1. Better Prior Art Utilization to Improve Patent Quality By Jonathan Becker WISE Intern Sponsored by IEEE-USA Syracuse University Electrical Engineering August 6 th, 2008 1

2. Outline Background ◦ What are Patents and Prior Art? ◦ What Happens During a Patent Examination? ◦ What is Patent Quality and Why Does it Matter? Issues ◦ USPTO examination Constraints ◦ Disincentives for Applicant Support ◦ Lack of Third-Party Support Recommendations ◦ Restructure In-house Prior Art Resources ◦ Establish Two-Tier Examination Process ◦ Promote Third-Party Submissions ◦ Pre-Grant Opposition System Conclusion Acknowledgments References 2

3. Background Relevant background information to give insight into problems. ◦ Patents ◦ Prior Art ◦ Examination ◦ Litigation ◦ Patent Quality 3

4. What is a Patent? Twenty year monopoly from date of file granted by United States Patent and Trademark Office (USPTO)‏ Conditions: ◦ Useful ◦ Non-obvious ◦ Novel 4

5. What is Prior Art? Related Inventions or Published Materials Patent Prior Art ◦ Earlier Granted Patents (High Availability)‏ Non-Patent Prior Art ◦ Scientific Publications and any Disclosures 5

6. Patent Examination USPTO ensures three conditions are met Examiners use prior art to ensure novelty (State of the Art) Currently takes about 3-4 years from file to grant (Pendency)‏ 6

7. Patent Litigation Patent Holder vs. Infringer Presumption of validity ◦ Federal Circuit Defers to USPTO Willful Infringement ◦ Treble Damages 7

8. What are Bad Patents? Patents receiving legal rights for claims much broader than actually invented. Patent 5,132,992 - broad patent would cover everything from online distribution of home movies to scanned documents and MP3s 8

9. Impact of Low Patent Quality Intellectual Property represents 40 percent of our economic growth Phoenix Center estimates loss of $22.5 billion per year due to bad patents Good ModelBad Model 9

10. Issues Concerning Patent Quality Why do we have poor patents? The USPTO internally has to deal with: ◦ Time Constraints ◦ Lack of Resources ◦ Complex Emerging Technologies There is a lack of external support 10

11. Patent Filings by Year Examiners spend approximately 18 hours spread over a three-year period to examine. 11 2007-2012 USPTO Strategic Plan Patents Granted 1800-2000

12. Claimset Size 12

13. Complexity and Rate of Technology 13 Processing Power vs. Time

14. Why Applicants Do Not Contribute More to the Examination Presumption of Validity – Fed. Cir. Deference to USPTO Duty of candor – Duty for Applicant Submission Inequitable conduct – Infringement Defense Prior art searches are expensive Willful Infringement (Objective recklessness)‏ 14

15. Patent Reform Act of 2007 S.1145 - Stalled in senate. Patent Reform Act 2007 ◦ Post-Grant Review ◦ Increased Damages for Willful Infringers ◦ Third-Party Submissions 15

16. Recommendations What can be done to compete with the growing responsibility of the USPTO? Internal (USPTO) and External reform 16

17. In-house Prior Art Restructuring USPTO develop a new art classification system (Patent thickets/Nanothickets)‏ USPTO must continue to fund digitization of library documents. Bring in expert consultants for 2 nd tier examination process. SocietyNumber of Cited Patents IEEE203652 SPIE28176 ACM27851 LNCS1015 17 Patents USPTO database 1975-present

18. Establish Two-Tier Examination Process Congress should statutorily change the defendant’s burden of proof from “clear and convincing” to a “preponderance of evidence” Give USPTO rule-making authority to develop two-tiered examination system: 18 Applicant Standard Examination Stringent Examination Preponderance of Evidence Process Reward Clear and Convincing

19. Stringent examination forces applicant searches. Applicants submitted all of the non-patent prior art cited in about 70 percent of patents citing non-patent prior art. (Jan-Feb 2007) Share of All Citations in Patents, at Citation Level US Patents67% Non-Patent Literature 18% Foreign Patents15% Implications for Applicant Prior Art Submissions 19

20. Provide for Third-Party Submissions Congress should give USPTO rule-making authority develop pre-grant system composed of two windows: 1 st Window (Voluntary, part of 2 nd tier examination)‏ ◦ Participation limited to the submission of the prior art with a short document describing the claims it nullifies. ◦ After two submissions third party faces a disincentive fee to be refunded if it is found the prior art is found relative to a claim. 20 90 Day Submission Period USPTO Examiner Third Party

21. Pre-Grant Opposition 2 nd Window (Non-voluntary): 45 day reexamination period after USPTO decides to grant patent. Accusatory third party may bring up relevant prior art and argue their case against the patent grant before a different group of examiners. Losing party should incur the cost of the proceeding in addition to both sides’ legal fees. 21

22. Conclusion Low quality patents have economic implications. USPTO cannot keep up with the demand without reform. Congress and USPTO must ◦ Increase non-patent resources at the USPTO. ◦ Encourage applicant prior art searches with promises of higher deference. ◦ Promote third party submissions with a pre-grant opposition system. 22

23. References I. Cockburn, S. Kortum, and S. Stern. Are all patent examiners equal? The impact of examiner characteristics. NBER Working Paper w8980, 2002. Examining Patent Examination: An Analysis of Examiner and Applicant Generated Prior Art, Bhaven N. Sampat (2005). Dennis Crouch, Prosecution Data, Patently-O (February 15, 2007), http://www.patentlyo.com. Gary C. Ganzi, “Patent Continuation Practice and Public Notice: Can They Coexist?,” 89 Journal of the Patent and Trademark Office Society 545, 574-80 (July 2007). John R. Allison et al., “Valuable Patents,” 92 Georgetown Law Journal (2004), 435 Sampat, B. “Examining Patent Examination: An Analysis of Examiner and Applicant Generated Prior Art,” (2005). Eric Schonfeld, “Patent Reform Act Focus on Wrong Problem,” January 14, 2008, (2 July 2008) ‏ Lemley, M. “Rational Ignorance at the Patent Office,” Northwestern University Law Review, 95:1—34 (2001). USPTO Strategic Plan 2007-2012 (DRAFT v6) http://www1.uspto.gov/go/com/strat2007.bak/stratplan2007- 2012_06.htm 23

24. Questions? 24