Patent Law, Criminal Law and Small Inventors (2)

Summarizing from part 1, I argued that small inventors and start-ups (independent inventors) were innocent victims under the current state of patent law.  Independent inventors follow all the rules and lose their patents when the patent proves valuable.  Patents are overturned in IPRs for the simple and plain reason of ineffective fact finding.  This is an issue of patent quality.  That said, the root source cause of low quality patents and the creation of the PTAB is ineffective evidentiary fact finding.

I ended part 1 by asking how does Congress proposes to address this issue?  Do we adjust legal rules making the process seem fairer to independent inventors or reform how we identify pertinent evidence before prosecution.

To be clear, the issue is independent inventors losing IP because of an intrinsic systemic flaw that fails to identify pertinent evidence before or during prosecution leaving an evidentiary hole.  The hole is filled during an IPR by the infringing party.

Three Proposals

Congress apparently does not appreciate the problem.  There are three pending patent reform bills directed to PTAB.

HR 5874 Restoring America’s Leadership in Innovation Act, proposes to abolish both inter parties and post grant reviews as well as the Patent Trial and Appeal Board.  The system would revert back to pre-AIA rules.  Patents would be invalidated in an Article III court applying a clear and convincing evidentiary standard.  The presumption of validity not recognized at the PTAB would be restored by default.  Under this scenario independent inventors would benefit.  On the other hand, the same intrinsic failure would continue.  Patents would continue to issue with broad claims unsupported by evidence leaving the patent vulnerable to invalidity despite a higher standard.  We might even see the reemergence of bad faith actors commonly called patent trolls.

HR 3666/S 2082 the Stronger Patents Act,  tries to eliminate features detrimental to small inventors by aligning PTAB  and civil court evidentiary rules to a clear and convincing standard, restores the presumption of validity at PTAB and permits discovery.  The bill also allows claim amendments.  This bill addresses IPR features that hurt independent inventors.  Never the less, this bill would allow patents to continue issuing with broad claims unsupported by evidence.

S 4417 The PTAB Reform Act directly addresses the scourge of multiple petitions against a patent holder but only to the limit of “from the same party.”   The bill imposes the clear and convincing standard on IPR trials and provides sanctions against bad faith actors.  The bill is silent on the presumption of validity.  Of particular interest is § 320 Support for small and micro entities in inter parties  and post-grant review.  The bill authorizes payment to small and micro entities for PTAB trial expenses incurred by the patent owner.  The payments will be funded by fees on portioners.  As before, patents would continue to issue with broad claims unsupported by evidence.

Paying PTAB expenses is an interesting but misplaced idea.

First, damage to the patent holder has already been done because they received a patent  easily overturned by a preponderance of the evidence standard. The evidentiary hole leaves a patent highly vulnerable to invalidity even if a clear and convincing standard is applied at trial.  This bill does not mention the presumption of validity.

Second, the cost of a PTAB trial which I estimate here at $250K is not particularly dissuasive to a wealthy infringer and the threat of repeated petitions on the same claim(s) remain.

Another Option

None of these bills look to a solution to a known systemic flaw that directly affects patent validity.  All three bills are efforts to adjust legal rules making the process seem fairer to the small inventors.  The US patent system has evolved to a point where the PTO less and less adequately finds strong evidence over which claims can be allowed. This is evinced by the very existence of the PTAB.

Expert search skills developed in the private sector are employed against small inventors. Infringers pay private sector search experts to identify prior art subsequently applied against patents tried at the PTAB.  Private sector searchers are a resource generally not utilized by inventors before examination for various legitimate reasons.  Independent inventors would benefit by accessing those advanced skills.  This would require an incentive.

Due to IT advances over the past decade finding applicable prior art has become much easier.  It has become so easy that 67% of all winning IPRs are accomplished based on US and foreign patent documents.  This does not include the 21% based on art of record, i.e. submitted by the applicant.  Prior art patents have become low hanging fruit.  Advantage goes to the infringer.

Incentivizing the applicant, through reduced fees etc., to utilize private sector resources pre-grant  that infringers use post-grant goes directly to the evidence problem.  With corresponding fee reductions it would be cost free to the individual inventor. Applicant incentives is not a new idea.  The idea was proposed during AIA debate in 2009.  In view of the damage cause by the AIA, it is an idea worth evaluating again as an option to even the playing field.

Patent Law, Criminal Law and Small Inventors (1)

It has been clear for a long time that finding factual information to support patent law was not taken anywhere near as seriously as finding factual information to support criminal law.  Not even close.  I came up with an analogy.

If criminal law functioned like patent law we would have no prisons, treat all crimes the same, and then send the prosecutor a load of circumstantial evidence some not related to the crime allowing the criminal to walk.

While this analogy is not inaccurate, its point being ineffectual fact finding in patent law, it doesn’t help inform the issue as it affects patent law because criminals don’t usually walk.  Then I thought of the innocent victim.

If criminal law functioned like patent law there would be a lot of innocent people going to jail.  Detectives would spend a few hours investigating and stop when a 1st  suspect was identified.  That person would be convicted due to deference given the expert detective.  A wrongly convicted person would go to jail. An innocent person didn’t do anything wrong yet they are getting punished.

In this scenario what would society do?  Adjust legal rules making the process seem fairer to the accused or reform how detectives conduct a thorough investigation.  We would probably do both.

This sounds absurd but it is precisely the situation in which  many entrepreneurs and start-ups find themselves.

In patent law the victims are the small inventors and inventor-started companies (individual inventor) who do everything right.  They obtain a patent that has been duly examined.  They employ an attorney, follow the attorneys advise, go through two plus years of prosecution and finally receive a patent.  Then, when the patent proves valuable, through no fault of their own, in fact through no fault of anyone – applicant, attorney or examiner – they lose their property in an Inter Parties Review. .  Individual inventors are getting punished even though they and everyone else did everything right according to the letter of the law.  They are the innocent victims of patent law.

They lose their patent in an IPR for the simple reason of ineffectual fact finding.  Finding evidence pertinent to patent applications is not hard.  Sixty-seven (67%) of all IPR invalidations are based on US or Foreign patent documents (see Prior Art in Inter Parties Review).  This means a substantial number of patents are invalidated from low hanging evidentiary fruit.  Worse 21% of invalidations are based on prior art of record.  This tells me that in 21% of IPR cases that no one on either side looked closely at the material of record.  Ineffectual fact finding is the root cause of IPRs and PTAB.  This is an intrinsic systemic flaw.

Just as the justice system works in most cases so does the patent system.  Since 1931 corporations have been the predominant filers in the US, supplanting individuals.  Most corporations do not obtain patents to either enforce or license.  And only a very small percentage of patents granted in any given year are valuable.  For the vast majority of patent applicants, ineffective fact finding isn’t an issue.   For a small subset it is fortune killing.

After ten years of the USPTO revoking duly issued patents, we see there are indeed innocent victims.

The question is how does Congress propose to address this issue.

The Accelerated Examination Program

A conversation on 1st Office Action patent grants got me thinking about the Accelerated Examination Program where obtaining a patent on the 1st Office Action was the hoped for outcome.

The Accelerated Examination Program commenced on August 25, 2006.  PTO statistics end on May 29, 2015.  A Federal Register Notice on August 16, 2016 suggest that the PTO would cancel the program due to the popularity of the Track 1 program.

The Search

Accelerated Examination required a private sector searcher to conduct a thorough patentability search.  The search had to be clearly documented covering all source material and approved by the examiner.  The 2015 statistics page shows 3737 granted patents and 1609 rejections.  93% were 1st Action Grants.  This is a 70% grant rate.  A pie chart dated April 2012 shows an 82.2% Grant rate.

These numbers suggest that the program was successful because the best prior art was seen by the examiner.  One would expect a high quality patent to result from a focused effort to identify evidence.

However, I recall (but cannot now find) the PTO claiming the program produced results equivalent to what examiners produced.  I suppose this refers to grant rates which are about the same.  This comparison is grossly flawed.  Quality of evidence was not evaluated.  Because a private sector patentability search was conducted on every single AE application, one would expect the AE grant rates to be high.  Why would an applicant file an application if there was prima facia invalidating evidence.

The important question for patent quality insight is this: How many AE patents have been invalidated in either an IPR or in court?  Zero would be beautiful.

The Near Future

The recently proposed Patent Examination and Quality Improvement Act of 2022 is an effort to address the root-cause of low quality patents.  Low quality patents are the justification for Inter Parties Review.  The Bill requires the GAO to, among other things, “…rigorously evaluate previous and current initiatives and pilot programs of the Office relating to the quality of patents issued by the Office….”

This is an easy task.  While the Office has implemented at least three programs directed to prior art evidence – Patent Prosecution Highway (PPH); Collaborative Search Project; and Relevant Prior Art Initiative – all three are cooperative arrangements with foreign patent offices.  These programs do indeed bring additional evidence into the record.  At best, these programs demonstrate the search skills of the foreign office.  The United States can do better than relying on foreign patent offices.

The only program to compile data informing the effectiveness of a thorough search is the Accelerated Examination Program.

The Drawback

On the other hand, the AE program contained a counterproductive requirement.  The AE Support Document.

The AE support document required the attorney to discuss the evidence submitted.  Why?  The AE support document appears to be nothing more than a requirement forcing the applicant and their attorney to prove patentability.  A patentability search will produce no more than 20 and usually less than 15 documents.  Why does the PTO think an examiner needs a lawyer to interpret the evidence, in great detail no less.  The support document forces the attorney to make assertions completely unnecessary at this stage of examination.  The support document does not add to quality.

It is no surprise that Track One, lacking a pre-examination search and the support document, would be preferred option over Accelerated Exam when the objective is to obtain a patent quickly.  Should the Patent Examination and Quality Improvement Act of 2022 become law, we can expect the GAO to look deeply and find that pre-examination searches enhance patent quality.

Thinking Ahead

Patent applicants should have the option to strengthen their own applications by providing focused evidence.  The Accelerated Examination Program did that.

Rule 56 is obsolete and adverse to patent quality

Rule 56 is a significant obstacle blocking patent quality reform.  Patent quality is defined as a patents ability to withstand a validity challenge brought on prior art evidence.  Rule 56 discourages applicants from looking for and submitting prior art evidence.  Rule 56 is obsolete and adverse to patent quality.

If applicants had the opportunity to investigate and provide prior art themselves, patent quality would improve.

The Duty to Disclose was first implemented on March 1, 1977.  Prior to this date there was no verbiage that called for submitting information. The rule arose to address fraud.  The rule attempts to compel the submission evidence.

Is fraud still an issue in 2022?  Inter-Parties Review encourages the invalidation of patents including those obtained by fraudulently hiding evidence.  If fraud is no longer an issue, then Rule 56 is obsolete.

What is in fact a problem today are granted patents being overturned in IPR proceedings because of evidence that is relatively easy to uncover. There is no longer an advantage gained by hiding evidence.  On the other hand, there is damage when not informed of evidence that surfaces later.

The threat of inequitable conduct distorts the issue of applicants submitting evidence on their own behalf.  The threat of inequitable conduct affects the submission of evidence.

There are two prior art submission strategies that adhere to Rule 56.  Because the objective is to avoid inequitable conduct, both are sound legal advice.  On the other hand both are counterproductive to the purported spirit of the rule and the concept of strong patents.

The rule states:

The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability.

The filing strategies are:

  1. File with no prior art documentation;
  2. File and submit dozens or hundreds of documents.

There are two problematic terms in the underlined section that constrain the applicant from summiting  prior art: all & material.

A thorough patentability search, for competitive reasons strives to find all evidence, without being cumulative, relating to an invention described in a technical disclosure.  The PTO for multiple and various reasons does not provide thorough patentability searches.  This is evidenced by the very existence of IPRs.

The idea of incentivizing applicants to submit more inclusive evidence with their applications has been proposed in the past.  This idea sounds reasonable.  In theory the applicant is strengthening their application and precluding evidence from emerging later.  A person rewarded for locating evidence is unlikely to bury a reference but missing a reference is possible. In this scenario, Rule 56 allows for accusations of  inequitable conduct.  You can’t make an applicant file the results of a patentability search.  Indeed, because of Rule 56, it is not a good idea.  The threat of inequitable conduct disincentivizes applicants from intentionally looking for and providing information.

Secondly, a searcher selects references for technical reasons.  Materiality is a legal question.  What is or is not material does not enter into the searchers reasoning because the searcher is not qualified to make that determination.  A searcher selects references to show technical information that is publicly known, as it relates to a specific invention.  That is all.  What is material is specific to claims. The definition of materiality is very narrow.  It is easy to imagine situations where no references in a patentability search meet the definition of material.  Yet, patentability references represent average skill in the art.  Is that not be material?  Inserting a legal question into the act of proffering technical information seems inconducive to incentivizing the applicant to engage in that very act.

Rule 56 was conceived 45 years ago to address a problem that is no longer relevant.  Patent quality, despite the more critical eligibility issues, is very relevant still today.  Rule 56 is supposed to compel the submission of evidence.  The rule has the opposite effect.

In 1977 technical source material was limited and access to that information was by hand.  It was easy to hide information.  That is not true today.  Despite the vastly greater volume of information, finding that information is also vastly more efficient.  It is far harder to hide information today, if you wanted to do that, than in 1977.  The information would need to be really obscure.

Suppose applicant incentives had been included in the AIA.  I suspect there would have been far fewer successful IPRs over this time.

Weak patents are an unintended consequence of antiquated Rule 56.  It needs to be cancelled.

Clear and Thorough Search

S. 4704, the Patent Quality and Improvement Act of 2022 requires the GAO to define a clear and thorough search.  As  an expert searcher this is not hard.  I approach this question from the experience of a searcher in the engineering arts.  Chemical searches and bio-tech follow different procedures.

First of all, a clear and thorough search already has a name.  In practice, the term only applies to the private sector because it is only in the private sector that someone, usually an attorney, pays for a thorough patentability search.  A thorough patentability search is a well known product in the search/patent prosecution business.    However, the concept of a clear and through search reminds me of a well know Supreme Court phrase – I know it when I see it.  Never-the-less, a clear and thorough search is a common everyday patentability search as produced in the private sector.

In the phrase “clear and through,” clear, I think, refers to reporting and I absolutely support showing transparency in your work.  The PTO provides a print-out of examiner queries however you can-not determine what documents the examiner actually reviewed.  Private sector search reports are typically very explicit on this point since people are paying for the product.

The question for the GAO and actually all patent stakeholders then is: What constitutes a thorough patentability search?

A thorough patentability search conveys knowledge of average skill in the art.  The end product is a body of evidence on which claims for the subject invention can be discerned.  The objective is to find everything without being cumulative.

Conducting a patentability search is a process.  MPEP § 904.02 General Search Guidelines provides a pretty good generalized description of the process and source material.  The manual states that there are three reference sources (US, Foreign, NPL), emphasizes classification, and cautions against relying on text only.  The shortcoming as far as patentability is the emphasis on searching claims.  A thorough patentability search does not look for evidence directed to the claims.  (Searching claims is a validity question and beyond the scope of defining a thorough patentability search. In fact, focusing on claims at this stage muddles the very idea of patentability.)  The MPEP is inadequate in describing a patentability search because it is not sufficiently explicit.

There are only four steps to a thorough patentability search:

  1. A patentability search is premised on the expectation that a searcher will look at all patent documents in one or more sub-group classifications. Therefore, manually search the 1-3 sub-groups with definitions that read on the subject of the invention;
  2. Keywords applied to subject matter sub-groups beyond the areas designated to be manually searched;
  3. Keywords without classification limitations;
  4. Forward and reverse citation review.

There are additional techniques that a skilled professional searcher will employ.  They may use keywords in the title and abstract, or try combining sub-groups to identify a document classified in two areas.  I do not mention NPLs in the four step process because NPLs are not relevant in many searches.  I also don’t mention artificial intelligence here because at this point AI is still rudimentary in this space but it is emerging as a fourth implement in the searchers toolbox.

I’ve identified an objective and a four step process but that is not a definition.

A patentability search will identify evidence of prior teachings related to the invention.  There is an immense amount of misinformation and speculation about patent citations.  In terms of average skill in the art,  there is usually only a limited amount of evidence for any single application.  A patentability search will produce a dozen references – give or take.  Beyond 20 you are literally moving further away from the invention and adding noise to the record.

The #1 reason the patent office issues low quality patents is time.  Patentability searches vary in time, of course, but the vast majority, perhaps 80%, will fall into an 8-12 hour range.

Answering the question of what constitutes a thorough patentability search, I will answer this:

A thorough patentability search is an investigation to
identify evidence in printed documents that establishes
average skill in the art conveying a reduced probability
that additional evidence will be found to invalidate claims
on a patent allowed over the evidence identified in the search.

Defining a thorough patentability search, as we can see here, is the easy part.  The fact remains that 400k applications a year cannot receive this amount of attention.

The Examination and Quality Improvement Act of 2022

On August 2,  the Examination and Quality Improvement Act of 2022 was introduced in the Senate.  The Statute directs the GAO to produce a report directed to patent quality that will, among other things, “…more clearly defining what constitutes a clear and thorough search by a patent examiner…”

This searcher argues that a patentability search produced in the private sector is a good place to start an inquiry on this subject.  A patentability search report is a product that will give the reader a solid understanding of Average Skill in the Art in the subject matter of the search.  Therefore, a thorough search equivales with a private sector patentability search.

Who is the GAO going to consult in order to derive  a definition on what constitutes a clear and thorough search?  The patent office does not conduct patentability searches so is there anyone in the patent office with intimate knowledge of how do this?  Perhaps academics might have some insights.  The Patent Bar?  I know my clients, mostly all members of the Bar, appreciate and expect a thorough search.  They know a quality search when they see it.  However, the fact remains, they hire me, a search expert to find and forward facts relevant to the application.  Defining all the variables that comprise a  thorough search is going to require input from the private sector search community.

A fact that must drive this discussion is the understanding and cognition that patent searching is the act of finding and bring forward material facts.  This function is a substantive component of patentability but is clearly missing from the process.

This is the first time in the history of the patent quality debate that the discussion focuses on the root cause of low quality patents.  We like to think that what we do is an underutilized patent system skill in both the public and private sectors  Patent searchers can not let non-patent search people define search quality.

Funny thing once you define what constitutes a clear and thorough search the tough questions begin.  Like who is going to do it?  I guesstimate there are 600 professional patent searchers in the US.  1 searcher can do approximately 150 searches a year.  That is 90K.  Factor in it takes 2 years to train a commercial searcher and its immediately clear that the PTO will continue to have an impossible task.  The United States can find a way to fix this problem according to our customs and mores.  Fixing the problem starts with defining what constitutes a clear and thorough search recognizing that patentability is all about Average Skill in the Art.

Reviving the Patent Agent Apprenticeship

What in the world is the patent agent apprenticeship and why talk about a revival?

On March 23, 2021, the PTO published a Request for Comments in the Federal Register directed to the Technical Qualifications prerequisite to become a Patent Agent. The PTO proposed and subsequently implemented minor administrative changes to the General Requirements Bulletin (GRB). By doing so, the PTO has expanded the list of acceptable degrees and amended the coursework requirements for non-degree holders ostensibly allowing more people access to the patent agent exam. There were 32 respondents to the Request. While most (29) approved of the proposals six (6) went further proposing the revival of the patent agent Apprenticeship Program. Prior to the written exam, which commenced in 1933, future patent agents would apprentice with someone already on the rooster thereby qualifying for entry onto the roster themselves. The Apprenticeship Program did not end completely until the mid-1990s, forty+ years after the introduction, in 1952, of both the technical requirement and the GRB.

Why would six commentators including Microsoft and the Intellectual Property Owners Association propose an apprenticeship?

Spurred by the Success Act in 2018, an assignment by Congress to the PTO to investigate causes of a patentee gender gap, the idea emerged in 2019, that the PTO could “Boost Patentee Diversity By Relaxing the Technical Barriers to Patent Bar Membership.”  In the fall of 2020, Mary Hannon, a third year law student at DePaul, proposed “implementing an apprentice model as an alternative path to patent bar eligibility.”  I assume that the March 23, 2021 Request for Comments was an outgrowth of these three earlier events.  Historically the apprenticeship was about practical work experience in patent law. I presume that a new apprenticeship model would be along the same lines. So my question is: How does an apprenticeship in patent law align with the technical qualifications’ requirement? Where is the nexus? If the issue is a formidable technical requirement it would logically make sense that an apprenticeship would need to focus on demonstrating technical competence. We absolutely agree and argue that technical competence is openly demonstrated in the process of finding prior art.

Over a five year period (it takes two years to train a searcher) a private sector patent searcher will identify prior art across a broad range of diverse technologies, involving multiple dozens of unrelated classes/subclasses.  This work demonstrates technical competence commensurate with patent prosecution (and examining) responsibilities. We think the Director should accept this hands-on experience in place of the technical requirement and allow the fully trained searcher to take the Agents Exam. It does not require the technical skills of a working engineer or bench scientist to find prior art so a less strict educational standard is appropriate. (Additionally, the searcher will learn a significant volume of patent law in the process of years long searching: filing dates; continuations/continuations-part/divisionals; assignees; PCTs; duty to disclose; antecedent basis; single sentence claims; first to file; RFCs; Office Actions; etc.… all of which together make a patent information specialist. We think that patent information specialist could serve as a as basis for a second rooster but that would be the subject for a future post.)

While we think an apprenticeship as described in this post is an idea worth investigating, we do not think it is probable. Creating an apprenticeship based on actually demonstrating technical competence with patents would require a complete rethinking of searchings’ place in the broader patent field.  There are two functions that a make a substantive contribution to the patent process; one of them is not officially recognized in the United States. The patent quality issue was unable to bring the search functions’ contribution to the forefront, maybe diversity will be the force to drive the profession forward and improve patent quality in the process.