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A de facto patent registration system May 2, 2014

Posted by Brian Schar in General, Patent prosecution, USPTO.

Somebody explain to me how it is that we don’t effectively have a patent registration system in the US.

After 3 or more years in USPTO hell, winning appeals, and obtaining a patent that is supposed to be presumed valid, the owner might want to assert it.  However, the infringer against whom the patent is asserted will immediately throw that patent into IPR for more examination, sending the patentee’s purportedly-valid patent back to USPTO purgatory.  A whopping _92 percent_ of the time the claims will be amended or canceled!  How is this not a slap in the face to the examining corps, and the entire idea of patent examination?  If patentees are losing patent rights 92 percent of the time, what was even the point of initial examination?  Doesn’t this process negate on a de facto basis (1) the entirely of the examination process, and (2) the presumption of validity?

What is really happening on a de facto basis is that you have to open “real” examination, with adult supervision, at the time you assert the patent.  That is the basic characteristic of a registration system – there is no examination, and no presumption of validity.

In my view we now live in a patent system with the worst of all possible characteristics, which of course is the American legislative way. Patentees have to endure the expense and time of a normal examination process, as in examination-based patent systems, but then have to have their claims confirmed in a later proceeding, as in a registration-based system.

Why not abandon the entire idea of examination as it currently stands, and simply allow registration of utility patents?  Or at least give patentees that money and time saving option?


1. Socrates - May 5, 2014

In 2013, the USPTO allowed 334,560 patents applications, issuing 290,083. While “objective” markers for patent value are hard to quantify, one subject marker is whether the patentee chooses to pay the maintenance fees. Since 47% of patentees paid those fees for the 11.5 year fee in 2013, we can reasonably estimate that only 47% of patents actually have “subjective” value. Thus, of the 290,083 issued patents in 2013, we would estimate that 136,339 have subjective value.

In 2013, the PTAB instituted under the interpartes review 203 decision, with 26 denials in that group.

So for 2013, about 0.1% of patents likely to have subjective value were challenged under IPR. Is it really that unreasonable that Examiner’s erred 0.1% of the time in issuing patents? Given the ability of IPR submitters to spend significantly more time and resources on prior art searches as well as evidence from experts support findings Examiner’s might not be able to make, even a 1-2% error rate (less than that cited by the USPTO) would be amazingly good for Examiners. 1% of all valuable patents would mean 1,363 institutions, all of which should be instituted.

So rather than being Rader’s “Death Squad”, this seems more like a minimal 3 sigma error (unless you think the USPTO examination is a six sigma operation).

2. Brian Schar - May 5, 2014

I will stipulate to every one of your facts being correct. However, I would submit that those facts are not relevant to my point. The question is not “how many patents that might have value are subjected to IPR?” Instead, the question is “how many patents that are actually being asserted are subjected to IPR?” I suspect that number is closer to 100% than to 0.1%.

A patent that isn’t being asserted is a piece of paper, and has little to no deterrent effect unless the owner is perceived as being willing to defend it – and that requires litigation. Subjective value is subjective.

3. Socrates - May 5, 2014

According to patently-O, (http://patentlyo.com/patent/2014/04/district-courts-patent.html) “there were 19,325 patent cases filed before 865 judges over the four year period” of 2010-2013. While these were probably not precisely evenly distributed, even distribution would result in 4831 filings each year. Assume each filing relies upon only one different patent (some may be suing multiple parties and some may rely upon multiple patents). Of those 4831 filings, 203 patents were subject to IPR, so even if all 203 were involved in litigation, the number of patents being asserted which are subject to IPR is closer to 4%, not 100%.

4. Brian Schar - May 5, 2014

Of course, the current incarnation of IPR was not in existence in 2010, so your numbers for 2010-2013 are biased toward a smaller percentage of district court cases involving patents embroiled in IPR. The numbers you cite have already moved from 0.1% to 4%, a forty-fold increase. I stand by my original point.

5. Dennis - May 6, 2014

Does the examination process provides some deterrent to patent trolls shaking people down for cheap settlements using completely worthless patents? And without the “presumption of validity” the examination process creates, would some inventors might be reluctant to make the details of their invention public, instead opting for trade secret protection, thus defeating one of the purposes of the patent system?

6. Brian Schar - May 6, 2014

Dennis, thanks for your post. Your points are non-trivial. As to your first, I don’t know that you could shake anyone down with an examined non-IPR’d patent; the demand letter will just go in the garbage – particularly in a year or two when people really understand the current system. Based on my logic, those letters would equally go in the garbage if you had a registered, non-examined patent. Your second point is far more valid, and I think it’s the direction that IP protection is going. It’s hard to get and hard to assert patents, and it’s just getting more difficult and more expensive. I think you’ll see more and more inventors and companies trying to keep things secret to the extent they can.

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