What the PTO should do about Alice

Last week I had the very good fortune to be a speaker at a Bloomberg BNA conference in San Francisco on the Impact of the Supreme Court on Patent Enforcement. I was invited by Wiley & Rein partners Brian Pandya, a former student of mine, and James A. Wallace. Along with Bloomberg BNA's Steffan Welch, they put together an excellent program.

I was on the panel on "Ineligibility of Abstract Ideas, Business Methods, and Naturally Occurring Substances" moderated by Jim Wallace. The slides I prepared to accompany some brief remarks are here.

I am not a fan of 101 or of the latest phrase associated with it, patent ineligibility. Ineligibility is invalidity without bothering with messy things like proof.

The only sensible part of 101 is the final phrase "subject to the conditions and requirements of this title." Those conditions and requirements are found in 102, 103, and 112. Like Annie Oakley when she compared herself to Frank Butler, those sections can sing to 101, "Anything you can do, I can do better."

Likewise, 101's judicially-created implicit exceptions -- "laws of nature, natural phenomena, and abstract ideas" -- do not need to be exceptions, implicit or otherwise. That's because there has never yet been a patent claim that passes the tests of 102, 103 and 112 that is nevertheless offensive for attempting to patent one of those exceptions. Or anyway, nobody has been able to show me such a claim. No, not even the Supreme Court, not in the most recent 101 cases and not in any earlier ones.

Whenever these judicially-created implicit exceptions have been invoked, it has been to combat advances in technology that patent examiners and judges find scary. These are cases where unfamiliarity breeds fear which is then masked as contempt.

But none of that matters if my suggestion* for the Patent Office is put into effect. Yes, I know, the PTO has ignored my advice about 101 law in the past. (See, e.g., Urgent Letter and Time-Sensitive Proposal to then-new PTO Director David Kappos, posted right before the oral argument at the Supreme Court in Bilski v. Kappos.) But the PTO/DOJ brief in Mayo gave me hope (Argument II: "The disputed claims ... are likely invalid under 35 U.S.C. 102 or 103") and regime change gives me more.

*  Because of time constraints at the San Francisco conference, I was unable to present my "What would you do about it" slides (32-53). The idea for this post is on slide 34 item C and slide 35 item A.

Many at the conference seemed happy with 101 especially because it has become a weapon to resolve cases quickly, in some cases without discovery. My suggestion should be even faster and less costly for the parties and the taxpayers, without knuckling under to the 101-first wrong-headedness. Here's how it would work:

Step 1. As soon as an Accused Infringer (AI) asserts a 101 defense in court, whether by a Rule 12 motion to dismiss or a Rule 56 motion for summary judgment, or perhaps even after an early status conference, the court notifies the PTO.

There is an alternative that would not involve direct communication between the trial judge and the PTO. By statute (35 USC 290), the clerks of the district courts must notify the PTO when a patent lawsuit is filed. The PTO could monitor all such dockets so that it would know when an AI filed a pleading with a 101 defense.

Step 2. The PTO, sua sponte, throws the patent into reexam.

The Director of the PTO has the statutory right to begin reexamination proceedings. 35 USC 303; see also 37 CFR 1.520. True, the Director has to identify relevant prior art. That, however, should not be hard if the AI has argued that the claims-in-suit cover one of the implicit exceptions combined only with well-understood, routine, conventional activities.

As mentioned in slide 12 of my talk, that phrase from Mayo, quoted with approval in Alice, has the acronym WURCA, a plural noun. The associated adjective is WURC. Finding prior art should be easy: WURCA -- if truly WURC -- will be documented in patents, patent applications, journal and media articles, websites, product advertisements and specifications, tweets, etc.

WURCA and obviousness prior art are very similar. The main difference is that obviousness prior art is identified with specificity and considered in a careful manner with intellectual rigor and honesty. WURCA are whatever a decision-maker -- judge or patent examiner -- believes they are, no evidence required, and intellectual rigor impossible by the very nature of the legal standard.

Step 3. As soon as the reexamination is declared, the court entertains a motion to stay proceedings until the reexam is completed. Absent unusual circumstances -- so unusual I can't imagine any at the moment -- the court grants the motion.

Benefits: This suggestion benefits the parties, the courts and the public because it:

a. frees up court time. Judges would not have to write Rule 12 opinions or hold status conferences or anything else until the reexamination is completed and the time has run out for all possible appeals;

b. gets rid of the baloney patents so wittily described by panelist Morgan Chu. Claims that are invalid under 103 are just as dead as claims that are patent ineligible under 101;

c. brings the matter back to the PTO, whose search the first time may have been nonexistent or inadequate;

d. gives the patent owner (PO) a chance to narrow the claims. That might save some claims from attacks under both 103 and 101;

e. discourages use of 101 as a delaying tactic or legal boilerplate with only a minor relationship to the substance of the controversy;

f. helps everyone -- courts, PTO, inventors, competitors, the public -- return to an appreciation of 103 and its powerful, intelligent standard, the HOA-TA (hypothetical ordinary artisan, time appropriate, pron. WHAT-uh), which inherently keeps pace with technological change. See slides 23-24 and, e.g., slides 20-21 in my 2012 talk to the Oregon Patent Association; and

g. saves taxpayer money because, with respect to pubic funding, the PTO is probably a much less expensive forum than is a federal district court.

Advantages over AI-initiated reexamination: Having the PTO Director start the reexamination rather than putting the onus on the AI has additional advantages in terms of fairness, efficiency and justice:

a. No waiting: The Director acts predictably and early in the litigation;

b. the PO interacts with the PTO without the AI having first characterized the prior art and the claims;

c. the AI saves the filing fee and the lawyer bills associated with the reexamination, possibly a life-saving savings for young, financially-strapped AIs;

d. the PTO gets a chance to do its job right in the specific case and to collect data concerning searches in all the cases of Director-initiated reexamination so that improvements can be made; and

e. examiners have no incentive to whitewash these patents. Compare: when the AI initiates the reexam, examiners may want to make the original issuance look good; when the Director initiates the reexam, examiners may want to do it to get it right, not just to get it done (see this post for more about the getting it right/getting it done continuum).

Now, how can I convince the PTO and courts to work together on this?

March 20, 2015; rev 0321-27, 0402

Patent Fees and Counts and the Standard Application Metric - PTO Reform Ideas 03

Both the fee structure and the examiner count system should be based, not on the unit of the filed application, but instead on a metric that compares the actual application to a standard application.   The comparison would be based on such parameters as numbers of:  specification columns in standard format, figures and reference characters in the figures, independent and total claims, and IDS references and the sum of the individual references' pages (or word counts, figures, etc.). 

This way fees and counts would be appropriately tailored to the complexity of the task of examination.  Today's one size fits all system prevents such tailoring.  (Excess claim and page fees do not address complexity adequately and may not affect the count system at all.)

Patent prosecution professionals know that the more complex the case the more time is needed to do a proper job, and their fees, whether by the hour or by prearrangement, reflect this.  R&D expenditures are also related to the complexity of the technology, as are the pay scales in different fields.  Likewise, revenues from commercialization are often proportional to complexity because the price per unit, the margins and the volume of sales are often higher for more complicated and sophisticated technology.

Why do PTO fees and examiner counts essentially ignore complexity?  Answer:  "Because they always have."  That answer is not good enough any more.

Employing a standard-application metric (SAM) for the count system and fee structure acknowledges the reality that all applications are NOT created equal.  Examiners can be given twice the time to examine an application that is twice as complex.  This means that they will have enough time to understand complex technology, read a lengthy specification, consider voluminous information disclosures, and examine numerous, highly nuanced claims.  The system will also encourage applicants interested in cheaper and faster examination to be more succinct and direct.

Who will devise this metric?  Answer:  The PTO.  Director Kapos, and management, and the examining corps, all know what the measurables of patent applications are and how those measurables affect examination time.   

The public, too, can consider the definition of the standard application.  Publicly available databases and the PTO's $200 DVD of patent statistics are helpful.  For example, the CLAIMS.TXT data on the DVD permits calculation of the median, mid 50%ile and average for three aspects of complexity of issued patents:  numbers of claims, figures and drawing sheets.   Unfortunately, the number of specification columns and IDS references -- useful information for our SAM -- are not as easily found, nor are data for applications as opposed to issued patents.  That information can be compiled without too much difficulty, however.

To begin working toward the SAM solution, I have looked at some numbers.  For simplicity and speed,* I have segregated out two groups of ~1000 patents from the DVD, representing past and current complexity levels:

     For the 1000 patents numbered 3,999,000 to 3,999,999, issued in 1976:

          Claims: median 8, mid50 4 to 12, average 9.2,

          Figures: median 5, mid50 3 to 9, average 6.9, and

          Drawing Sheets: median 2, mid50 1 to 3, average 2.8.

     For the 990 patents numbered 6,999,000 to 6,999,999 (ten patents were withdrawn prior to issuance), issued about thirty years later in 2006:

          Claims:  median 15, mid50 9 to 21, average 19.6,

          Figures:  median 8, mid50 5 to 13, average 13.3, and

          Drawing Sheets:  median 6, mid50 4 to 9, average 9.5.

It is undeniable that serious thought and hard work will be needed to determine

     (1) the parameters to use,

     (2) the standard application values,

     (3) the weights to apply to those parameters, and

     (4) the structure -- linear?  step function with how many steps? -- by which to calculate the fees and counts for actual applications compared to the standard.

Consideration should also be given to how often the definition of the standard application should be adjusted.  It might be when the median actual application goes above 1.5 SAMs, for example.

The PTO can do this.  And should.  And the time to do it -- while Microsoft v. i4i is pending before the Supreme Court, patent reform legislation is before Congress, and public attention is being given to the quality of examination and in particular to the problem of inadequate examination time and resources -- is now.

//

 

* I used batches of 1000 patent numbers rather than a larger or more random sample.  Consecutive patents, all issued on the same date or a week apart, may all have been granted by a small subset of examiners or art units and thus may not necessarily represent the whole.

PTO Reform Ideas - 02: Examining Patentable Subject Matter

At the February 26, 2010 Stanford Technology Law Review Symposium on PTO Reform Arti K. Rai, Administrator for External Affairs at the USPTO, and the Elvin R. Latty Professor of Law at Duke University, gave the Opening Remarks. Among other things, she summarized some ideas for internal reforms that the PTO is implementing.

One reform will give examiners more time and credit for EARLY evaluation of Patentable Subject Matter (35 USC 101). When Prof. Rai spoke about this, I was happy until the word "EARLY." Yes, give examiners more time and credit for doing their jobs. But please, NOT for an EARLY analysis of Patentable Subject Matter (PSM).

As I said in October 2009 in An Urgent Letter and Time Sensitive Proposal to David Kappos, as well as in my amicus brief to the Federal Circuit in In re Bilski, only claims IN CONDITION FOR ALLOWANCE should be analyzed for PSM.

EFFICIENCY AND ECONOMY
A primary reason to defer PSM analysis is that many apparent PSM problems will disappear when claims are amended or abandoned in response to rejections based on prior art or lack of enablement. By postponing PSM analysis until the claims are allowable, both the PTO and the applicants will save time and money.

NO DATA YET? GET SOME!
If PTO management doubts my efficiency / conservation of resources argument, it better collect some data. How many claims survive intact from application through allowance? Let us call this the allowed-without-amendment rate (AWOA), where both the numerator and the denominator are based on ONLY the claims submitted at filing.

Of course, that's not the total number of claims the PTO may have to examine before the case closes, because often additional claims are proposed during prosecution. The PTO should also know that statistic -- the number of claims at filing divided by the total number of claims considered, the inflation rate, as it were -- but I have never seen it reported. Since, however, the subject of the moment is early PSM analysis, the PTO can ignore all claims other than those submitted at filing, and perhaps should care most about the AWOA rate for independent claims.

Any AWOA rate will be hard for an ordinary person to calculate, but the PTO should be able to do it. The Index of Claims from the back of the file wrapper, nowadays available on PAIR in the Image File Wrapper (sometimes) in a document called Index of Claims (FWCLM) is the key.

The PTO should evaluate aggregate data as well as data for those classifications that have the highest rate of PSM rejections. (Does the PTO have data of PSM rejection rates by class? It needs that information, too.)

OTHER DATA, WHILE YOU'RE AT IT
The AWOA percentage rate may show some dependence on other factors: the number of applications in the chain, the total number of proposed claims during the life of the application, the years of experience of the examiner, the calendar date of the notice of allowance, etc. Perhaps the PTO has a statistician who can do some serious regression analysis.

GUESSING THE AWOA RATE
I do not know the percentage of claims submitted at filing that are allowed without amendment (whether independent claims only, or both independent and dependent), but I have my suspicions. It's not likely to be much higher than 10%, averaging over all applications, including those that are abandoned (in which case the rate is 0%).

If you are an experienced prosecutor, I would love to know your educated guess.


WHAT I CAN DO IN THE MEANTIME
I propose to make a quick survey of 100 published applications that have Image File Wrappers and a final result. I’ll use a random number generator to select my sample. I should be able to obtain a ballpark estimate on how many claims survive intact to allowance as a percentage of claims originally filed. I'm curious about the average of the percentages for each application in the survey, as well as the average for all applications taken together, and also about how different those numbers may be if I consider only independent claims or all claims. More on the survey will appear in this blog.

WHAT THE PTO CAN DO IN THE MEANTIME
Meanwhile, PTO management should reconsider the early-PSM initiative. I appreciate that the PTO's failure to moot Bilski v. Kappos while it had a chance to do so (see October 2009 Urgent Letter post mentioned above) complicates things. It is quite possible that the Supreme Court decision will mandate such early analysis. If that happens, the PTO should run to Congress for a repeal.

Of course, the PTO will need to be armed with the data I mentioned above, and its spokesperson must be someone who understands that, as the PTO’s own publicity states, the essence of a sensible and trustworthy patent system is that it compares each inventor's claims to the prior art. (See the PTO 2008 Annual Report, page 22, referenced as n.3 in the Urgent Letter.)

RESTATEMENT OF [MY VIEW OF] THE LAW
I also appreciate that the foolish rush to evaluate claims for PSM before they have been determined to be valid over the prior art goes back at least to the "threshold inquiry" language in In re Comiskey which in turn dates from a remark in Parker v. Flook. In my Urgent Letter, under the heading CLEARING UP THE "THRESHOLD INQUIRY" MISUNDERSTANDING, I addressed the posture of Flook and the lack of authority (or thought or analysis or understanding of the patent system) behind the Supreme Court's statement that PSM -- "what TYPE of discovery is sought to be patented" (emphasis mine -- "must precede" examination on the merits.

I won't go through it all again, but it is still true. Read Flook for yourself. Also think about how the purposes of a patent system are, or are not, served, by evaluating PSM without regard to whether or not the claims are enabled or read on the prior art.

Last rev 3/12/2010 9:20 pm

PTO Reform Ideas (thoughts inspired by the 2010 STLR Symposium): Part 01 - Introduction

On Friday, February 26, 2010, the students of the Stanford Technology Law Review held a symposium on PTO reform. The organizers, Connor Williams and Tim Saulsbury, with help from Tim's co-Editor-in-Chief Vinita Kailasanath and SLATA President Laura Zapiain, did a stellar job. If I should mention anyone else, please tell me.

I was privileged to be a commentator for the presentation by Ron Katznelson, and I attended almost all the other sessions and talked with many attendees during the breaks. Everyone -- speakers, commentators, and audience -- gave me many things to think about.

The experience has motivated me to write a series of blog posts under the title "PTO Reform Ideas 2010."

The Opening Remarks for the Symposium were given by Arti K. Rai, Administrator for External Affairs at the USPTO, and the Elvin R. Latty Professor of Law at Duke University. I will therefore begin the series by commenting on some of the PTO's proposals for internal reform that Prof. Rai mentioned in her talk.