When the United States Supreme Court decides Microsoft v. i4i, which should happen sometime before the Court recesses in June 2011, we may have a very different patent landscape. By now most probably are aware of the fact that the Supreme Court has been asked by Microsoft and a swarm of amici to reduce the standard of proof necessary to invalidate patent claims. By definition a patent claim that is easier to challenge is one that is weaker, so don’t be fooled by the pretenders who dismiss this case as meaningless and charge the patent community with crying wolf. Anyone who isn’t willing to admit that lowering the presumption of validity will have extremely negative implications for innovators as a result of weaker patent rights is either not paying attention, isn’t very knowledgeable about patent law or simply has an agenda.
But what are the consequences? In addition to weaker patents making it easier for competitors to ignore patent rights and engage in infringing activities, there is a real possibility, if not probability, that it will become harder to come by funding for start-up technology companies that are seeking to build on an innovative foundation through the use of proprietary (and patented) technology. Investors love patents because they provide a competitive advantage, which allows companies that invest in developing innovation to realistically have an opportunity to recoup funds expended on research and development and turn a profit. It will also create an enormous burden on the USPTO and tax the already inadequate IT systems.
Those companies that are urging the Supreme Court to make a change don’t need the patent system any more because they have an enormous competitive advantage due to their market dominance, which translates into an overwhelming percentage of the market share in their industries. Companies like Microsoft no longer really innovate, and could easily get by with significantly weaker patents. Sure, they get patents but most of what they protect are incremental advances. They also get sued with some frequency, so making it easier to challenge patents comes with no downside from a business perspective, only upside.
Over the last several decades Microsoft has famously been chasing those first to the market, sometimes catching and surpassing them while other times barely treading water. No one argues that big companies like Microsoft are innovators because they are not. They copy and sometimes make better, but innovation of paradigm shifting technologies, the ones we supposedly want because they are worthy of the mantle of a patent, are made by start-up companies that are not married to a particular product line, way of thinking or overburdened with bureaucratic red tape that prevents good ideas from getting a green light. So the negative consequences of a weak patent system matters not to those that already dominate, but for those who innovate and don’t already enjoy market domination.
One of the proposals the Supreme Court will consider is that prior art considered by the patent examiner, or perhaps at least submitted to the Patent Office, be afforded a higher lever of deference; a clear and convincing standard applying to when claims are to be invalidated using that “considered” prior art. A lower standard, a preponderance standard, would apply when prior art is not considered by the patent examiner. This is ridiculous. Those who do patent searches find hundreds if not thousands of patents that are dismissed and never included in any search report because they are not relevant, marginally relevant or cumulative with respect to what has been found. So in truth every patent that comes up during a patent search has been considered, perhaps not appropriately so in hindsight, but to focus on those patents that make it to the patent search report and are actually checked-off and read by the patent examiner ignores the truth about patent searching. It also refuses to give the Patent Office appropriate deference it is due under the law for the decisions it makes.
But what else is at stake? The United States Patent and Trademark Office is already overburdened with a slightly less than ridiculous level of patents in the backlog. There has been modest progress made within the system thanks to Team Kappos, but without funding and resources there is only so much even the creative Kappos can do. But what if the law were to change in a way that causes patent prosecution to come to a grinding halt? What if the law were to change so that applicants had to file tremendous amounts of new paperwork with the Patent Office and then fight tooth and nail to get examiners to consider that voluminous information? We are likely to find out what will happen and it is not good.
If the standard changes you can bet that every patent attorney and patent agent who is working on an invention with real commercial promise will submit a voluminous information disclosure statement (IDS), or perhaps voluminous and multiple information disclosure statements. An IDS is how we tell the Patent Office about material we know to exist and believe is relevant. So to make sure that everything known is “considered” the USPTO had better be ready to accept dump truck sized disclosures. In fact, that is already happening.
At the Innovation Alliance conference on January 21, 2011, I asked USPTO Director David Kappos what burden would be placed on the Patent Office as a whole and the examining corps in particular if the Supreme Court does what we expect it will do, which is lower the burden. I asked the question in leading fashion, pointing out that everyone expects patent attorneys to simply file inordinately large information disclosure statements. His response was, in part, to point out that a 1000 page IDS in an application could become the rule and the Office is already dealing with just such an application. Kappos explained:
I am quite concerned, and my colleagues here from the USPTO share the concern, that if the burden of proof were lowered we would indeed, almost certainly, be facing a tremendous influx of very marginal value, perhaps no value, prior art that would put a lot more pressure, and unneeded pressure, on our examing corps and all of our delicate systems at the USPTO without adding value to the examination process. I think it would pretty clearly be incumbent upon applicants to protect their innovations by trying to get pathologically relevant art, irrelevant art frankly, in front of the agency in order to be able to protect their clear and convincing standard. It would be very nature for that to happen and I wouldn’t hold anything against anyone from doing that if the law motivated them to do it. I do not think it would be good for our agency. I think it would be a real problem.
I was talking to some folks at the PTO the other day and they were telling me about a thousand page IDS that we are dealing with in one particular matter. A thousand page IDS. This is the information disclosure statement, not all the prior art. The prior art occupies boxes. I think we could well be looking at a lot of thousand page IDS-es in the future as a result of the possible changes here.
A 1000 page IDS? With dozens of references disclosed per page, even if each reference is only 20 pages (which seems a low-ball estimate) you can easily see that the amount of data pushed into cases will grow to a ridiculous level. Of course, in the less than 20 hours of time that patent examiners get on average to deal with a file they won’t read those references. For crying out loud they won’t be able to read the IDS which just provides citations. Patent attorneys will struggle with patent examiners to make sure they check the box as having considered the critical patents, and that fight alone won’t be an easy one. We will enter uncharted waters in terms of the relationship dynamic between patent attorney and patent examiner, with attorneys asking or even demanding for things no patent examiner could ever do. The Patent Office IT systems also have absolutely no hope of standing up to the data demand. The IT systems are famously laughable; even President Obama himself has pointed that out specifically. Truthfully, the data that will be pushed at the Patent Office as a result of a lowering of the burden would tax even the most sophisticated IT systems, so imagine what it will do to the USPTO IT systems.
Several years ago Harry Moatz, who is the Director of the Office of Enrollment and Discipline, released word that patent attorneys who filed extremely large information disclosure statements would be investigated as engaging in unethical behavior. The statement by Moatz was really irresponsible given the development of the law of inequitable conduct, but a threat from the ethics police is always something one needs to be considered. Director Kappos suggested he, and therefore the Patent Office as a whole, will not hold anything against any patent attorney or agent that does what they think is necessary to address changes in the law. That is a good thing indeed, particularly since more 1000+ page information disclosure statements will likely become the norm.
It is impossible to know for sure, but it is reasonable to assume that the 1000+ page IDS Kappos referred to might be in response to what the Supreme Court will likely do. The Supreme Court doesn’t seem to like to apply changes in the law prospectively, even radical changes as this would be. So if they do lower the burden the changes will be applied retroactively and affect (and infect) issued patents and pending patent applications. With that in mind, those with patent applications pending might want to anticipate the worst and file “everything made by man under the sun” information disclosure statements. That way you will be protected if the Supreme Court says there is a reduced standard for invalidating patent claims when prior art was not submitted to the Patent Office.