The United States Patent System:
The United States Constitution gives Congress the ability to grant patents to promote innovation. Patents give an inventor exclusive rights, for a period of twenty years, to exclude others from creating, using, or selling inventions. Not every invention can be patented; an invention must be “useful, novel, and nonobvious, and claim patentable subject matter.” The USPTO recognizes three types of patentable subject matters: utility patents, design patents, and plant patents. To apply for a patent, an inventor must submit an application to the United States Patent and Trademark Office (“USPTO”) that includes clear and detailed descriptions of the invention, so that another skilled in that area could make the invention, and technical specifications to support the scope of the patent’s exclusive rights. Once submitted, the application is assigned to a “technology center” and then reviewed by an examiner with relevant expertise in that technology to determine if the patent is clearly defined and meets the requirements specified in 35 U.S.C. §§ 101-103, 112 as well as the USPTO’s Manual of Patent Examining Procedure. The examination process consists of reviewing prior art (including prior patents and other publications about the invention), identifying issues with the application, and interviewing applicants when issues arise. The examiner will then grant the inventor a patent or deny the application. If the application is denied, the inventor can appeal.
What is Patent Quality:
Patent quality is difficult to characterize as it does not have a clear definition. Both the Government Accountability Office (“GAO”) and the Department of Commerce’s Office of Inspector General (“OIG”) defined a high quality patent as one that would be upheld if challenged in a court or at the Patent Trials and Appeals Board (“PTAB”). Low quality patents are issued when examiners approve a patent application that does not meet the requirements set out in 35 U.S.C. A low-quality patent can reduce innovation since it can lead to “uncertainty in the enforceability of patent rights [and] make it more difficult for others to ‘invent around’ a particular patent.” During a 2021 Senate Judiciary Committee hearing on patent quality, Senator Leahy discussed patents issued to Theranos, the fraudulent blood testing company, to show how low quality patents hinder competition. Theranos’s blood testing kits never worked, yet the company was issued hundreds of patents which were sold after Theranos’s founder/inventor was charged with federal crimes. The company that acquired Theranos’s questionable patents then filed a lawsuit for patent infringement against a healthcare startup company working to create COVID-19 testing kits. This example shows the damage low quality patents can inflict on innovation.
Senator Leahy and Senator Tillis have proposed a bipartisan bill, The Patent Examination and Quality Improvement Act of 2022 (Act), that would require the GAO to evaluate the current patent examination process, with a special emphasis on patent quality, and submit a report to Congress. After the GAO releases the report, the USPTO Director would develop new guidelines for patent examiners and create plans to advance and modernize the patent examination process. The Act would likely improve patent quality because it uses the expertise gained by the Senate Judiciary Committee’s Subcommittee on Intellectual Property to specify the scope of GAO’s study and recommendations, and then requires the USPTO to take those recommendations into consideration when creating new guidelines.
How Will the New Senate Bill Help to Improve Patent Quality?
Improving patent quality is an extensive task, especially since patent quality itself is still ambiguous. It may seem like the Act would be repeating a study that has already been done since GAO released a report on patent quality in 2016. But GAO’s previous recommendations to the USPTO did not have a large impact on improving patent quality, as a 2021 OIG report found issues similar to those GAO reported five years earlier. Both reported similar problems with the current examination process, such as a lack of clear policies and definitions to measure patent quality and insufficient time for examiners to evaluate each patent application. Although the USPTO implemented more evaluation time for patent examiners based on GAO’s 2016 recommendations, the 2021 OIG study actually found that patent examiners had less evaluation time than reported in the 2016 GAO study; OIG found examiners spend on average twenty hours on an application, while GAO found the average was twenty-two hours.
The previous GAO report and recommendations may not have been as effective because, as critics at the time noted, GAO may not have fully grasped the reasons examiners grant low quality patents. Critics agreed that examination time is a problem yet the answer might not be to increase patent examination time for each examiner, but to make sure the patent examiner has the correct technical background for that particular application. The Act would require GAO to study whether the USPTO should increase examination time and whether they should assign applications based on technical backgrounds and the number of patents in that area they have already reviewed. Therefore, the GAO report mandated by the new Bill would be more effective than previous reports because it considers areas of concern from stakeholders before starting the study.
Another new aspect of the Act is to require an evaluation of whether the USPTO should form a task force to “analyze[] real-world circumstances, such as practices at other agencies and in the broader scientific community.” This was not done in the 2016 GAO study. The GAO would most likely find that the USPTO should form such a task force to evaluate practices at other agencies. They may also require the task force to comparatively evaluate international patent offices. The OIG report mentioned other patent offices are more consistent across their patent examination process. Analyzing how their examination practices could be used in the U.S. patent system could decrease the number of low quality patents granted. In addition to reviewing practices at other agencies, the USPTO could also look into ways to work together with federal regulators. For example, in 2014 the Environmental Protection Agency (“EPA”) found that certain pesticide companies were downplaying the effects of their product on the EPA while magnifying their effects on the USPTO in order to receive a patent.
The Act is also different from previous GAO and OIG reports because it requires the USPTO to submit its own report that takes into account GAO’s findings. GAO and OIG recommendations do not have the force of law behind them, so agencies can choose not to follow them. The USPTO would also be required to submit its own report about how they plan to improve guidance to patent examiners plus a five year plan to modernize the examination process. This could create more collaboration between the USPTO and GAO since the USPTO would have to submit a report partly based on GAO’s recommendations.
Recommendations
One recommendation on how the Act could be improved would be to have GAO evaluate if Congress should increase the USPTO’s budget. The USPTO relies on fees generated by patent applications and patent maintenance to fund itself, leading some studies to question whether this gives the USPTO an incentive to grant more patents than it should. Increasing the USPTO’s budget could also allow them to hire more patent examiners. As of October 2022, the USPTO employed approximately 8,000 patent examiners but had a backlog of over 700,000 patent applications waiting to be examined. Adding more examination time and matching applications with examiners based on expertise may not help if the supply of examiners is not close to meeting the demand of patent applications. If the USPTO is focused on reducing its backlog, then the 8,000 current patent examiners will never have enough time to thoroughly examine a patent application and the approval of low-quality patents will continue.