IPO Disagrees with Director Dudas

    By Kevin E. Noonan --

As reported by Patent Docs on April 30th, Jon Dudas (at right), Undersecretary of Commerce and Director of the U.S. Patent and Trademark Office, has a message for the public (and Congress, and the courts and particularly the patent community):  one of the problems that ails the Patent Office is that "[w]e [the Patent Office] are getting more and more unpatentable ideas, worse and worse quality applications."  His "evidence":  falling allowance rates, which he asserts dates from about 2003, when the allowance rate was about 70%, until now when the allowance rate is less than 50%.  This is convenient, because it roughly correlates with the beginnings of the examination backlog that began under his watch and has gotten steadily worse under his leadership.  This even while Congress has (for the past 4 fiscal years) reversed a twenty-year trend of raiding Patent Office receipts to fund other parts of the federal government.  The Patent Office is getting full funding, and hiring thousands of new examiners, and yet it still can't reduce the backlog of pending applications.  The Office's answer, as it has been for several years, is that patent applicants and the patent bar are to blame (see "New Rules, New Threats: More on the Office of Enrollment and Discipline").  The reason used to be a proliferation of continuation applications and RCEs (before Judge Cacheris enjoined the ill-advised "new rules" designed to reduce the backlog by precluding applicants from filing more than two continuations in an application family).  Now the mantra is "quality" (which ranks with the flag, motherhood, and apple pie in the Patent Office pantheon) and the Patent Office cannot "do its job" because of these "poor quality" applications.

On May 6th, the Intellectual Property Owners Association (IPO) joined the ranks of those understanding these Patent Office pronouncements for what they are:  desperate attempts to shift the blame for the application backlog to anyone other than the managers whose incompetence is actually to blame.  In a letter to Mr. Dudas, the IPO stated it was "not aware" of any such quality decline.  The IPO reminds the Director that IPO members file almost 30% of all U.S. patent applications by U.S. citizens, and "take patent quality very seriously."  The IPO also reminds the Director that, as an organization, the topic of patent quality "is a regular subject of discussion within IPO committees and at public conferences attended by our members."

The IPO's letter also reminds the Director what the other side of the Patent Office's mouth has been saying for several months:  that the reduction in the allowance rate was not because patent quality has declined, but because patent examination quality has increased (see "USPTO Announces 'Record Breaking' 2007 Performance").  In addition, the letter specifically cites comments at a public conference on March 17, 2008 by the former Chief Administrative Patent Judge of the Board of Appeals and Interferences, that "it was not clear" (presumably to the Office) why patent allowance rates were falling.  However, the artificial "abandonments" recorded with the filing of Requests for Continued Examination ("RCEs") were mentioned by the Judge as a possible reason.  Considering this rationale, it appears reasonable that RCEs may be contributing to the statistic, especially if "patent quality" initiatives were resulting in a decrease in the number of allowances and an increase in the time and number of Office Actions needed to reach agreement with Examiners about the scope of patentable subject matter in an application.

The IPO's letter also points out, accurately, that declining allowance rates today occur in applications filed several years ago, in view of the time it takes for an application to be examined (which, by the Patent Office's own measurements were, on average, 31.9 months in 2007).  And if there is a basis for "declining quality," according to the IPO, it may reside in the greater number of prior art citations applicants make today than they did in the past, in an effort to forestall inequitable conduct allegations when patentees attempt to enforce patent rights.

The IPO closes its letter with a challenge:

Therefore, we request that the USPTO share the data it has to support the proposition that the quality of applications submitted to the office is declining.  If the data does indeed support this position, IPO would be very interested in working with the USPTO to improve application quality, consistent with keeping the responsibility for examining patent applications with the office and not transferring it to patent applicants.  As you are aware, we oppose legislation mandating "Applicant Quality Submissions," but we remain willing to explore voluntary actions that could be taken by patent applicants to reverse any demonstrated decline in the quality of submitted applications.

The challenge is likely to fall on deaf ears, since Mr. Dudas' comments were not intended to address an actual problem.  No, the answer to "bad quality" patents is easy:  don't allow them.  If they are of particularly poor quality, or don't claim a patentable invention, it should be easy to continue to reject them without expense or extensive Patent Office resources.  And these applications, if pursued, will continue to be a boon to patent examiners, who can continue to exploit the antiquated "count" system with these applications and allocate more time to other applications containing patentable subject matter.

Thus, Mr. Dudas' comments are yet another Patent Office straw man raised to deflect attention from the real root of the problem:  mismanagement.  The management problem exacerbated the lack of funding that started the Office down this path at a time of great technological advances in several scientific and industrial fields.  This was coupled with changes in what was considered within the scope of patentable subject matter, and with Patent Office rule changes (like publication) that created strong incentives for applicants to file new, continuing, and divisional applications before these rule changes went into effect in the fall of 2000.  As a consequence of all these factors, the Office (as well as patent offices worldwide) experienced a large increase in the number of applications, an application "bubble," that is the true "cause" of the application backlog.  Instead of pointing fingers, the more productive approach would be to accept the IPO's invitations (and others like it from other groups and organizations in the patent community) to join with the Office in an attempt to solve these problems, rather than merely assessing blame.  Perhaps the next Administration will be able to field a Patent Office team capable of doing so.

For additional information on this topic, please see:

• "New York Times to Innovation: Drop Dead," April 30, 2008

Comments

[Sean]

"...the more productive approach would be to accept the IPO's invitations...to join with the Office in an attempt to solve these problems...."

I couldn't agree more. The PTO seems to chart its own course, without ever seeking input from the patent bar or other interested parties. There would be plenty of simple ways to increase examination efficiency (e.g., allowing multiply dependent claims; having the applicant designate a representative claim or two for preliminary examination), and plenty of ways to introduce minor statutory tweaks with potentially great results (e.g., delayed examination).

However, the PTO never bothers to ask for input, except after they've proposed some rules and opened up the commenting period (which comments they ignore anyway).

[Federally Circuitous]

Last week I received the following notice from the AIPLA:

"The AIPLA Spring Meeting in Houston had scheduled Under Secretary of Commerce and PTO Director Jon W. Dudas to be the speaker at the May 14, 2008, luncheon. Director Dudas has just informed us that it will be necessary for him to attend the upcoming WIPO Coordination Committee meeting which will take up nominations for the post of WIPO Director General."

Sure. A WIPO committee meeting that was probably scheduled well before Mr. Dudas agreed to speak to the AIPLA. That *must* be the reason he opted out of luncheon gig. I mean, it couldn't possibly be because he suddenly realized that most of the AIPLA membership is less than sympathetic toward his buffoonery...

Maybe it's just his survival instinct kicking in - since he'll be out of a job in January, he may be submitting his cv to WIPO for its consideration.

[Sean]

I wish him the best of luck in obtaining that job...the sooner, the better.

[e6k]

"The IPO's letter also reminds the Director what the other side of the Patent Office's mouth has been saying for several months: that the reduction in the allowance rate was not because patent quality has declined, but because patent examination quality has increased"

Apparently you don't understand what this means. This means that since quality of examination went up, crppier apps are not being allowed, where they were being allowed before. Thus, higher quality patents issuing being due to higher quality examination does not have any effect on the fact that the submissions are suking. They are merely indicative of it. Learn to use reason on your blog and maybe Doll will start liking it more.

[Kevin E. Noonan]

Dear e6k:

The timing doesn't match the rhetoric, you see. First, the trend of falling allowance rates have been over the past year or so. If the Office was reducing allowance rates merely for bad applications, you would expect that applicants would be filing fewer bad applications. But Director Dudas has been speaking (or at least leaving the impression) that applicants are filing more and more poor quality patents now, which seems illogical.

Second, the applications you are examining now (by Office statistics) should be applications that were prepared and filed before the fall in allowance rates. If you are correct and there has been an improvement in the standards of examination, then a graph of the allowance rate and the quality of applications should start to parallel, with a lag time for applicants to realize they have to improve application quality.

Since you are in a better position to know than I am, why don't you give me a representative dozen or so patents that have been granted during the 72% allowance rate days that you think would not be granted now (in the 44% allowance rate days). You can even include cases with KSR implications (although that represents a change in the law). If you go back to the blog in November, we asked our readers to send us the "bad" patents they knew about, and were a little underwhelmed not with the response but with the types of "bad" patents we got in return. It would be good to have someone with you expertise weigh in on the issue.

And, as we discussed before, ad hominem doesn't really work on our site. We can have differences of opinions without it, and it does little to advance the discussion.

Thanks for the comment.