The Simple Fix That Could Transform the Troubled Patent System

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Dec. 4 2013 9:45 AM

The Power of No

This simple change could fix the patent system—but it’ll never happen.

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Generally, the only way that an applicant can fail to get a patent is if the application is abandoned altogether. Well-heeled companies who can afford the lawyers and fees to keep barraging patent examiners don’t drop many applications. In 2012, of all patent applications that were resolved in some way, only 11 percent were abandoned; the other 89 percent of applications were allowed, according to researchers at the University of Richmond. Inevitably, this high allowance rate means that many low-quality patents are issued, patents that should be rejected by patent examiners and which, in many cases, were rejected multiple times.

Problem No. 2: Gotcha lawsuits

Continued patents are much more likely to be litigated than are other patents—not only because they result in low-quality patents, but also because they permit a particularly nasty legal tactic: A patent applicant with a continued application can rewrite the claim language so that the patent covers technology that is developed after the patent is filed. In the worst cases, so-called “submarine patents” are kept hidden from the public as they mark time in the Patent Office. Innovative companies come along and develop new technology only to find themselves surprised one day with a patent infringement lawsuit, a lawsuit based on a patent application that was rewritten to cover the defendant’s own innovations.

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For example, a patent troll called Rambus was invited to attend meetings of JEDEC, a semiconductor trade group that was establishing a new standard for memory chips. Rambus offered a technology, but JEDEC chose to go in a different direction. According to the Federal Trade Commission, Rambus withdrew from JEDEC and subsequently rewrote its continuing patent applications to cover the technology that JEDEC was developing. Rambus was later able to collect hundreds of millions of dollars from memory chip manufacturers based on these patents, engaging many of them in lengthy lawsuits. Yet the courts have ruled that what Rambus did was perfectly legal.

Problem No. 3: Patent application backlog

Hundreds of thousands of applications are waiting to be examined, leading to long delays before inventors can obtain patents. These delays have led congressional representatives to call for more funding for the Patent Office.

Paradoxically, however, funding for more examiners might not help. If patent examiners process applications more rapidly and reject many of them, applicants will simply submit more continuing applications. With more examiners, the total number of applications might even grow rather than shrink. In 2012, 43 percent of patent applications were for refiled continuations, more than double the share in 1996. In other words, the patent application backlog is largely the result of continuations policy—so abolishing continuations would go far toward eliminating the backlog.

Unfortunately, that’s unlikely to happen. If there is a legitimate rationale for having continuations, it is so that patent attorneys can draft better patents, giving them multiple opportunities to revise claim language. But the normal patent examination process already provides multiple opportunities for applicants to revise claims. The law also provides for a reissue procedure, where patent claims can be modified after a patent is granted. Continuations clearly do much more than allow attorneys to get the language right. They allow attorneys to bill for multiple submissions for each invention and to get patents on undeserving applications.

In 2007, the U.S. Patent and Trademark Office attempted to put restrictions on the number of continuations that could be filed on a patent application. The patent bar reacted angrily, the Patent Office was sued, and a court ruled that changing continuations procedure required congressional approval. But that’s unlikely to happen. The last time Congress visited the issue in 1999, it made it easier to file continuations. Given the strong opposition from the patent lawyers’ lobby to reforming continuations policy, none of the 11 legislative proposals currently being considered in Congress addresses this issue. Yet until continuations are reformed, it seems hard to see how the patent quality problem can be fixed.

James Bessen researches technology and innovation at Boston University School of Law. He is the co-author of Patent Failure and is currently writing a book on technology and jobs.

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