“Whether admitted or not, ‘closing the gap’ by any action of the USPTO affecting patent grant rate of demographically-favored applications, would necessarily mean relaxing the patentability examination standards for those applications. This would result in lower quality patents issued to inventors in such favored groups.”
As previously reported on this blog, a bipartisan group of senators recently reintroduced a bill in Congress called the “Inventor Diversity for Economic Advancement Act of 2021,” or the ‘‘IDEA Act,’’ S.632; H.R.1723. The Senate Committee on the Judiciary is scheduled to hold its hearing on the IDEA Act this Thursday morning. Citing a report that “only 22 percent of all U.S. patents list a woman as an inventor,” the sponsor’s press release explains that the bill’s purpose is “to close the gap that women, minorities, and others face when procuring patent rights in the United States.” To advance this putative goal, the bill adds Section 124 to the Patent Act that will require the U.S. Patent and Trademark Office (USPTO) to annually collect and report personal demographic data from patent applicants including “gender, race, military or veteran status, and any other demographic category that the Director determines appropriate, related to each inventor listed with an application for patent.” Accordingly, the USPTO Director would be granted plenary authority to collect information on “any other demographic category” such as those the sponsors have already identified in their previous version of the bill, namely: ethnicity, national origin, sexual orientation, age, disability, education level attained, and income level. See HR 4075 and S. 2281, both introduced in the 116th Congress on July 25, 2019.
An Unexpected Effect
I have published elsewhere a detailed analysis of the likely effects of the IDEA Act. I strongly support closing the societal gaps in the abilities of individuals to participate in, and benefit from, invention and technological innovations; and I believe that this is also the well-intended goal of the sponsors and supporters of the IDEA Act. I believe that efforts and resources for closing such gaps should be focused where they can actually have real effect—by targeted assistance for STEM education, mentorship, and professional training in the years prior to patenting. The lawmakers sponsoring this bill have established records of supporting strong patent rights and are widely respected for being champions of small business inventors. Unexpectedly, however, this bill would actually harm small business and underrepresented inventors. As explained below, this legislation is contrary to patent law; it proposes a dangerous method for injecting identity politics at the USPTO, where it never has nor should play any role, and where there is no evidence that the USPTO has displayed prejudice or discrimination.
The implied premise of the bill is that “women, minorities, and others” may be disadvantaged “when procuring patent rights in the United States”—that they somehow face discrimination at the USPTO in the patenting process itself. This notion is echoed by an advocacy group’s proposal for removing inventors’ names from patent applications to “mitigate potential gender and racial biases” in USPTO examination. But there is no evidence to support this premise of discrimination at the USPTO. If anything, the evidence and sources compiled in the USPTO’s report under the SUCCESS Act confirms that other pre-filing factors are determinative. Most importantly, whereas Figure 2 in this USPTO report shows the share of women inventors at 22% of issued patents, the report lacks data on women’s share of filed applications. The latter is additionally required for evaluating the “grant rate” (defined as the fraction of applications filed that successfully issue as patents) to assess whether women actually face any disparate outcomes at the USPTO. In and of itself, if found to exist, disparity in grant rate may not prove discrimination in examination at all. This is at least because examiners make rejection errors across all applications and it may only signify that financially-disadvantaged inventors may be unable to afford costly appeals or Requests for Continued Examination (RCEs) at the USPTO to correct these examiner errors and vindicate their right to a patent.
1. The Act’s provisions for handling applicants’ identity contradict the Patent Act and USPTO’s regulations and examination practice. Proposed § 124(b)(2)(B) would require the USPTO to “establish appropriate procedures to ensure … that demographic information is not made available to examiners or considered in the examination of any application for patent.” But concealing such information from examiners is virtually impossible without turning on their head the Patent Act, the USPTO regulations, and its long-established examination procedures.
First, examiner interviews are an integral part of the examination process, wherein the inventors explain in their own words to the examiner the invention and distinctions over the prior art. See 37 CFR § 1.133; MPEP § 713. These interviews are efficient ways to advance prosecution and are mostly conducted by videoconferences. Although inventors are not always present at interviews, they often accompany their patent attorney/agent and would be conducting the interview alone if they were engaged in pro se representation. When an inventor is present at an interview, that would necessarily reveal to the examiner the inventor’s gender, race, color, and approximate age. At least one interview is conducted for one in every three patent applications.
Second, a great majority of inventor names reveal their gender, and sometimes their national origin or race. The USPTO observed that gender can be determined from the name alone with an accuracy of more than 93%. Accordingly, USPTO’s procedures to comply with the Act would necessitate removal of the inventor’s name from any document that examiners consider in direct contradiction with at least the following patent statutes, regulations, and USPTO examination procedures:
(a) 35 U.S.C. § 115(a) and 37 C.F.R. § 1.41 (Inventor’s name “shall” be included in the application).
(b) A published application under 35 U.S.C. § 122(b) contains the name(s) of the inventor(s) on the first page. See 37 C.F.R. § 1.215(c).
(c) The double patenting bar requires the examiner of an application to identify all the inventor’s other patents and applications and to issue rejections when the claimed subject matter is the same, or patentably indistinct, across such applications. See MPEP § 804.
(d) 35 U.S.C. §§ 120, 121, prescribe that inventor(s) of a continuing patent application “which names [the] inventor or joint inventor in the previously filed application” can claim priority benefit of the parent application, necessarily disclosing to the examiner the name of the common inventor.
(e) 35 U.S.C. § 102(b)(1) (post-AIA) excludes as prior art any public disclosures made “by the inventor or joint inventor” 1 year or less before the effective filing date of a claimed invention. Entitlement to removal of such inventor’s public disclosure as prior art is established by the inventor’s name.
(f) Examiners are authorized to require from the applicant a “copy of any non-patent literature, published application, or patent (U.S. or foreign), by any of the inventors, that relates to the claimed invention.” 37 C.F.R. § 1.105(a)(1)(iii). These publications’ authors are identifiable by the named inventor.
(g) Declarations filed under 37 CFR §§ 1.130 and 1.131 to overcome a rejection require the signature of the declarant, who often is one of the named inventors.
Third, as a matter of policy, inventors 65 years or older qualify for expedited treatment of their application under 37 C.F.R. § 1.102(c)(1). Such applications are designated as “special” and are advanced out of turn in examination to the top of the examiner’s docket, thereby informing the examiner of the inventor’s old age.
2. The scant and selective data collected voluntarily would have no utility and thus doom the Act. The proposal is to limit the USPTO data collection to voluntary submissions. There would be “missing data” on inventors, not only from those who do not file patent applications for fear of losing their patent at the PTAB (as inventor Jeff Harding explained), but also from those who file applications but decline to furnish the demographic information. Collection on a voluntary basis would produce very low response rates, rendering any inferences therefrom erroneous and subject to self-selection bias. Note that most inventors do not file their patent applications with which their personal information would be submitted. My analysis projects that voluntary submission will result in less than 1 percent response rate for various reasons, including refusal of patent practitioners to ask their clients for personal information and the fact that companies who file the applications do not keep a record of their employees’ race, declared gender, veteran status, sexual preference, etc. Collection and reporting of such personal information may expose the company to secrecy obligations and further potential liability. Indeed, the U.S. Equal Employment Opportunity Commission’s guidance titled “Prohibited Employment Policies/Practices discourages “inquiries that relate to … race, color, sex, national origin, religion, or age, [as] such inquiries may be used as evidence of an employer’s intent to discriminate unless the questions asked can be justified by some business purpose.” It is an open legal question whether a voluntary response to a survey constitutes a justified “business purpose.”
The voluntary aspect of the IDEA Act may be a temporary feature to assuage initial objectors to the bill. If passed, future sponsors of an amendment to the Act would be able to point to the anemic applicant response rate and the need to increase statistical reliability by making applicants’ submission mandatory.
3. Transforming USPTO examination into an “equality of outcome” operation with identity-driven patent allowance quotas. Under proposed § 124(d)(1), the Act would require the USPTO to publish annually the total number of patent applications filed and the total number of patents issued during the previous year, disaggregated by inventors’ demographics and technology class. By simple calculations taking into account application pendency at the USPTO, these reports will enable any member of the public to estimate the patent grant rate by inventors’ identity characteristics and by examiner technology Work Group.
Inevitably, it would not be too long before activist groups and examiner analytics firms would use this published information to identify specific inventor groups as having disproportionately lower patent grant rate than other groups. Because no inventors’ background information would be collected alongside their demographic data, the reports under the Act would contain no information that could shed light on any of the causes for, or factors underlying the patenting disparities that the data would reveal. In this critical information vacuum, the activists would claim that disparities can be explained by USPTO prejudice—that “equality of outcome” is the only correct measure of “equity”—ignoring confounding factors unrelated to examination. The reported demographic grant rate for half of all examiner technology Work Groups would be below the average. Examiners in these Work Groups may face unfair scrutiny as having “prejudice.”
4. The IDEA Act would reduce patent quality and harm the very inventors the Act seeks to benefit. Whether admitted or not, “closing the gap” by any action of the USPTO affecting patent grant rate of demographically-favored applications, would necessarily mean relaxing the patentability examination standards for those applications. This would result in lower quality patents issued to inventors in such favored groups. The mere upward shift in reported grant rate for demographically favored groups would quickly lead to public stigma, as patent holders in these groups would be perceived as the beneficiaries of less rigorous allowance standards, thus holding lower quality patents. This would harm their reputation and detract from their ability to enforce their patents. Discrimination, for which there is no current evidence, would become very real.
5. Should patent applicants be saddled with loss of patents and the cost of government studies on social disparities? My analysis based on USPTO’s paperwork burden estimates for information collections similar to that contemplated under the IDEA Act projects the recurring costs to the applicant and the USPTO of gathering, furnishing, verifying, and processing the information would total about $310 per application. This does not include the USPTO’s costs for developing and maintaining the separate secure demographic database and reporting infrastructure. Submissions would have to be made mandatory for the information to be statistically meaningful (see Section 1 above); my analysis based on USPTO price elasticity estimates shows that the incremental costs of mandatory submissions would suppress application filings by 2.7%, 5.5%, and 10.9%, for large, small, and micro entities respectively. These reductions in patent application filings entail real social costs manifest as reduced innovation. Clearly, there can be no justification for this negative impact, which would disproportionately adversely affect small and micro entities.
An Alternative Credible Approach
If despite the objections discussed above, Congress insists on adopting a revision of the IDEA Act having the USPTO collect the information, and if burdens are to be imposed on applicants, the effort must be done the right way. Data solely on the number of patents and applications at the USPTO that merely characterize the numerical disparities in patenting would fail to inform any attempt to identify the causal determinants, or the contributing and confounding factors that drive such disparities in patenting.
A sound approach would collect pre-application background information from inventors such as data related to their experiences, education, research, mentorship, prior activities, etc. Only by having such inventor attributes in addition to, and coupled with their demographic information, can useful correlations and causal inferences be made on ways to address actual causes of disparities.
The exact data to be collected from inventors relating to the factors and attributes that may be important predictors and essential explanatory factors for disparity should be determined prior to enactment by experts in technology, education, STEM training, and social sciences. A panel of experts at the National Academy of Sciences (NAS) should be assembled to identify the specific information to be collected. The NAS is the appropriate body because it is charged with providing independent, objective advice to the nation on such matters related to science and technology. They should formulate the charge for the inventors’ survey, instilling public confidence that it is driven solely by scientific expert considerations and not by agendas of activist groups, or political pressures on the agency head.
Let’s Redirect These Efforts
For the reasons explained above, I submit that enacting the IDEA Act as currently written is not a good “idea.” If enacted, it would harm the very inventors the Act seeks to benefit. The USPTO should be kept free from any identity-based task, process, or reporting requirement. The fact that the sponsors of this bill are strong champions of small business inventors engenders hope that they will reconsider this Act, and redirect their efforts to having the NAS undertake the relevant study to determine the data to be collected, and focus on legislation that truly and prudentially restores U.S. patent rights to all demographic inventor groups.
The Senate Judiciary Committee will convene an executive business meeting tomorrow morning to discuss the IDEA Act, as well as S.169, the Artistic Recognition for Talented Students (ARTS) Act, which would waive certain registration fees for copyright claims arising from student art and science competitions sponsored by Congress.
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