TGIF for Debate Over Mandatory Patentability Searches

On Friday, March 28, 2008, the Intellectual Property Owners Association (IPO) issued an urgent legislative alert to all U.S. members urging them to contact their two Senators to express opposition to the mandatory “applicant quality submissions” (AQSs) in patent reform bill S. 1145 that would require pre-filing patenatbility investigations. According to the IPO,

The bill requires nearly every patent applicant to (1) search the prior art and (2) submit a search report and analysis to the USPTO with its patent application. . . . Mandatory AQSs would add unjustifiable expense to the filing of many patent applications, embroil applicants in disputes over what constitutes an adequate search or analysis of the prior art, and discriminate in favor of certain applicants who would be exempt from the AQS requirement. IPO believes the case has not been made that AQSs would be cost effective for improving patent quality.

However, according to "Seeking Cost-Effective Patents," by Professor Thomas G. Field, Jr.,

Inventors should not try to save money by omitting prior art searches before filing applications. Given the difficulty and cost of marketing new products, inventors must not assume, just because a product seems to be commercially unavailable, that it is novel. True, patent examiners do searches after applications are filed, but dollar-wise inventors do not pay attorney and filing fees to have examiners tell them what they could learn much more cheaply.

Other views on the need for pre-filing searches, include

"Patent quality should start with a focus on high quality search.” –-Ruud Peters, CEO of Philips Intellectual Property and Standards

"Quality patents start with a quality search.” -- Mark Adler, Chief IP Counsel, Rohm and Haas Company

“The process of quality examination begins with the applicant. Too little or too much
information both present serious challenges to examination quality, and both abuses are created solely by applicants. These abuses must be prevented if the system is to function properly for the benefit of the public.” -- USPTO Public Advisory Committee Report for 2007

Still, "to search, or not to search" may not be the only concern driving this issue. As one commentator puts it "I have no problem as long as the rules set out what type of search would be sufficient not to trigger 1.56 problems & if the IDS limiting rules were not in progress at the same time. But as it is, this rule is a bad idea." According to IPO Daily News on April 2, 2008, the devil is in the details of defining an adequate scope and field for any such required patentability searches:

While IPO supports meaningful inequitable conduct reform, such reform would not eliminate all of IPO's concerns over AQSs. AQSs would result in expensive litigation over inequitable conduct charges and charges of inadequate searches and analyses. The expense and risks of AQSs could deter filing of tens or hundreds of thousands of patent applications.

And that's a bad thing asks the current Administration? In what appears to be a counterattack on the IPO, U.S. Secretary of Commerce Carlos M. Gutierrez sent a letter to members of the U.S. Senate on April 3, 2008 sharing the Administration’s thoughts on the Applicant Quality Submissions provision which it "beleives will prove to be the strongest step toward improved patent quality." According to yesterday's letter,

The Administration strongly supports the AQS provision in the bill in its current form and believes that enactment will prove to be the strongest step toward improved patent quality. By reducing the number of poor quality and imprecise applications, applicant quality standards will result in dramatic reductions in patent pendency and backlog, as well as reduce the likelihood of excessive litigation. The current misalignment of information incentives slows and degrades the patenting process. . . .

The Administration also recognizes and supports statutory changes to the doctrine of inequitable conduct to support this provision. The inequitable conduct standard hould more clearly target actual fraud affecting the examination process and preserve judicial discretion in application of appropriate sanctions. However, the Administration strongly opposes any statutory changes to the doctrine of inequitable conduct in the absence of a strong provision requiring Applicant Quality Submissions. Applicant quality standards and inequitable conduct reform are inextricably linked. Diminishing the penalties for misrepresenting facts before the United States Patent and Trademark Office (USPTO) without also increasing the robustness of the process for eliciting quality information from applicants may lead to poorer quality pplications, in turn increasing the difficulty of conducting accurate examinations. Inequitable conduct reform alone, without Applicant Quality Submissions, would merely invite fraud on the patent system.

In any event, it appears that the USPTO won't have the last word on whether to require pre-filing patent searches. As noted by Judge Cacheris in permanently enjoining the United States Patent and Trademark Office from enacting the “Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications,” 72 Fed. Reg. 46,716-843 (Aug. 21, 2007)(to be codified at 37 C.F.R. pt. 1)(the “Final Rules”) under his decision in Tafas v. Dudas:

Sections 102 and 103 provide that “[a] person shall be entitled to a patent unless” the claimed invention lacks novelty or is obvious in view of the prior art, 35 U.S.C. §§ 102 and 103, and Section 131 states that the USPTO “shall cause an examination to be made of the application,” id. §131. The Federal Circuit has read these provisions as placing the burden of examination and the burden of proof to make a prima facie case of unpatentability on the USPTO. In re Warner, 379 F.2d 1011, 1016 (C.C.P.A. 1967). It is only after the USPTO makes a demonstration of unpatentability that the burden shifts to the applicant to rebut that showing. In re Oetiker, 977 F.2d 1443, 1445 (Fed. Cir. 1992)(“[T]he examiner bears the initial burden, on review of the prior art or on any other ground, of presenting a prima facie case of unpatentability. If that burden is met, the burden of coming forward with evidence or argument shifts to the applicant.”). Thus, by requiring applicants like GSK and Tafas to perform prior art searches and by shifting the examination burden away from the USPTO, the ESD requirement manifestly changes existing law and alters applicants’ rights under Sections 102, 103, and 131. Applicants must now undertake new substantive responsibilities if they wish to file more than five independent or twenty-five total claims, which represents a significant departure from Section 112's rule of unlimited – though not unduly multiple – claims. For these reasons, the Court finds that Final Rules 75 and 265 are substantive rules. . . .

Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive innature, the Court finds that the Final Rules are void as “otherwise not in accordance with law” and “in excess of statutory jurisdiction [and] authority.” 5 U.S.C. § 706(2).

Regardless of your position in the debate, the award for best-patent-sound-bite-of-the-week should go to U.S. Patent Office Commissioner Jon Dudas who, during a press conference on April 4, 2008, succinctly pointed out that the current 54% allowance rate for all patent applications means that "The current system is now heavily subsidized by successful applicants."

It's too bad that we don't have some hard data that linking successful patent applicants to their pre-filing searches. Still, it makes sense to me, if for no other reason than to establish minimum searching standards for weeding out applicants that are so unlikely to be successful that they should not otherwise be allowed to clog the patent system with an application.

Thank Goodness It's Friday (and I'm searching for a quality weekend),

--Bill Heinze