Public Hearings Concerning the Evolving Intellectual Property Marketplace #540872-00031

Submission Number:
Paul F. Morgan
Initiative Name:
Public Hearings Concerning the Evolving Intellectual Property Marketplace

Evolving IP Marketplace – Comment, Project No. P093900 Practicing patent attorneys have concerns with the practicality of certain patent reform proposals by certain academics and others. In particular, arguments that all patent problems could be cured by a great increase in the "quality" in USPTO application examination. Practitioners would like to see such a "utopia" as well. Certainly some aspects of PTO operations could easily be greatly improved. In particular, ending inexcusably long PTO delays of reexaminations, reissues, and "submarine" applications, misrepresenting RCE's as new or continuation applications, and misrepresenting gross examiner continuation and divisional delays as entirely applicant delays. However, most (and usually the most serious) patent "quality" problems are issuances of invalidly overbroad claims due to inadequate PTO prior art searches. Yet the unavoidable real world fact is that adding several thousand dollars for adequate prior art searches and their reviews for each of the half-million patent applications per year is clearly impractical. That would require a huge total cost increase, impossible for the PTO and applicants. Nor is that even logical, since less than 1% of all patents are ever sued on, and determining which will ever be sued on is rarely predictable at that early stage. Making patent applications so expensive that individual inventors and small companies could not afford them is politically impossible and bad public policy. Greatly decreasing the total number of all patent applications by greatly increased costs would also defeat a major public objective of all patent systems - the adequate and early public disclosure and dissemination of the details of new technologies and how to make and use them. Yet issued patent claims can cost millions to invalidate in litigation, with difficulty, and the PTO now takes far too long for most reexaminations to avoid such costs and risks. Thus, patent owners can get large settlements or licensing trades even for potentially invalid patent claims. [The value of an issued patent is fundamentally its perceived potential for infringement litigation recovery against planned or actual products of others, since a patent is merely a ticket to file a law suit, as noted in the prior FTC hearings.] The REAL patent "quality" problem is thus the very high costs and other serious disadvantages in defending against a very small percentage of invalid patent claims in patent litigation. At the 2/11/09 FTC hearing Professor Paul Janicke of the Houston Law Center reported that if defendant summary judgment motions fail, the patentee seems to win 75 percent of the time. [The vast majority of successful partial-cost-saving summary judgments are for non-infringement, not for claim invalidity, which is far more difficult.] He also noted that the median range of awarded damages is between $5 and $6 million, and that erratic jury damage awards may be due to unpredictable use of the Georgia Pacific factors in determining statutory reasonable royalties. [Indeed, since they are lengthy, vague and confusing - see also the just-published detailed article on patent damages and its blocked legislation by J. W. Schlicher in 91 JPTOS 1, pp.19-76 and citations therein.] Proposals for an "opposition" system limited only to a brief time window after patents issue would be of little real-world use, because the vast majority of U.S. patents are not asserted until years later. Equally unrealistic is reliance on systems for non-threatened parties to volunteer prior art to the PTO. [PTO Rules 1.99, 1.292, 1.292 and 1.501 and "Peer to Patent" systems, in which a mere handful of patent applications are provided with better prior art, for several good reasons.] Thus, the only realistic solution is vastly faster (completed well before trial dates) PTO handling of its reexamination systems for low cost claim invalidations by threatened parties.