By Dr. Rao Vepachedu(1), PhD, JD, LLM
Intellectual property (IP) protection affects the economy by providing incentives to invent novel products and technologies that create jobs and boost the economy through the short-term monopolies to the inventors protecting from unauthorized copying. Patents are IP that may need to be appraised for accounting, tax, litigation and transactional purposes. IP intensive industries support at least 40 million jobs in the US and contribute more than $5 trillion, nearly 35 percent of the gross domestic product(2), making the US a world leader and a super power.
A strong patent system, supported by quality patents, also boosts American competitiveness. Thus, a strong patent system effectively promoting innovation is a key driver of economic growth and job creation. Such innovation requires an expedient examination process resulting in issued patents that comply with all statutory requirements and stand the scrutiny of litigation in the courts of law. Errors in patent grant and administration procedures can cause legal uncertainty and increase costs for all users of the patent system: rights-holders, competitors, users of patent information and the patent offices. The United States of America must set the standard for patent quality to ensure other countries both respect US patents and seek to raise quality themselves. Maintaining high quality patents also helps US companies to invest in innovation, enabling them to compete in the world marketplace.
Last year, the Washington Post reported that some of the 8,300 patent examiners repeatedly lied about the hours they were putting in, and many were receiving bonuses for work they didn’t do, and the top agency officials ensured that cheaters were protected(3).
Therefore, the USPTO has established enhanced patent quality initiative(4) to:
- Build more confidence in the US patent system by enhancing patent quality;
- Make the system understandable and usable by all inventors; and
- Ensure each of our customers is treated fairly and professionally throughout the patent application process.
As part of this initiative and commitment to issuing patents that clearly define the scope of the rights therein, that are within the bounds of the patent statutes as interpreted by the judiciary, and that provide certainty as to their validity to encourage investment in research, development, and commercialization; the USPTO has released new training for examiners in the area of functional claiming, guidance on subject matter eligibility of claims, an improved classification system for searching prior art and targeted three aspects of patent quality, so-called the “patent quality pillars”(5): (1) Excellence in work products, in the form of issued patents and Office actions; (2) excellence in measuring patent quality, including appropriate quality metrics; and (3) excellence in customer service. The USPTO recognizes that examiners are the fundamental resource essential to building and strengthening the first pillar(5).
Despite these alleged efforts to improve, the quality of US patents has been deteriorating. A new independent review(6) by the National Academy of Public Administration found that the U.S. Patent and Trademark Office’s award-winning telework program to be a patent system that stresses “quantitative production over quality” and questions whether examiners are working hard enough; while patents are being issued at a rate of more than one million a decade. Oversight of examiners based at the Alexandria headquarters was “completely ineffective.”
Patent quality is based on meeting the legal requirements of subject matter, utility, disclosure, enablement, novelty and nonobviousness; and may include components such as value of invention, specification, patent prosecution, and commercialization. Bad patents drive up costs for innovative companies by forcing them to pay undeserved license fees or incur litigation costs. The USPTO policies have resulted in the grant of thousands of low quality patents to trolls bringing the majority of cases, hitting companies of every size in industries from high-tech to main street.
While the EPO has once again been rated number one for patent quality among the world’s largest patent offices, according to a recent survey of patent professionals by Intellectual Asset Management (IAM) magazine. The latest IAM benchmarking survey is based on responses received earlier this year from more than 650 corporate IP managers, non-practising entity (NPE) executives, and private practice lawyers and attorneys worldwide. Corporate respondents rated EPO grants as either excellent or very good and the EPO also ranked first in the level of service provided by the IP5 offices. The EPO has received top marks for patent quality in all of the most recent editions of the IAM survey (2012, 2011 and 2010). The other offices included in the survey are the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO), the State Intellectual Property Office of the People’s Republic of China (SIPO), and the United States Patent and Trademark Office (USPTO). Things had got worse over the last year for the USPTO, according to 12% of operating company respondents and 14% of those from private practice.
REFERENCES AND NOTES:
(1) Dr. Rao Vepachedu is the Managing Director at Cardinal Risk Management and registered patent attorney with extensive experience in the management of intellectual property and extensive experience in research and teaching. He currently works for Cardinal Intellectual Property (CIP), Cardinal Risk Management (CRM), and Cardinal Law Group (CLG). In addition, he is the president of Vepachedu Educational Foundation Inc. (www.vepachedu.org), a 501(c) (3) educational foundation. For more information visit: www.linkedin.com/in/vepachedu; http://www.avvo.com/attorneys/60201-il-sreenivasarao-vepachedu-764535.html, and http://www.crm-ip.com/vepachedu.html. Contact: email@example.com or firstname.lastname@example.org: www.linkedin.com/in/vepachedu and http://www.crm-ip.com/vepachedu.html;
(2) Intellectual Property and the U.S. Economy, at: http://www.uspto.gov/learning-and-resources/ip-motion/intellectual-property-and-us-economy
(3. Patent office filters out abuses: http://www.washingtonpost.com/politics/patent-office-filters-out-worst-telework-abuses-in-report-to-watchdog/2014/08/10/cd5f442e-1e4d-11e4-82f9-2cd6fa8da5c4_story.html
(4) USPTO Launches Enhanced Patent Quality Initiative: http://www.uspto.gov/blog/director/entry/uspto_launches_enhanced_patent_quality
EPO global benchmark for quality: http://www.epo.org/news-issues/news/2015/20150603.html