During my tenure at the US Patent and Trademark Office, the agency engaged in its Enhanced Patent Quality Initiative. To effectively improve patent quality, it was important to understand the various policy “levers” that might influence quality (and of course to understand what we mean by quality, as I discussed here). What levers are available to the office? Which are easy to “pull”? Which are effective? It was obvious to the leadership at the time that only a subset of policy levers is available to the agency. Patent quality is a complex issue that is influenced by a variety of policies, including legislative, legal, and administrative policies. Each of these policy areas has several levers available to influence patent quality.
Legislative changes are arguably the most powerful policy levers. Congress has the power to define what is and is not eligible for patent protection; to create institutions like the Patent Trial and Appeal Board (PTAB); and, to change patentability standards. But these changes are rare, costly, and politicized.
The courts also have a role in shaping patent quality, as they are responsible for interpreting the law and making decisions that can impact uncertainty in the patent system. For example, the Supreme Court determined that claim construction is a matter of law, and not a question of fact to be determined by the jury (Markman v. Westview, 1996). This led many district courts to adopt specific standards regarding Markman hearings. However, the courts are dependent upon which cases come to trial. And they do not necessarily coordinate their decisions, nor can their decisions always reflect sound policymaking. For instance, the Myriad, Mayo, and Alice decisions by the Supreme Court arguably led to greater uncertainty into subject matter eligibility for patents, by reversing years of case law at the Federal Circuit.
Administrative policy levers are those that the USPTO can directly affect. These include the regulations controlling patent prosecution (the patent examination process). In addition, the agency can change the incentives and resources available to examiners. For instance, suppose that each patent was examined independently by two separate examiners. Or suppose that examiner compensation was tied to the error rate determined by an annual audit of the examiners' decisions. New technologies can be adopted to improve prior art searching. Further, incentives for applicants can be influenced by changes in rules (e.g., the duty to disclose prior art known to the inventor), or changes in fees. Fee-setting is an often-overlooked policy lever for patent quality, which I will discuss in more detail another time. Suffice it to say that fees may be able to incentivize applicants to provide higher-quality information and discourage the filing of overly broad claims. However, the USPTO is constrained by the statute (and by its interpretation by the courts). The USPTO does not have substantive rule-making authority. Thus, our expectations should be lowered for wide-scale reform in patent quality led by the USPTO alone.
I would like to use a particular example to demonstrate the roles of the different policy actors in the patent system, motivated by experience over the years attending academic and policy conferences. At these gatherings, I have heard it said on more than one occasion that the problem with the US patent system is an inventive step. The claim is that if we required a more significant inventive step, we would have fewer patents, but each patent would be more valuable. Moreover—as the claim goes—it would be easier to identify the scope of each patent because the step between technologies would be larger. Without going into the merits of this claim, it is interesting to think about how we would go about implementing such a change in the US. What policy levers at the legislative, legal, and administrative levels could be pulled to effectively increase the inventive step for US patents?
At the legislative level, how would we re-write the law? Could the non-obviousness standard (Section 103) be amended to refuse patentability if the claimed invention is “obvious to a person having extraordinary skill in the art”?1 To make the patent really, really non-obvious? And how would the courts interpret the change in statute? How would the USPTO implement the statutory change in its Manual of Patent Examining Procedures?
Could the Supreme Court change the inventive step independently from the legislature? It would require the court to hear a relevant case and to re-interpret Section 103, going against years of precedent, and effectively rule that courts should interpret obviousness much more stringently. The following application of this new standard would have to apply generally across the patent system. This may be theoretically possible, but such an ad hoc approach would be messy and inexact. The parameters of the legal change are also unlikely to be rooted in sound economic and policy reasoning.
Could the USPTO influence the inventive step with purely administrative policy levers? It could not (legally) simply begin rejecting more applications based on a new standard. However, it could indirectly influence the de facto inventive step by sharply increasing application and patenting fees. This may have the desired effect to increase the technological step between those inventions that ultimately are patented. But there would be inevitable unintended consequences, such as increased concentration of patent ownership by better-capitalized firms.
This hypothetical example underscores the fact that different aspects of patent quality are suited to different policy levers. Improving patent quality requires careful examination of the various policy levers available and the development of targeted strategies to address the specific challenges faced by the patent system.
In my next post, I will go into detail about the legal quality of a patent and the factors that contribute to it, including the quality of the patent application and the quality of the examination process. These are aspects of patent quality suited to the USPTO’s policy levers.
Dr. Alan Marco is the Chief Economist for Ocean Tomo, a part of J.S. Held, having previously served as the Chief Economist for the USPTO. He is an economist who specializes in intellectual property and innovation. To learn more about Dr. Alan Marco, visit https://www.oceantomo.com/team/alan-marco-phd/
1 As opposed to “ordinary skill in the art,” thus replacing the PHOSITA standard with the new, improved PHESITA standard.