Earlier this summer, the U.S. General Accountability Office (GAO) completed three reports related to the performance of the U.S. Patent and Trademark Office (USPTO). The three reports, that were all officially released July 20, are:
1. Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity
2. Survey of U.S. Patent Examiners
3. Patent Office Should Strengthen Search Capabilities and Better Monitor Examiners' Work
This month, we will summarize and analyze for you the first of these three reports.
The report opens with a letter to Rep. Bob Goodlatte, a Republican from Texas who is the chair of the House Judiciary Committee. Rep Goodlatte has proposed and supported several anti-patent-rights bills, so it can be reasonably assumed – although it does not state this in the report – that the report was initiated through a request from Rep. Goodlatte and/or his committee.
Purpose of the Study
Beginning with the premise that going to court to resolve disputes over patent infringement and validity costs millions of dollars, the report assumes that an increase in the numbers of low quality patents – specifically those that are unclear and overly broad – is the culprit. The report begins with the undocumented assumption that an increase in patent infringement litigation may hinder innovation by blocking new ideas from entering the marketplace.
The GAO was asked to review issues related to patent quality as a means to reduce patent litigation, ignoring entirely the concept that in a rush to get a new product to market in an increasingly competitive global marketplace, many companies fail to perform sufficient due diligence to determine if the technology behind their new products is infringing a patent or patents.
The report examines recent trends in patent infringement litigation and what additional opportunities exist to improve patent quality. The GAO analyzed patent infringement litigation data from 2007 through 2015, conducted a survey of USPTO examiners, and interviewed Patent Office officials and stakeholders such as legal scholars, technology companies, and patent attorneys – but no inventors!
Page 10 of the report includes a very instructive and interactive chart showing the steps in the patent examination process, with a pop-up paragraph that explains each step. Here is the chart, but you must go to the actual Adobe version of the report to see the pop-up text.
The GAO included several charts based on research by RPX Corporation that tracked patent litigation. The GAO found that District Court filings for patent infringement lawsuits increased from about 2,000 in 2007 to more than 5,000 in 2015, while the number of defendants named in these lawsuits increased from 5,000 to 8,000 over the same period.
Additional research showed that from 2007 through 2015, patent infringement filings in the Eastern District of Texas increased from about 20 percent to almost 50 percent of all filings.
Without providing documentation to back up this claim, the GAO reported that the increased filings in the Eastern District of Texas were “likely due to recent practices in that district that are favorable to the patent owners who bring these infringement suits.” The agency also found that – not surprisingly – most patent infringement lawsuits are in the high-tech sector: Software, computers and telecommunications.
The report went on to include that according to what several stakeholders told the GAO, it is easy to unintentionally infringe on patents associated with these technologies because the patents can be unclear and overly broad, and that is the result of low patent quality. What due diligence is or is not performed by high-tech companies was not addressed.
The GAO acknowledged the Enhanced Patent Quality Initiative launched by Patent Office Director Michelle Lee in May of last year was a series of good first steps toward improving patent quality. However, the GAO concluded in its report that there are additional opportunities to improve patent quality.
1. The USPTO does not currently have a consistent definition for patent quality that is articulated in agency documents and practices, and that is in line with federal internal-control standards and best practices. The GAO reports that the stakeholders they interviewed would define a quality patent as one that meets the “statutory requirements for novelty and clarity” and one that would be upheld if challenged in a lawsuit or other proceeding. Without a consistent definition of patent quality, the GAO believes that the Patent Office is unable to truly measure progress toward meeting its patent quality goals.
2. The agency found that time pressures on patent examiners are an essential challenge to patent quality. Based on GAO's survey of patent examiners that is included in one of the three reports released in July, 70% of patent examiners say they do not have enough time to complete a thorough examination given their typical workloads. According to federal standards for internal control, agencies should provide staff with the right structure, incentives, and responsibilities to make operational success possible. Without assessing the effects of current incentives for examiners or the time allotted for examination, USPTO cannot be assured that its time allotments and incentives support the agency's patent quality goals.
3. The GAO believes that the USPTO does not currently require patent applicants to define key terms or make use of additional tools that would further ensure patent clarity. Federal statutes require that patent applications use clear, concise, and exact terms, but the GAO estimates that nearly 90% of patent examiners “always or often” encountered broadly worded patent applications, and nearly two-thirds of examiners claim that this makes it difficult to complete a thorough patent application examination. Without making use of additional tools – such as a standard glossary of key terms – to improve the clarity of patent applications, the Patent Office risks issuing patents that do not meet statutory requirements.
The report includes seven recommendations that it believes would improve patent quality:
1. Develop a consistent definition of patent quality, and clearly articulate this definition in agency documents and other guidance.
2. Further develop measurable, quantifiable goals and performance indicators related to patent quality as part of the agency’s strategic plan.
3. Analyze the time examiners need to perform a thorough patent examination.
4. Analyze how current performance incentives affect the extent to which examiners perform thorough examinations of patent applications.
5. Establish a process to provide data on the results of the PTAB proceedings to managers and staff in the USPTO’s Technology Centers, and analyze PTAB data for trends in patent quality issues to identify whether additional training, guidance or other actions are needed to address these trends.
6. Evaluate the effects of compact prosecution and other agency application and examination policies on patent quality. In doing so, USPTO should determine if any changes are needed to ensure that the policies are not adversely affecting patent quality.
7. Consider requiring patent applicants to include claim clarity tools – such as a glossary of terms, a check box to signal functional claim language, or claim charts – in each patent application.
While everyone in the innovation community – from independent inventors to corporate R&D staffs, from patent attorneys to patent litigators – want quality patents, no evidence has been put forth substantiating the belief that patent infringement litigation will be reduced if we just had better quality patents. While the report is comprehensive and it includes excellent recommendations, it does not address the market dynamics that are a critical factor in why patent infringement occurs, and the patent litigation that follows as a means to enforce IP rights and provide remedies to those whose patents have been infringed.