Panelists Warn Senate IP Subcommittee Against Drastic Measures on Patent Quality

By Eileen McDermott
October 31, 2019

“In my view there’s no single issue that’s more important or more damaging to the patent system today than the fact that nobody has any idea what a patent means until you spend eight years and $10 million litigating.” – Professor R. Polk Wagner

The Senate Judiciary Committee’s Subcommittee on Intellectual Property, headed by Senator Thom Tillis (R-NC), yesterday heard from five witnesses on ways to improve patent quality at the U.S. Patent and Trademark Office (USPTO). Suggestions ranged from fixing patent eligibility jurisprudence to strengthening efforts on international work sharing, increasing patent application fees, and allotting more time for the examination process. The majority of panelists warned against the dangers of using patent quality as a means to simply block broad swaths of patents that particular industries or entities don’t like, and emphasized that clarifying U.S. patent law would likely go a long way to curbing invalidation rates.

Tillis opened by reminding those listening of the Subcommittee’s work—this was the tenth hearing on intellectual property this term, but the first on patent quality. While Tillis acknowledged that “many good, high-quality patents are being improperly invalidated under section 101,” alluding to the “madness” of the recent Chamberlain decision, in which a garage door opener was found abstract, he said that poor quality is still an issue that needs to be addressed:

“I believe that some patents are being issued that clearly have prior art and novelty/ non-obviousness problems under [Sections] 102/103 and definitely have scope and written description problems under 112. It’s wrong to put applicants through the rigorous examination process only to grant a patent with defects and flaws. It’s unfair to licensees who are building businesses around licensing a product that potentially never should have been patented, and it’s unfair to the American public, who tolerate time-limited monopolies in exchange for truly innovative inventions.”

How the USPTO is Addressing Quality

Drew Hirshfeld

The hearing’s first witness was Drew Hirshfeld, Commissioner for Patents at the USPTO. He told the Subcommittee that the USPTO’s most recent Patent Application Perception Survey showed the highest perceptions of patent quality since the survey’s inception 12 years ago, that pendency is at its lowest since 2002 despite applications doubling since that time, and applauded the technical expertise of the Office’s 8,300 examiners. Some of the major challenges facing examiners, however, are the need to “navigate changing jurisprudence in the constraints of a rigorous production system,” and the ever-expanding universe of prior art. The USPTO is actively pursuing initiatives to improve patentability searching and streamline examination, including through the issuance of guidance of Section 101; adjusting examination times; development of a new docketing system, to be implemented by October 2020; and enhanced automation tools, including using artificial intelligence for examination. Hirshfeld told Tillis that new filings increased by 4.9% this fiscal year, and that the current examiner-to application ratio was a good one, but that the Office still plans to hire about 600-700 examiners in the coming years to account for attrition.

During questioning, Senator Chris Coons (D-DE), the Subcommittee’s Ranking Member, asked Hirshfeld if freeing up examiner time spent on unraveling patent eligibility jurisprudence would potentially help to improve patent quality. Hirshfeld said that, while in recent years training and re-training on eligibility law has been one of the Office’s biggest struggles, the January Section 101 guidance issued by USPTO Director Andrei Iancu has “gone a long way.” He added: “The more clarity we have in the whole system, that would free up time on other issues. Before the guidance, we were having to give examiners more time for 101 analysis. We’re in a much better place now.”

Attempts to Isolate Quality Could Undermine the System

Professor R. Polk Wagner of the University of Pennsylvania Law School kicked off the second panel, which Hirshfeld joined, with a clear warning to the Subcommittee:

All too often ‘poor quality’ is deployed as shorthand for patents I don’t like or that might be used against me rather than as a useful description of a specific systemic problem.  While I agree there are certainly too many patents that don’t meet the standards…advocates of patent quality describe a set of reforms that generally center around issuing far fewer patents in particular industries, and this I think would be a mistake.

Wagner, whose research has shown that even small changes can result in a significant drop in participation in the patent system by small entities, said that such measures could cause the pendulum to swing too far in favor of large and established firms at the cost of startups and individuals, and that some solutions could be counterproductive. For example, “One could make standards for patentability so high that almost no patents got issued. Those patents would be in some sense high quality, but that would undermine the entire system,” he said.

Wagner noted that “nobody worldwide has quite figured out” how to maximize quality and efficiency at the scale the USPTO is working on, and said that the Subcommittee should pay more attention to the current incentives applicants are being given. “Right now, unfortunately, because of some case law, many patentees have incentives to make their patent documents as unclear as possible in order to get what they think is the most advantageous patent for their own circumstance.” He added that a reluctance to amend and claim construction are other areas that must be addressed. “In my view there’s no single issue that’s more important or more damaging to the patent system today than the fact that nobody has any idea what a patent means until you spend eight years and $10 million litigating,” Wagner said.

Changing Examiner and USPTO Incentives

Professor Melissa Feeney Wasserman of the University of Texas at Austin School of Law spoke next. Wasserman recently briefed congressional staffers on her proposals for improving patent quality, which are based on findings she and Professor Michael Frakes of the Duke University School of Law laid out in their paper, Irrational Ignorance at the Patent Office, recently published by Vanderbilt Law Review. Wasserman is a proponent of increasing fees as a means of reducing incentives to grant patents, since issuance and renewal fees currently only apply if a patent is granted. Wasserman said that current front-end application fees do not cover the costs of examination time and that the Office is too heavily dependent on these back-end fees. Her proposal would raise initial fees for large entities by about $3,000 and abolish issuance fees.  Wasserman also expressed concerns about the U.S. system’s use of continuations, which she said mean the agency can never truly reject an application, and proposed increasing the amount of time provided for examiners to review applications. On average, examiners spend 19 hours reviewing an application, she said, and may feel pressure to allow an application within that time frame under the current system. “As examiners are given less time to examine, they’re more likely to grant patents,” she said.

Focusing on Better Prior Art Searches

Teresa Stanek Rea of Crowell & Moring and former acting and deputy director of the USPTO, opened by saying she never uses the phrase “bad patents.” “The strength of a patent depends on perspective,” Stanek Rea said. “There have been times when groups of patents have been declared invalid, but most often because of substantial changes in the law. It’s not useful to say that a particular patent is bad without providing context.”

She added that we should not be relying on post-issuance review of patents to ensure quality and emphasized focusing on international work sharing options and the global dossier, as well as the crowdsourcing opportunity presented by the America Invents Act for third parties to identify potentially relevant prior art “We need to encourage third-party submissions, because [the program] is not as robust as anticipated,” she said.

The final panelist was Professor Colleen Chien of Santa Clara University School of Law. Chien’s chief concern was examiners’ access and attention to prior art vetting.  While examiners are good at looking at prior art patents, they often don’t expand their prior art searches far enough out into the non-patent literature, Chien said. She added that the Office should take seriously  the robustness of prior art searching and create a metric that would include all of the different sources of prior art. Pointing to the European Patent Office (EPO) as a model, she explained that despite its lower grant rate, slower timings and higher fees, applicant satisfaction is higher at the EPO. Chien said the EPO’s bifurcated process, which includes a front-end prior art search that comes back to applicants before the full examination process proceeds, helps applicants to feel more in control of outcomes.

Chien also proposed that, since many industries use patents for purely defensive purposes, one option is to separate such patents by providing a “defensive-only” option for patent protection. She exhorted Congress to “continue focusing on what is important, not just what’s urgent,” explaining that, while Section 101 law deserves serious attention, patent quality is also extremely important. “What I’m seeing right now is that policymakers are debating drastic changes, like expanded use of march-in-rights, but not patent quality,” she said.

Back to the Drug-Pricing Debate

Senator Richard Blumenthal (D-CT) asked the panelists to comment on whether patent quality is a factor with respect to the phenomenon of “patent thickets” and “product-hopping” in the pharmaceutical industry, which have been chief focuses for Blumenthal this term. Wagner responded that “the patent system gets a bum rap for some of the behaviors of the pharmaceutical industry” and that it’s actually the interaction between patents and the Food and Drug Administration’s approval process that can create holdups and tie-ups. Hirshfeld added that the USPTO is equipped to prevent the improper extension of patents, but that “when there’s a great deal of innovation around a particular pharmaceutical that could lead to multiple patents, that is innovation that is bringing more drugs to consumers, and that needs to be taken into account.”

Stanek Rea, a pharmacist, bolstered this argument, saying that a patent thicket is very difficult to define, as innovation on a new molecule is desirable and should be encouraged. “If I can take [a drug] once a week instead of four times per day, patient compliance is going to be better. We have to look at the individual patents at issue,” she said.

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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 16 Comments comments. Join the discussion.

  1. Chris Takacs October 31, 2019 11:25 am

    great recap. Thank you Eileen. Find Prof Chien’s remarks about front-end prior art search to be compelling. I hear more about filing applications without completing a search because you don’t want to “do the work for the examiners”. Would be interesting to see if this shift would improve quality and emphasize why the idea is different from what exists.

  2. concerned October 31, 2019 12:26 pm

    While Tillis acknowledged that “many good, high-quality patents are being improperly invalidated under section 101,” alluding to the “madness” of the recent Chamberlain decision, in which a garage door opener was found abstract”

    What about the entire Social Security Administration’s computer network that nationally sends out millions of payments per month and a companion network rooted within that corrects its eligibility errors? Are those abstract thoughts in someone’s mind?

    Right now it is the wild west’s principle of “Shoot first with s101, ask 102,103 and 112 questions later.”

    Fix s101 first, then perhaps the other issues will get appropriately addressed under 102,103 and 112.

  3. Benny October 31, 2019 1:36 pm

    I agree that the USPTO needs to improve its’ prior art searching. A knock on effect, if they can do this, would be a reduction in the application to grant ratio, which would discourage many applicants at the outset.

  4. BP October 31, 2019 2:11 pm

    As part of a continuing strategy to avoid RICO under protection of Noerr-Pennington, mouthpiece for illegal monopolies, Prof. Wasserman recommends: “increasing fees as a means of reducing incentives to grant patents”.

    The illegal monopolies push their judicial and regulatory anti-competitive agenda to further raise barriers (at the expense of those other than her handlers) to potential entrants in her handlers’ markets. She uses Texas state taxpayer dollars to lobby for ever-increasing barriers to those her handlers despise. Who paid for her travel/stay in DC? Was it department funds at UT Law?

    We need transparency in her funding, what she refers to as “peer-review” (i.e., “who you know”), and in the agenda at the Texas legislature that already makes it quite difficult for starts-ups in the State of Texas.

    Texas was awoken by ED TX, which scared Apple out of UNT. So, Apple is opening other university stores in the UT System far from ED TX, like in the Rio Grande Valley to skim the grant/loan money off the largely Hispanic community at the border. Look at Apple’s hiring of Hispanics (and women too Prof. Wasserman!).

    The issues with Prof. Wasserman and her institution’s coddling of Apple are many. Apple injects its “Brand Ambassadors” into dialogs of what should be authentic “shared governance” between free thinking, honest academics and UT as an institution.

    Indeed, having your winter vacation cut short, rearranging airline tickets (at the faculty member’s expense), etc., to be at a sudden, impromptu departmental meeting run by an Apple Distinguished Educator (ADE), i.e., Apple Brand Ambassador, is what Prof. Wasserman stands for. That makes me vomit, especially when an actual, in-the-flesh Apple employee is there to make sure the free thinking, honest academics know who is in charge!

    Prof. Wasserman needs to be viewed in the light of day, I welcome a response, particularly an explanation as to how/why Apple employees are allowed on UT campuses to dictate what professors think and do and whether she “advised” Apple to pull out of UNT and open at other UT campuses outside of ED TX.

  5. Night Writer October 31, 2019 2:42 pm

    >>Find Prof Chien’s remarks about front-end prior art search to be compelling

    Maybe there is an argument for doing the same way as the EPO. But let’s not forget that what Chien is also talking around is trying to shift the burden from the PTO to the applicant. This is one of the anti-patent groups themes of trying to weaken patents. The idea is to remove the expert nature of the search from the PTO by shifting the burden to the applicant. This is also comes up trying to remove the presumption of validity. Chien has argued to remove the presumption of validity for references that were not explicitly cited by the examiner, which is absurd and counter to how experts work.

  6. Night Writer October 31, 2019 3:29 pm

    And I’ll say it again. The way to improve quality includes the following:

    (1) Move the entire PTO to a place like Pittsburgh.
    (2) Bring back TSM so that objective reviews can be performed.
    (3) Better allocation of applications so that examiners focus on small areas to become experts.
    (4) Probably some form of evaluation of the examiners work and/or searches performed by contractors. The idea is that the elements of a claim and reasons for combining needs to be formalized.

    You will note that most of what is said by the “experts” is really about weakening patents. They obviously don’t understand patent prosecution. @BP 4: I’ve read a number of papers by these experts and believe that they have committed ethics violations, but the problem is that the law schools don’t care.

  7. Ternary October 31, 2019 5:10 pm

    As to Prof Chien’s remarks. As an independent inventor I have no interest in a “weak” patent. Especially not a patent that can be invalidated by prior art that is relatively easy to find. I do extensive prior art searches and both in patent and non-patent literature. When I find relevant prior art that is too close, I do not file the application or I focus on a specific aspect that seems to escape prior art.

    The system is too expensive and chaotic to screw around with and to incur the enormous cost of post-issuance trouble. In fact, I am more concerned about being invalidated over 101 issues that are mostly arbitrary and unpredictable, than with prior art. Eligibility is an issue that has to be addressed. Urgently. Don’t distract from the real issue here.

    Prof. Chien still seems to live in the world wherein it was beneficial to get a patent. Wake up Professor! That time has long gone. Your comments are mostly irrelevant to independent inventors. Right now, an inventor who pursues a patent is most likely to be confronted with the questions: Why do you do that? Don’t you know that a patent has no value?

  8. Anon October 31, 2019 5:23 pm

    Benny,

    A knock on effect, if they can do this, would be a reduction in the application to grant ratio, which would discourage many applicants at the outset.

    No.

    The application to grant ratio does not discourage applicants at the outset.
    You should check your rather recent history during and immediately after the Dudas Reject Reject Reject era.

    Lesson there: if the ratio is artificial, applicants generally persevere (although certainly, a fair number drop out). If the ratio is not artificial, applicants generally adapt.

    Once again, your views come across in a very “Efficient Infringer” mantra type of way.

  9. BP October 31, 2019 5:27 pm

    @6, Thanks Night Writer. I’ve seen some of these charlatans speak and I’ve talked to a few.

    I personally do not see “patent quality” to be a major issue. Though, if you are a clerk for a Fed Cir judge, maybe that’s all you see. And, then when a monopoly offers you $$$/titles, it’s easy for you to promote that position.

    Time to pull it out and see the bigger picture. Prof. Wasserman can start by giving up “research” to advise independent inventors on a pro bono basis. But what could she really say that would be of any value? “You’re at the Fed Cir now because you got a $20+ million dollar jury verdict on a ‘poor’ quality patent that withstood multiple invalidity challenges while being litigated for four years in front of one of the top district court judges in the world . . . good luck because the Fed Cir has clerks like me, we simply don’t care, we answer to ‘higher powers'”. At least that would be true.

  10. Pro Say October 31, 2019 6:16 pm

    Knock knock Congress; it’s Halloween.

    American innovation is at your door.

    Is it going to receive a treat . . . or a trick from you?

    The treat is of course the unadulterated restoration of patent eligibility.

    The trick is falling for FAANG, their innovation-stealing compatriots, and their shills; wailing like banshees that if you restore American innovation leadership by restoring eligibility . . . that you at least also mangle Section 112 and make other patent-killing changes they want.

    As our Country’s innovation leadership hangs in the balance, the choice is yours.

    As you know by now, consensus between and among the various stakeholders is impossible.

    You simply have to choose to step up, stand up, and get over it.

    ‘Cause it ain’t gonna happen. Not today. Not tomorrow. Not ever.

    You either shut out the noise of the patent haters and do what you know in your collective hearts to be right for our Country.

    Or you don’t.

    So what will America find in it’s Halloween bag tomorrow morning?

    A treat . . . or a trick?

  11. B October 31, 2019 10:17 pm

    Off the topic, has anyone read the recent Judge Moore decision holding that APJs are NOT inferior officers and that apparently every APJ lacks the authority to issue a written decision depriving a patent applicant rights to a patent?

    There are two issues to consider: (1) whether the APJs had the authority to make a written decision taking away patent rights; and (2) whether the courts will consider the issue.

    Obviously, under the CAFC ruling, the APJs have no inherent power. The following issue is whether waiver applies, i.e., whether an appellant waives the issue by not raising it. Courts are allowed, but not required, to take up issues even if waived. However, in some instances waiver cannot apply. For example, you cannot waive jurisdiction.

    This holding will raise hell. FYI, the USPTO has already taken off information on becoming an APJ from its website.

    Maybe removing all the knuckleheads from the PTAB will improve patent quality. Not all APJs are knuckleheads, but far too many are.

  12. Anon November 1, 2019 9:04 am

    B,

    I think that the folllow-on post regarding the APJ situation is excellent.

  13. VPLM November 1, 2019 9:42 pm

    Question for the board: With two successful IPR challenges won at PTAB, how far should that take a patent holder in later battling an Alice challenge at the U.S. District Court level? In other words, in the full, year+ long IPR trials, are Alice issues generally addressed?

    Thank you in advance.

  14. PTO-Indentured November 2, 2019 3:20 pm

    Congress: Goals organize behavior

    Goal: Set in motion ASAP a clear path to patent equality / fairness.
    End the overt double-standard bias / caste system — demonstrated time and again since the unleashing of the PTAB — to favor companies that are blatant multi-nationalists proving they owe no loyalty to, and operate above, the likes any one country (e.g., the one whose first two names you’ve been elected to serve).

    Reestablish the fighting chance U.S. inventors had prior to the PTAB, they’re the proven innovators not the big-co.s. Don’t believe me? Look at doted on Apple since the PTAB began, or over the past decade. What’s their unique IP contribution / where’s their next BIG thing in the U.S. tech market? Over all this time, incrementalist CEO Tim Cook saw to it we got a one-inch screen ‘iWatch’ (released concurrently amidst a stampede of fifty other watch wearables all struggling for some sort of differentiation).

    Remember too: ‘Langley’s Folly’, who after receiving an order of magnitude more funding from the U.S. government — relative to the Wright Brothers’ own funding — while at the top of his game prestige-wise, could only come up with an uncontrollable aircraft, seemingly preferring to operate more like a submarine, deep in water. There was no doubt, that the Wright Brother’s aircraft could literally fly circles around Langley’s ‘submarine’.

    Let all innovators win and the U.S. patent system will win again, like they did before the PTAB’s ruination of U.S. patents.

    Goal: Judge the (PTAB) tree by the fruit it wasted, ruined.
    Cite even one year out of all since the PTAB began, when the PTO was unquestionably doing better / operated as a stronger patent system than before the PTAB. Can’t find one? It is the PTAB (well, let’s be a little more pointed: the APJs making up the PTAB) that wasted thousands of U.S. patents. Note that it’s the same APJs that have all just been deemed by the FC to have been unconstitutionally appointed (and since, practicing thus).

    Goal: Prevent fees paid by Applicants from being purloined for non-USPTO purposes. The USPTO has shown itself to be one of the top essentially self-funding government entities in the past, keeping up with patent application prosecution — up to when it coffers were (seriously) dipped into, significantly diminishing prosecution effectiveness.

    Goal: Note that the character of the U.S. individual inventor/innovator often comprises the qualities of fearlessness, tenacity and efficiency, these qualities — in certain respects best qualities of Americans — when allowed to effectively be put into practice, when duly respected, encouraged and rewarded, are what has fueled innovation in the United States, not a mere incrementalism we’ve seen attributable to corporations / entities absent these empowering, special human qualities.

    Goal: Give U.S. inventors once again, a fighting chance to win for America, and you will not see replicated the USPTO (Langley aircraft like) nosedive wrought by the AIA and PTAB. To the contrary, you will see U.S. innovation take flight once again, and see it literally flying circles around timidity induced baby-stepping incrementalism.

  15. Model 101 November 2, 2019 4:04 pm

    “While Tillis acknowledged that “many good, high-quality patents are being improperly invalidated under section 101,” alluding to the “madness” of the recent Chamberlain decision, in which a garage door opener was found abstract, he said that poor quality is still an issue that needs to be addressed:”

    The face of Senator Tillis looks beat up in the Senate Hearing videos. He either got punched in the face by FAANGM for saying the quote above and advocating for 101 reform or he has some new dirt on the Clintons.

    Doe anyone know what happened to him?

  16. Night Writer November 5, 2019 9:38 am

    So they have mainly people that have done no prosecution and probably couldn’t even read a patent if their lives’ depended on it.

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