PTO examiner arrested, removed in handcuffs
The newsletter of the Patent Office Professional Association [POPA] describes the incident in the June July 2005 newsletter
[http://www.popa.org/newsletters/junjul05.shtml].
--> Separately, the newsletter also has a piece relevant to the
"patent quality" issue:
"Third Pair of Eyes" Quality Review
Patent supervisors in May informed examiners that the USPTO was immediately instituting a "third-pair-of-eyes" review of all allowances, due to an unacceptably high error rate in allowed applications corps-wide so far this year. Supervisors also told employees that if examiners show more than 31 additional patentability errors before the end of the fiscal year, the USPTO will fail to meet its own error goal.
The agency issued no written notice of this change and informed only some art units, not all.
The USPTO did not mandate that primary examiners perform the additional reviews of their colleagues' work, and instead is seeking "volunteers" for that service. Primary examiners need not volunteer, but supervisors are pressuring employees to do so, and the agency may give no additional time to perform these duties. If a supervisor directly assigns a primary examiner to conduct such reviews and/or to submit his or her allowances for review by another primary examiner, such a directive would need to be followed in order to avoid being insubordinate.
--> There is also a piece on patent reform:
On oppositions:
The legislation would allow the identity of the party funding the challenge, while known to the government, to remain secret from the public. Thus a company that is already using the patented process/product, and doesn't want to divulge that fact to the patent holder, can launch a challenge.
Small entities may be hit by a multitude of opposition proceedings that they can't afford. Some companies would be able to protect their financial interests by filing a multitude of opposition proceedings against smaller companies, forcing them to respond and effectively breaking their bankroll. The proposed law provides an element of protection by allowing the USPTO to determine if there's a substantial question of patentability, whether the patentee does or does not respond.
Post-grant opposition can create unacceptable risk for many inventors. For example, pharmaceutical companies' average cost for the development of a new product is $1-2 billion, a large part of which is invested after obtaining a patent. The companies need to ensure exclusivity to protect their investments. Getting socked with post-grant opposition proceedings can jeopardize these huge investments. The same holds true for university researchers and small companies that rely on venture capital investments.
Impact on PTO:
The proposed law says that panels of three administrative patent judges (APJs) will adjudicate the opposition proceedings. Even if a relatively small percentage of granted patents receive post-grant challenges, the USPTO will have to hire many more APJs to handle the workload.
In 2004, the USPTO issued approximately 180,000 patents. That number is likely to rise to more than 200,000 within the next two years. The European Patent Office (EPO), which already has post-grant opposition, receives an annual average of 4.4 percent of patents challenged after issuance. Applying that average to the USPTO would create more than 8,000 opposition proceedings per year in the near future. Even a 1 percent challenge rate would equal 2,000 proceedings.
One expert projected that each APJ would lead a panel and clear about 10 cases per year, in addition to sitting on others' panels as a second or third member. The USPTO would therefore need between 200 and 800 APJs to handle the workload. With 800, the USPTO APJ count would exceed the total number of federal district court judges.
The agency now employs approximately 55 APJs and would have to devote funds to hiring, training and managing them. This would prove an expensive expansion. If Congress appropriates no additional funds, the USPTO would need to move money from examination into adjudicating opposition proceedings. This could result in fewer examiners doing more work and cutting more corners on quality to make the production numbers, thereby creating a vicious cycle of poor quality.
While some think post-grant opposition is a solution to poor quality, the EPO's experience shows otherwise. In Europe, the number of challenges is not a function of the quality of the initial examination, but is based more on the competitiveness and the practices in the patent's particular art. Not all challengers come up with better prior art, just different art. Even with quality examination, some still may challenge a patent just for the sake of challenging, to try to knock down the other guy.
The patents for everyday items that have embarrassed the USPTO and raised the biggest fuss over quality represent few big economic interests. However, it's the patents that indeed affect major financial interests that tend to bring opposition. Many third parties don't even realize the economic impact of a patent for many months after issue. This naturally delays the challenge. As a result, if the two time windows for post-grant opposition are enacted, few may file during the first nine-month period, choosing the wait-and-see option instead.
While current examiners may view the additional hiring of APJs as an opportunity to advance into those jobs, the USPTO would likely hire more experienced patent attorneys for the positions.
Inequitable conduct
The proposed legislation takes the oversight of violations of the duty of candor—the obligation of an applicant to divulge all known prior art—from the courts, and places it before the USPTO. This will require an expensive expansion of the USPTO administration.
Prior duty-of-candor violations have resulted in the entire patent rendered unenforceable, even those claims that are otherwise valid. The proposed bill would require that one patent claim first be found invalid; then the patent would be referred to USPTO for a validity determination. To find the entire patent invalid, the USPTO would have to find that the fraud was the responsibility of the patent owner and that with the undisclosed prior art an examiner would have found the claims unpatentable.
What remains unclear is what happens when the patent is sold—the finding of fraud may not apply to the new patent owner. This proposed change would significantly reduce the likelihood of finding duty-of-candor violations, limit the amount of court system discovery, and possibly encourage applicants to risk withholding information. Many patent attorneys oppose the proposals to change the duty of candor rules.
Judge Ellis contested the bill's diminishing of the court's functions and the expansion of the role of the USPTO. "I'm very opposed to allowing district courts to refer things to an administrative proceeding," Ellis said, as stated in Drug Industry Daily. "That's the last thing in the world I would favor. All you're doing is creating another bureaucracy and another level of litigation. It troubles me a good bit. I think the provision even as written is not coherent."
[http://www.popa.org/newsletters/junjul05.shtml].
--> Separately, the newsletter also has a piece relevant to the
"patent quality" issue:
"Third Pair of Eyes" Quality Review
Patent supervisors in May informed examiners that the USPTO was immediately instituting a "third-pair-of-eyes" review of all allowances, due to an unacceptably high error rate in allowed applications corps-wide so far this year. Supervisors also told employees that if examiners show more than 31 additional patentability errors before the end of the fiscal year, the USPTO will fail to meet its own error goal.
The agency issued no written notice of this change and informed only some art units, not all.
The USPTO did not mandate that primary examiners perform the additional reviews of their colleagues' work, and instead is seeking "volunteers" for that service. Primary examiners need not volunteer, but supervisors are pressuring employees to do so, and the agency may give no additional time to perform these duties. If a supervisor directly assigns a primary examiner to conduct such reviews and/or to submit his or her allowances for review by another primary examiner, such a directive would need to be followed in order to avoid being insubordinate.
--> There is also a piece on patent reform:
On oppositions:
The legislation would allow the identity of the party funding the challenge, while known to the government, to remain secret from the public. Thus a company that is already using the patented process/product, and doesn't want to divulge that fact to the patent holder, can launch a challenge.
Small entities may be hit by a multitude of opposition proceedings that they can't afford. Some companies would be able to protect their financial interests by filing a multitude of opposition proceedings against smaller companies, forcing them to respond and effectively breaking their bankroll. The proposed law provides an element of protection by allowing the USPTO to determine if there's a substantial question of patentability, whether the patentee does or does not respond.
Post-grant opposition can create unacceptable risk for many inventors. For example, pharmaceutical companies' average cost for the development of a new product is $1-2 billion, a large part of which is invested after obtaining a patent. The companies need to ensure exclusivity to protect their investments. Getting socked with post-grant opposition proceedings can jeopardize these huge investments. The same holds true for university researchers and small companies that rely on venture capital investments.
Impact on PTO:
The proposed law says that panels of three administrative patent judges (APJs) will adjudicate the opposition proceedings. Even if a relatively small percentage of granted patents receive post-grant challenges, the USPTO will have to hire many more APJs to handle the workload.
In 2004, the USPTO issued approximately 180,000 patents. That number is likely to rise to more than 200,000 within the next two years. The European Patent Office (EPO), which already has post-grant opposition, receives an annual average of 4.4 percent of patents challenged after issuance. Applying that average to the USPTO would create more than 8,000 opposition proceedings per year in the near future. Even a 1 percent challenge rate would equal 2,000 proceedings.
One expert projected that each APJ would lead a panel and clear about 10 cases per year, in addition to sitting on others' panels as a second or third member. The USPTO would therefore need between 200 and 800 APJs to handle the workload. With 800, the USPTO APJ count would exceed the total number of federal district court judges.
The agency now employs approximately 55 APJs and would have to devote funds to hiring, training and managing them. This would prove an expensive expansion. If Congress appropriates no additional funds, the USPTO would need to move money from examination into adjudicating opposition proceedings. This could result in fewer examiners doing more work and cutting more corners on quality to make the production numbers, thereby creating a vicious cycle of poor quality.
While some think post-grant opposition is a solution to poor quality, the EPO's experience shows otherwise. In Europe, the number of challenges is not a function of the quality of the initial examination, but is based more on the competitiveness and the practices in the patent's particular art. Not all challengers come up with better prior art, just different art. Even with quality examination, some still may challenge a patent just for the sake of challenging, to try to knock down the other guy.
The patents for everyday items that have embarrassed the USPTO and raised the biggest fuss over quality represent few big economic interests. However, it's the patents that indeed affect major financial interests that tend to bring opposition. Many third parties don't even realize the economic impact of a patent for many months after issue. This naturally delays the challenge. As a result, if the two time windows for post-grant opposition are enacted, few may file during the first nine-month period, choosing the wait-and-see option instead.
While current examiners may view the additional hiring of APJs as an opportunity to advance into those jobs, the USPTO would likely hire more experienced patent attorneys for the positions.
Inequitable conduct
The proposed legislation takes the oversight of violations of the duty of candor—the obligation of an applicant to divulge all known prior art—from the courts, and places it before the USPTO. This will require an expensive expansion of the USPTO administration.
Prior duty-of-candor violations have resulted in the entire patent rendered unenforceable, even those claims that are otherwise valid. The proposed bill would require that one patent claim first be found invalid; then the patent would be referred to USPTO for a validity determination. To find the entire patent invalid, the USPTO would have to find that the fraud was the responsibility of the patent owner and that with the undisclosed prior art an examiner would have found the claims unpatentable.
What remains unclear is what happens when the patent is sold—the finding of fraud may not apply to the new patent owner. This proposed change would significantly reduce the likelihood of finding duty-of-candor violations, limit the amount of court system discovery, and possibly encourage applicants to risk withholding information. Many patent attorneys oppose the proposals to change the duty of candor rules.
Judge Ellis contested the bill's diminishing of the court's functions and the expansion of the role of the USPTO. "I'm very opposed to allowing district courts to refer things to an administrative proceeding," Ellis said, as stated in Drug Industry Daily. "That's the last thing in the world I would favor. All you're doing is creating another bureaucracy and another level of litigation. It troubles me a good bit. I think the provision even as written is not coherent."
posted by Lawrence B. Ebert at 5:55 AM
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