE READING… UP NEXT… discussion of how patent quality relies on a fictitious narrative.

The Author

Neal Solomon

Neal Solomon is CEO of Advanced System Technologies Inc. A prolific inventor of technologies involving semiconductors, communications, data management, imaging, robotics and healthcare, he holds degrees from Reed College and the University of Chicago.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 33 Comments comments.

  1. Night Writer July 25, 2017 9:22 am

    The Googles are continuing to pour money into to DC. They have been wildly successful at weakening patents and are drunk on their success. Talk isn’t going to change this. The only thing that will change this is real statistics about how it is hurting the US. Unless the US goes into a recession and it is blamed on the change in the patent system, then things aren’t going to change.

    The only other way things may change is if pro-patent lobbyist start spending as much money as the Googles and even then remember that the SCOTUS hates patents and the CAFC is filled with Google selected judges.

  2. Tesia Thomas July 25, 2017 10:37 am

    People need to realize PTAB doesn’t fix the supposedly poor examination.
    Hence, every patent issued for the past 20 years (at least) was poorly examined.

    Why aren’t all of these prior poorly examined patents going to PTAB, the great patent quality rectifier?

    Why do companies get to cherry pick the poor quality patents by filing IPRs on only some selected patents that they are biased against (IPR after accused of infringement)?

    Why is the Software Cartel still paying for poorly examined patents? And NOT PAYING for IPR on each others’ patents?

    AIA is an ex post facto law that only applies to cherry-picked patents.
    It needs to be all or none.
    Laws should not be applied to only some hand-picked things. That in and of itself should make it unconstitutional.

    The same examiners who examined the patents that are invalidated in IPR examine the Software Cartel’s patents.
    People don’t get to pick their examiner. It’s random.

    If the Software Cartel thinks USPTO examiners suck so much then why aren’t they protesting by not paying the filing fees that pay examiner’s salaries?
    They still file a ton of patents.

  3. Tesia Thomas July 25, 2017 10:43 am

    We need to employ Socrates on these backwards mofos and catch them in their hypocrisy, BS, and lies.

  4. Edward Heller July 25, 2017 8:48 pm

    Neal, you need to update your history. The first post grant re-examination occurred in 1980 with the creation of the re-examination system. Originally proposed by the patent office to implement its no-fault reissue procedure, someone added the ability of third parties to request re-examination. The rest is history. Once the door was open, infringers took full advantage. Once they got a taste of just how potent re-examinations could be, how they could tie up patent owners in the patent office for years, bleeding them of both money and treasure, the infringer lobby slowly began to widen their opportunities to engage the patent owner in these proceedings and to unlevel the playing field in their favor. Thus we eventually got IPRs.

  5. Edward Heller July 25, 2017 11:04 pm

    The final version of the Constitution was finished on September 17, 1787. I hardly think the founders were influence whatsoever by the French Revolution that have yet to take place, let alone their patent laws establish in 1790 and all that incessant babbling about the rights of man etc.

    But the crafters of the patent clause in 1787 had in mind by writing the constitutional provision the way they did – to “secure” exclusive rights to inventors – was to protect against the revocation of patents by any authority other than the courts of law and by a jury. The primary villain in this piece is Charles I, yeah that guy. He is the one who believed that he was empowered by God to rule over the English people. Eventually the fight between the English people and the King resulted in the English Civil War where he eventually lost his head. But prior to that, one of the very first acts of Charles was to nullify that portion of the Statute of Monopolies that guaranteed that no patent should be held void except by and under the common law. That meant in a court of law and with a trial by jury.

    The constitutional convention well knew of this history, and were acting to preserve the rights of inventors to have the validity their patents determined in courts of law and by juries.

  6. Benny July 26, 2017 7:10 am

    Patent quality isn’t a myth. It is a real problem, and I am sure that everyone who frequents this site has seen a patent claim which should not have been granted. The problem doesn’t lie in the rules or method, the problem is chiefly with patent examiners falling down on the job and performing less than thorough prior art searches, resulting in claims being granted for inventions that were publicly disclosed years before, or obvious even by the lowest standards.

  7. Eric Berend July 26, 2017 10:56 am

    The IP pirates sometimes called ‘efficient infringers’, themselves created the very problem; and then a false canard; of so-called “patent quality” – in the first place.

    http://www.ipwatchdog.com/2017/05/24/ptab-procedural-reforms-necessary/id=83651/
    Comment #22, Line 8: “Quit going to TED and giving talks on making society ‘accessible to all’ while you a) fund efforts to funnel all benefits of IP to you and b) fire hose massive volumes of applications at the patent office. ”

    The U.S. Constitutional patent system, was established to support all engagements with inventors, of every class and organizational size. These large corporations have distorted the use of these resources, denying proportionality to the smaller inventor entities. This essential aspect seems to have been lost, in what passes for debate, in this domain.

    Until it is more generally understood that the very companies lobbying for pirate-friendly changes to U.S. patent law, were the actual cause of whatever so-called “patent quality” problem that may exist, this topic will continue to labor under vast misconceptions – to the continuing, irreparable harm of small entity patent holders and inventors.

  8. Eric Berend July 26, 2017 11:00 am

    @ 5. ‘Edward Heller’:

    Thanks, this is useful, as a matter of original principles. Putting aside other, possibly valid objections to some of your legal assertions on this site; I appreciate your historical citations and references that reflect the ‘big picture’ of the formation of patent law jurisprudence, over some centuries beginning in English law and its continuation in U.S. law.

  9. Benny July 26, 2017 11:11 am

    Eric,
    Patent quality a false canard? I pulled up one at random – US6523982. Obvious? Nah. Who would have thought to put a hinge on a cover? You can imagine any manufacturer who wants to use hinged covers getting hot under the collar when reading that one. If you were an examiner, would you not find valid reason to reject that one?

  10. Tesia Thomas July 26, 2017 11:20 am

    @Benny,

    I don’t know. I looked at the patent and don’t think it’s obvious. The inventor basically made a hinged lamp shade that has no small parts and doesn’t require tools to open and change the bulb.

    You seem to think simple things are obvious.

    His description clearly identifies the novelty and non-obviousness in my opinion.

  11. Tesia Thomas July 26, 2017 11:21 am

    @Benny,

    Forks, cups, hairbrushes, etc are inventions the same as computers.

  12. CW5 July 26, 2017 1:11 pm

    Most innovation is carried out by small and medium sized businesses (“SME”). The big businesses then acquire these innovative SMEs to get access to their cutting edge technology.

    Patents are the only leverage SMEs have to induce the big businesses to pay money to acquire them. Without patents, big businesses can simply steal the cutting edge technology from the SMEs.

    Patents are also the only leverage SMEs have to be able to compete in the marketplace with big, well funded, entrenched businesses.

    Big businesses want a weak patent system because it will provide them with easy access to new technology they didn’t spend the money to invent themselves, and it will insulate them from competition from the smaller and more innovative businesses.

    Its time to dust off the antitrust laws and use them against the pirates that have wrecked the patent system over the last 10-15 years.

  13. Tes July 26, 2017 4:14 pm

    Hmm

  14. Tesia Thomas July 26, 2017 4:15 pm

    Is there something wrong with comments?

  15. Tesia Thomas July 27, 2017 8:39 am

    # of issued patents last 20 years= millions

    # of IPR = thousands

    So we’ve data that says only about 0.1% of patents are invalid.

    How is that sufficient?

  16. Tesia Thomas July 27, 2017 8:41 am

    Sufficient to say patent examination sucks.

    Examiners should write an amicus brief telling PTAB to check ALL of their work.

    Totally agree CW5

  17. Benny July 27, 2017 8:53 am

    Tesia,
    You should be looking at the total number of IPRs compared with the total number of patents whose value is greater than the cost of prosecuting an IPR. According to statistics Gene provided in the past, far less than 10% of patents meet this criterion. Also, many valuable patents are FRAND licensed, so would not normally be contested.

  18. Tesia Thomas July 27, 2017 9:46 am

    Doesn’t matter. They say examination is poor quality.
    Why does it matter how valuable?

    So you’re saying it’s only worthwhile to ipr a valuable, poor patent?

  19. Tesia Thomas July 27, 2017 9:53 am

    When you indicate that you’re only willing to cast doubt on lucrative IP then you’re saying it’s not about quality.
    Quality says we need to IPR everything that examiners touch because they suck.
    Valuable as the criteria says we don’t care about poor quality unless it’s making money.

    But that almost means anything valuable is assumed invalid because you want it to be.

    It’s bias.

  20. Benny July 27, 2017 10:08 am

    Tesia,
    I will IPR a poor quality patent that stands in my way because I can. If I can design around the patent, or if it protects an inferior solution to mine, then I don’t care. (there go 95% of the patents I meet). If the patent protects a truly novel and inventive concept, I have no grounds for filing an IPR and I will not waste my time and money chasing a lost cause.
    I realize many of the readers of the blog don’t like this attitude, but they are not in the business of creating and selling products so they have a different outlook.

  21. Tesia Thomas July 27, 2017 10:54 am

    @Benny

    Are you sure you won’t try to IPR the truly novel and valid concept?

  22. Tesia Thomas July 27, 2017 10:59 am

    It only costs $9,000 to press your luck.

  23. Anon July 27, 2017 11:00 am

    Benny,

    With all due respect, what you consider ” I will not waste my time and money chasing a lost cause” presumes far too much.

    It presumes that anything less than a “bad patent” being IPR’ed is a “lost cause.”

    Far too polly anna – even for someone in the business of creating and selling products.

  24. Tesia Thomas July 27, 2017 11:09 am

    @Anon

    Agreed. There’s no way in heck.
    I can afford to press my luck with an IPR right now and I’m a microentity.

    $9,000 for a shot at destruction is a pittance for large multinationals.

  25. Tesia Thomas July 27, 2017 11:21 am

    For a microentity, that’s 10% of income at least.
    For large multinational, the percentage wouldn’t even be on the left side of the decimal point.

  26. Anon July 27, 2017 12:09 pm

    Here’s a thought for patent quality:

    Have the US government provide a free service of confidential – and as rigorous as those bring IPR challenges, maybe even more so – prior art searching as a pre-submission service.

    Basically turn the first step of examination (and something the Europeans have typically done far better) into a starting point, or at least one of an input into the writing of a patent.

    Would this not be a better “bang for the buck” than ANY type of post-grant effort (which does not – and cannot – put any quality into a patent)?

    If the USPTO leadership wanted to sink their teeth into an imrovement, they would be looking at the process, the inputs to that process, and ways to, you know, improve the product.

    We have seen the dangers of a “just say no” mindset. I will be among the first (and have been) to warn of dangers of a “just say yes” mindset; but the Patent Office is responsible for not only examining and saying “no,” but supposedly is THE agency that is supposed to be about PROMOTING innovation.

  27. Benny July 27, 2017 1:33 pm

    Tesia,
    If I could invalidate a patent for 9000 bucks I would do one every third Monday, and more often if there is a full moon. In practice I would need nearly 10 times that sum. To file an IPR, though, I need a good cause, i.e prior art. I can’t just walk into an attorneys office, plunk down a patent, and say, waste it for me. If multinationals do that, maybe they have money to burn or dishonest in house counsel. Without prior art and a reasoned argument, I wouldn’t give my lords and masters take off clearance.

  28. Tesia Thomas July 27, 2017 2:04 pm

    “If multinationals do that, maybe they have money to burn or dishonest in house counsel.”

    Maybe they do.

  29. Damien July 28, 2017 10:08 am

    @Anon “Have the US government provide a free service of confidential – and as rigorous as those bring IPR challenges, maybe even more so – prior art searching as a pre-submission service.”

    … why not have the government provide free food and rent too? Also the government can provide R&D and then if its already patented the government can then also pay the royalties…

    Stupid government why arent you doing these seemingly obvious simple fixes!!

  30. Anon July 28, 2017 11:39 am

    Damien,

    You over-apply a single point that is the “contention” of “poor quality.”

    Examiners are going to be prior art searching ANYWAY, right?

  31. Silicon Valley Inventor July 28, 2017 2:57 pm

    This thread is a good microcosm of the situation…Benny finds a patent he claims is poor quality (without explaining why or seeming to understand it whatsoever) by making a generalization about hinges. He was rapidly corrected, but never acknowledged the correction or the implications. That’s similar to the court system that promotes patent reexamination. There’s no downside to wrongly requesting reexamination of a “poor quality” patent you don’t like.

    Examination on average results in 2-3 rejections before allowance. Benny simply has no clue as to the response by the patent attorney when the examiner rejected it 2-3 times while the patent moved through USPTO. Clearly those responses and any amendment of the claims reached a threshold where the patent was allowed. Benny is simply ignorant of this and thinks he knows better after two minutes than the patent attorney and examiner who spent many hours poring over the document and applicable prior art and law.

    It’s just too easy to say “poor quality” or “troll” and use generalizations to make ignorant people think you know what you’re talking about. There needs to be, if not an end to IPR, a serious consequence for abusing IPR challenges, like paying big fees to USPTO and paying for legal fees, increased licensing royalties and time and expenses of the challenged patent holder.

  32. Tesia Thomas July 28, 2017 3:17 pm

    @Silicon Valley Inventor,

    100% agreed

    People tell me all the time that they think my zipper’s obvious because it’s simple.
    Everything’s obvious after the fact.
    DoD, private competitors spent 60 years and billions of dollars not even realizing my invention was a possibility.
    Like, they didn’t come close. They iterated toothed fasteners and ziploc zip tracks, altering the shape.

    Simple isn’t obvious. It just means you don’t RESPECT it.
    Benny doesn’t respect hinged lampshades.

    Pencils were invented but now they’re everywhere.
    Paperclips, folders, tissue. All simple inventions that are ubiquitous.

    A simple invention that lasts 100+ years before becoming outdated is awesome!
    Evidence the inventor was a genius.
    I can’t live without tissue, paper towels, cloth wipe of some kind. But, I can live without a computer.
    The simple stuff is more closely a need than a want in my opinion.

    I respect the simple stuff.
    A lot of techies don’t. It’s not cool and shiny and expensive.

  33. John Fetter August 11, 2017 7:25 am

    Benny – Just happened to read your comments about US6,523,982. Very simple idea – in fact a ridiculously simple idea. An electrical garden fitting. Slipped effortlessly through examination. Did what it is supposed to do – the product made money – and then when a little over a decade old, the patent was sold to Philips Lighting – who evidently believed the idea was worth spending money on.