Under the microscope: patent quality at the USPTO

It’s a land filled with rising patent lawsuits and ever more vehement plaintiffs. The steady increase in patent-related litigation on US shores has been at the forefront of industry professionals’ minds for many years.

As lawsuits continue to rise nationally, there has been a notable increase in cases filed at a traditionally popular venue, the US District Court for the Eastern District of Texas. Statistics published in July from the US’s Government Accountability Office (GAO), as well as data from patent monitoring organisation Unified Patents, show that 50% of all US patent lawsuits were filed in the court last year.

According to the GAO, which acts as the “investigative arm of Congress”, the number of patent lawsuits nationally increased from around 2,000 in 2007 to 5,000 in 2015, with the Texas court continuing to bear the brunt of cases. The number of named defendants overall in that time frame also rose, from approximately 5,000 to 8,000.

In 2007, 20% of all defendants were sued in the Texas court but by 2015 the corresponding number rose to 50%. According to the GAO, most of these cases in Texas involved software-related inventions and computer and communications technologies that are “easy to unintentionally infringe” because they can be unclear or broad.

The surge in interest in the so-called patent-friendly venue has led to various attempts to curtail its attractiveness, including efforts to place new rules on forum-shopping—where plaintiffs are able to sue in the venue of their choice without any connection to the area.

Those efforts, which were partly led by rights group the Electronic Frontier Foundation (EFF), failed. In a petition for writ of mandamus filed at the US Court of Appeals for the Federal Circuit, TC Heartland, which was in a patent dispute with Kraft Foods, asked the court to limit where plaintiffs could file complaints. The EFF weighed in with an amicus brief on behalf of TC Heartland but the Federal Circuit rejected the petition, finding that TC Heartland’s claims were “foreclosed by a longstanding precedent”.

So it fell to the GAO to come up with its own method of not only stemming the flow of lawsuits towards Texas but also trying to improve the quality of granted patents. In July, the GAO, which is responsible for examining matters that relate to public funds, outlined several recommendations on how the USPTO can improve its quality and in turn reduce the need for excessive litigation.

Bob Stoll, partner at law firm Drinker Biddle and former commissioner for patents at the USPTO, welcomes the intervention.

“Any time something comes up that has a potential impact on the economy, the GAO will get involved,” he says.

“An organisation can always rebut any statement or recommendation it makes but I believe the USPTO had already seen a draft version of the report [before its publication] and accepted the criticisms,” Stoll says.

In the first of its concerns, the GAO said the USPTO could reduce the need for lawsuits by implementing a consistent definition of patent quality and by clamping down on broad patent applications.

The report noted that the USPTO does not currently have a definition for quality articulated in agency documents or examiners’ guidance. If it did this, the GAO said, the USPTO would be in line with federal internal-control standards and best practices for performance.

Survey findings

To help with its report, the GAO surveyed 3,336 examiners, from which it received 2,669 responses. Most of those interviewed said they would define a “quality patent” as one that meets statutory requirements for novelty and clarity and would be upheld if challenged in a lawsuit or other proceeding.

Further, 90% (2,402) of respondents said they “always or often” encounter broadly worded applications and nearly two-thirds of that 90% said that this made it difficult to complete a thorough examination.

“Without a consistent definition, the USPTO is unable to fully measure progress towards meeting its patent quality goals,” the GAO said.

Reacting to the report, Jason Lohr, partner at law firm Hogan Lovells in San Francisco, says it is not clear how the proposed guidelines would differ in substance from what is already in place regarding written description and clarity requirements, and how they would result in better patents.

One way that the GAO suggested this could be achieved would be for the USPTO to require applicants to define key terms or make use of “additional tools to ensure patent clarity” as well as including dictionary and glossary definitions for examiners who are faced with broadly worded applications.

Lohr is sceptical about whether the plan would work, adding that it may not achieve its intended goal.

“Applicants will generally not want to be limited to a one-sentence definition of a key claim term where the definition would be used to construe the scope rather than the many paragraphs that might have been used to provide a robust understanding,” he explains.

“As such, any definitions provided would likely be as broad as, if not broader than, the ones currently presented in the specification. If they are forced to narrowly define terms, applicants will likely just use a wider variety of terms to refer to the same general concept, with each term having different scope, which might end up making things even harder to comprehend.”

“If the accuracy and firmness of property boundaries can be improved upstream in the patent office, there is hope that benefits will be felt downstream."

According to Lohr, a better option might be for the USPTO to require, or be able to request, that the applicant be able to point to the relevant lines or paragraphs in the specification where the key claim terms are defined.

“Best practices might then change so that the terms are at least defined in more concise and related sections of the specification,” he adds.

Stoll says that any initiatives that set out to improve patent quality should be welcomed.

“It’s a very good thing to focus on the quality of patents as a remedy for what we are seeing with more vague patents being asserted,” he tells WIPR.

“We are in a situation now where we’re seeing recent patent-related decisions including the Alice, Mayo and Myriad rulings being overly applied in the examination process. That’s why the USPTO is looking at the application process as a whole.”

Michael Powell, founder of Powell IP Law in Atlanta, agrees, adding that it’s good to see “positive efforts like these” directed towards improving the quality of patents and surveying patent examiners.

“If the accuracy and firmness of property boundaries can be improved upstream in the patent office, there is hope that benefits will be felt downstream and perhaps reduce the complexities and costs associated with patent litigation,” Powell says.

Although the office is not known for having a backlog of patent applications—Stoll says the current time taken to physically examine an application after an examiner has first viewed it is around 21 to 23 hours—the time examiners have to view patents was highlighted as a concern by the GAO.

In the GAO’s survey, 70% (1,868) of respondents said they did not have enough time to complete a thorough enough examination.

Lohr says addressing time concerns seems like the most fruitful way of enacting positive change, as examiners are often “not familiar with large portions of the specification and references” due to not having time to properly prepare for interviews and other communications.

He adds: “Similar issues arise with the search process. Examiners commonly complain off the record about not having enough time to perform a proper examination.

“An increase in the allotted time or a decrease in workload would have the most direct impact on quality, and require those drafting the patents to step up their game accordingly.”

On the other hand Stoll says that, rather than focus solely on timings, he would like to see changes in the way the workforce at the USPTO operates.

One way this could be done is to look at key subject areas and use the office’s supervisory patent examiners (SPEs) in problematic areas.

“The SPEs should go in and look at applications and see if there is a particular subject area that is throwing up slower results or where examiners are struggling. Once they know what that area is they should ensure that the examiner understands everything correctly and what his or her responsibilities are,” he says.

Will the change happen?

Despite making suggestions about how the GAO’s proposals could be improved, Stoll says he expects the changes to start being implemented by the USPTO in the coming weeks and months.

Powell warns that, despite the quest for change, the “unique pressures” of litigation will continue to yield vigorous prior art searches and arguments that attack patent validity.

“No patent system is perfect, nor can—or should—the patent examination process anticipate all such pressures, searches and arguments, but hopefully this effort will lead to patents that hold up a little better than we have seen in recent years,” he adds.

The office is under no obligation to take the concerns on board.

WIPR asked the USPTO whether it would be implementing any of the proposals and although it did not give a direct answer, a spokesperson shared a letter that the office’s director, Michelle Lee, sent to US newspaper the Washington Post on the subject.

In the letter, published in July, Lee stopped short of accepting the recommendations but said the office constantly strives to issue the highest-quality patents amid continuing changes in technology and law.

“Our highly skilled employees know that doing a good job ensures that innovators and the public have certainty in the boundary of issued patent rights. Certainty, accuracy, clarity and consistency of patent rights promote efficient investment in research and development, resulting in even greater innovation,” Lee wrote.

She added: “The GAO was right that the importance of issuing high-quality patents cannot be overstated ... That’s why we are committed to further improving patent quality.”

The recommendations from the GAO mark an important step in the fight to improve patent quality, and advocacy groups including the EFF will be pleased that their calls have been met.

Although the proposals may not get to the heart of the problem—at least as far as some lawyers are concerned—the fact that the GAO is suggesting change at all should be reason to be positive.