Patent Law

Broken: The USPTO

By Gary Odom and Jordan Kuhn

This begins a series on what is wrong with patents in this country. The constitutional goal of patents is "to promote the progress of science and useful arts." But patents present irrepressible contradictions of purpose by the players of the patent game, and the pursuit of self interest by the players reveals their flaws and limits. Which is to say that the room for improvement would fit the several elephants of what is obviously wrong, but seldom acknowledged by those involved. Aside from incompetence, which weighs in heavily, two factors stress the patent system: politics and money. Let's begin with the place where patents are birthed: the patent office.

Problem number one with the PTO is the examiner corp. With rare exception, they do not approximate the sharpest tacks in the box, nor is the examination regime geared to sharpening them. Every prosecutor has his own nightmares to tell of examiner inanity. On more than one instance I've abandoned an application over prior art found by an examiner, but for which the examiner did not cite the right passages, and couldn't even write a decent rejection, thus failing to either fully appreciate or adequately articulate what he had found.

Career examiners and PTO management are government bureaucrats. In this country at least, that can't be mistaken for a complement. Unlike the French, the best and brightest Americans are not prone to public service. The smart ones go in for the resume boost and get out within a few years. Einstein's first career was in the Swiss patent office. He didn't linger.

KSR, a politically inspired Supreme Court decision, has made examiners practically insufferable with their unreasoned hand-waving rejections. The nature of the problem is that of lack of examiner competence and awareness: failure to conceptualize and failure to distinguish details. The irony is built in: examiners don't qualify as "one of skill in the art at the time of the invention," and don't examine objectively.

Examination has been heavily geared, post-KSR, to rejection. Examiners get scant training in the grounds to allow claims. The training regime is focused almost solely on the bases for rejection.

Besides examiners suffering logic as a second thought process, there is the less damning but often vexing problem of English as a second language.

KSR was a watershed in regime switching: from permissive too restrictive. KSR transpired as a culmination to the junk patent decade plus, which enveloped the Clinton years, where getting a patent granted was far too easy. It was the junk patent decade that lead to outcry by large computer corporations, assailed with lawsuits where only a fraction were worthy of patent protection.

Examiners work on a production quota point system. Like post office workers used to, to sort the mail. The fundamental flaw in using a production system where quality should take precedent over quantity should be obvious. It was to Patent Office Commissioner Casper W. Oom in 1945:

It has been brought to my attention that the practice prevails [in] the Patent Office of measuring the "amount of work accomplished" by Assistant Examiners during particular periods of time by assigning quotas of production.... This practice necessarily emphasizes quantity rather than quality of work.

Work of the kind in which Patent Office Examiners are engaged involves great public and private interests, and requires exceptional training and experience coupled with matured and considered judgment in its execution. For these reasons, it cannot be measured by methods applicable to routine office operations. High class professional work performance in a favorable environment and adequately compensated inevitably attracts and holds high class men [and women], and the pride of achievement entertained by such men [and women] ordinarily provides a sufficient incentive for work which is commendable both as to quality and quantity.

KSR at least paid lip service to articulating reasoning for combining references to an obviousness rejection. More often than not that articulation is only evident in the breach in an office action. Worse is mischaracterization of prior art, and reading in what was never disclosed. Those logical flaws are running wild in office actions. While the mentality varies from art unit to art unit, the heavy accent is on rejection, logic and regard for the law take the hindmost.

These generalizations are not intended as blanket damnations. Most examiners are at least civil, even the morons. As Pink Floyd observed on The Dark Side of the Moon, "good manners count for something." But, while the facade remains civil, the spirit has generally become meaner in not granting patents on merit since KSR, which was really a watershed in the larger political movement to crack down on patent protection.

Not all patents granted pre-KSR are junk, nor are all post-KSR patents worthy. But there's more than grains of truth in the generalization that, while examination quality may have remained something of a constant, the flip got switched to less garbage output, at the expense of some worthy inventions never reaching patent status.

The patent office is a political creature. This was glaringly apparent with the last director, Jon Dudas, who was nothing shy of a ill-favored political hack, and whose subsequent descent was to a very politically oriented law firm: Foley & Lardner. As to his stated qualifications: "Mr. Dudas is admitted in Illinois only. His practice is limited to matters before federal courts and agencies." Not a patent agent, hence not a prosecutor. Not a patent litigator. And, as his tenure at the PTO showed, not a manager.

The USPTO is practically the only federal agency capable of actually making money. Application and allowance fees almost pay the rent. It's the maintenance fees on granted patents that are the gilt trim of profit.

From 1992 through 2004, Congress pilfered the patent office's piggy bank. That budgetary shortfall created a backlog of 1.2 million applications, estimated to be six years in catch-up work, if adequately funded. 2005-2008, when the agency was fully funded, were largely squandered by Dudas, whose lack of managerial acumen led to both examiner discontent and acrimony from the patent community. The built-in irony is that Dudas has been credited with getting the money to spruce up the agency, but lacked the wherewithal to make productive use of it.

How to fix the PTO? Better management, better training. Easy to say, nearly impossible to do. Especially at a time of fiscal constraint. Which is why the Dudas reign represented such a lost opportunity. A very few years ago the Office was flush, and could afford corrective action. No more, nor likely for years to come. Current Director David Kappos, former patent handler at IBM, has his work cut out for him.

The recession hammered the PTO like it hammered everyone but corporate chieftains. Kappos came on board inheriting a $200 million deficit. So he can neither hire & train new examiners, nor upgrade the agency's reputedly antiquated computer systems. Attrition continues to sap quality, as about 50 examiners a month quit without replacements. The agency has recently launched a campaign to hire back into the fold examiners who quit, thus regaining experience and some talent while saving training costs. The response of silence has been deafening. One erstwhile examiner told me, "I'd rather wait tables than go back to the PTO."

Congress just passed a budget this month larded with pet projects, as usual, but with a restrictive spending ceiling on the PTO. An additional $100 million was stripped at the last-minute.

Lack of quality examination equates to patent abortion. Alas, the damage of not granting patents to merited inventions is inestimable, like proving a negative, that something that should exist doesn't. One cannot easily state one way or another whether commerce, or society, is better off granting fewer or more patents. The hurt is individual: of companies or inventors not getting patents they deserved. The failure of patent protection by merit could doom startup companies that depend on such to raise capital and have a shot at marketing their innovative products without having their lunch eaten by a mega-corporation. The recent i4i v. Microsoft is a case in point.

Kappos is aware of the dilemma, waxing prophetic to make a point: "Every patent application that we sit on is an American job not being created."

That's one of the truisms about patents: it's nearly impossible to make generalizations about their value, other than to say that patents do serve a valuable role in rewarding innovation by providing a return on investment. Not protecting invention means the economy's engine lacks lubrication.

The factory where patents come from is fouled, and there's no fix in sight.

Full post as published by The Patent Prospector on December 31, 2009 (boomark / email).