Before You Complain About So-Called Bad Patents, Read This

By Michael Borella --

This weekend The New York Times published an editorial opinion entitled "Save America's Patent System."  It bemoans the purported prevalence of "bad patents" -- including "uninspiring tweaks" to existing products -- that supposedly undermine innovation.  This led the Times to call for radical patent reform.

The Times continues a trend that has been at play for well over a decade now.  The "bad patents" narrative raises its misguided head from time to time and lodges complaints about the supposed inequities of the patent system.  According to the Times, these include higher drug prices and extortion by patent assertion entities.

Perhaps ironically, the Times does not identify any of these "bad" patents.  Every U.S. Patent has at least two unique numbers by which it can be differentiated from all others, but none of these are provided.  Therefore, it is unclear which patents the Times believes to be "bad."

Further, the Times does not go into any detail regarding how it determined the "badness" of these unidentified patents.  What part of the patents did the editorial board consider?  Did they ask a patent attorney for help?  Did they properly consider how the scope of the claimed invention might be construed?

If you think that you can just look at an issued patent and determine that it is "bad," think again.  All patents are required to be novel and non-obvious (among other requirements).  But the legal principles of novelty and non-obviousness are notoriously tricky, even for seasoned U.S. Patent and Trademark Office (USPTO) patent examiners, patent attorneys, and federal judges.

First of all, the claims of the patent define the invention.  These numbered paragraphs at the end of each patent are where you start.  All too often the popular press does little more than read the abstract of the patent and conclude that the patent is "bad."  But the abstract is required by the USPTO to be no more than 150 words and thus is almost always a high-level summarization of what is claimed.  Put another way, concluding that a patent is "bad" through a cursory reading of it is not unlike determining the guilt of a person accused of a crime by only considering their shoe size.

Instead, the claims must be construed.  Claim terms are given their ordinary and customary meaning (e.g., based on dictionary definitions or how the term is used in the relevant field).  Further, one must look to the specification of the patent to determine whether the inventors used any particular term in an unconventional fashion that would override its ordinary and customary meaning.  Also, one must look to the file history of the patent (a written record of back-and-forth arguments made between the patentee and the USPTO that led to the granting of the patent) to determine whether the patentee made representations that would further color the definition of the terms.  In some cases, testimony of the inventors or experts in the patent's field of technology may also be used to determine how the claims are to be interpreted.

As a consequence, rather than just glancing at the abstract, a drawing or two, or the claims themselves, the process for determining whether the claims are valid may require reviewing many hundreds of pages of documents.  Further, much of the patent statute has been heavily interpreted by the courts.  Thus, even after all of this material is reviewed, applying the law to the claims may involve additional review of a few dozen Supreme Court and Federal Circuit decisions.  This is a process that can take weeks.  And even after that, reasonable minds can differ.  The legal notion of non-obviousness is still somewhat subjective.

Furthermore, some of the most innovative ideas and products are obvious only when 20-20 hindsight is applied.  If you look at a patented invention and think "I could have done that!" slow down and think again about whether you could have come up with that idea only having the information available to the inventors at the time the application for this patent was filed.

Did the Times go through this process before complaining about "bad" patents?  It seems unlikely.

Nonetheless, the Times did get some things right.  It wrote that the USPTO has "devolved into a backwater office that large corporations game, politicians ignore and average citizens are wholly excluded from."  This is mostly correct.  The high cost of doing business with the USPTO (not to mention attorneys' fees) is prohibitive for most Americans.  And the economics do favor the companies with deep pockets who can persist through multiple rounds of examination.  And some patent assertion entities do act in bad faith, spamming lawsuits with the hope of recovering nuisance damages.

But this is not the whole story.  To be fair, the USPTO regularly issues patents that it probably should not.  But the USPTO also throws up arbitrary barriers to patenting solid inventions on the basis of dicey reasoning.

The quality of examination at the USPTO varies dramatically between art units and examiners.  Not all examiners are equally well-trained on the technology or the law.  Some seasoned examiners have 95% allowance rates and others allow less than 5% of their examined applications.  If an individual inventor or small business patentee finds themselves with a difficult examiner, they may lack the resources to conduct an extended prosecution or to appeal.  In some cases, the patentee will give up simply because it cannot afford to continue.

Also, once a patent is issued, the story is not over.  Since the passing of the America Invents Act in 2011, patents can be pulled back into the USPTO for further review.  Typically this occurs prior to or during litigation.  Also, the 2014 Alice Corp. v. CLS Bank decision from the Supreme Court has made it significantly easier to invalidate software patents on completely sketchy grounds.  As a result, litigation of even a patent reasonably believed to be valid is a very risky and expensive process.

The Times also fails to explain how small businesses can struggle to obtain a few (often just one or two) patents, and then have to spend millions over the course of years to shut down copyists and free-riders.  In the last decade, the term "efficient infringer" has been used to describe how a large corporation can infringe its competitors' patents with little risk of consequence.  Seeing a patent all the way from application to issuance to successfully winning an injunction, settlement, or damages award is not unlike trying to hop across a minefield on one leg.

Moreover, the strain on innovation goes both ways -- an overly permissive patent system would limit innovation, but so does an overly strict system.  Not granting patents that should be granted disincentivizes innovators from publicly disclosing their inventions and motivates the use of trade secrets instead.  And an economy based on trade secret limits our ability to share our advances in science and technology -- to stand on the shoulders of giants.

So determining whether a patent is "good" or "bad" is not at all analogous to sorting ripe fruit from rotten.  It is a process that requires more than a glance and a roll of the eyes.  You need to put in the work.

If the Times wants to improve the patent system, it needs to call for a higher quality of examination at the USPTO rather than a higher bar for non-obviousness.  It needs to call for lower fees and a less onerous examination process for individual inventors and small companies.  And it needs to stop its vigorous hand-waving away of the complexities of patent law in order to provide a more accurate and well-reasoned viewpoint.

Comments

[skeptical]

I saw the article as well and would have simply dismissed the piece as very badly misguided MISinformation.

As noted, many of the thrusts have been around for more than a decade, and have simply not aged well.

[Night Writer]

Most of the information in this editorial is just ridiculous. They obviously don't understand patent law and are assuming that patents are just "bad."

I worry that this is a set-up for the new Director to take a turn to the far left like other Biden nominees. It would be easy for the director using IPRs and 101 to devastate the patent system.

And Congress is so crippled and corrupt that I can't believe they will do anything but make our patent system weaken.

Seems to me with all the division in the USA that the most important thing is what is reality. Do patents help innovation. That is the key point. All my experience says yes.

[Dan Feigelson]

All excellent points. I would add that it is impossible to assess the cost to society of the false negatives, viz. patents that aren't allowed by the PTO but should be. No one is going to bother to develop a new drug for which there isn't patent protection - the cost of getting FDA approval is too high. But it's hard if not impossible to identify the drugs-that-might-have-but-for-a-recalcitrant-examiner. With the cost of enforcement having been raised by the introduction of IPRs, which instead of replacing district court litigation are now a mandatory and costly adjunct thereto, coupled with the likelihood of a patent being found invalid under 101, and the long period between investment and return on investment, it's no wonder that investment in the biotech area is not as attractive today as it was 15 years ago, especially in comparison to investments in high tech.