PublishedFebruary 5, 2018

Dear Director Iancu

So, you’re Andrei Iancu, about to be the newly confirmed Director of the United States Patent and Trademark Office.  What are the first things you put on your agenda?

I have some suggestions.

Eliminate Contingent Amendments

As an initial matter, the PTAB’s practice of allowing contingent amendments needs to end.  Essentially, this allows patent owners multiple bites at the apple; if their first version of a claim isn’t patentable, well, they can try again with their contingent amendment.  

It’s also contrary to the statutory language.  The statute says that a patent owner can propose a “reasonable number of substitute claims.”  Let’s engage in a little bit of statutory construction here.  Substitute means, per Merriam-Webster, a “thing that takes the place or function of another.”  What it doesn’t mean is an alternative possibility, or a backup that takes the place only when the first one fails.  The statute says a claim that takes the place of another claim, and that’s exactly what should be allowed.

If a patentee would prefer an amended claim, let them make their substitution and show why that substituted claim is patentable.  But they need to decide whether they want to stand on their claims or ask for different ones—allowing them to do both is contrary to the statute’s expressed intent and imposes unnecessary additional burdens on parties and the Board.

Make The Rules The Federal Circuit Told You To Make

Sticking with amendment practice, there’s another important task.  The Federal Circuit recently issued a fractured decision in the in re Aqua Products case.  As Judge O’Malley noted, most of the opinion amounts to nothing more than “cogitations.”  But there does seem to be a majority that would be happy to hold that a Patent Office rule placing the burden on the patent owner with respect to patentability of amendments is valid, if properly promulgated through rulemaking.

It also happens to be the right rule.  The PTAB is not structured to conduct prior art searching, and is bound by the art of record.  And particularly when patent owners employ contingent amendments, it’s difficult for the petitioner to respond meaningfully to the proposed claim, as they must focus their efforts on the main claims at stake and lack the time and word count to address contingent amendments.  All of this contributes to a situation where the patent owner is best situated to defend the patentability of their proposed amendment, and one where the decision-maker and opposing party should not have that burden placed on them.

It’s not only in IPR that this is the right rule, of course.  One analogous situation is the ”hypothetical claim” used in certain doctrine of equivalents cases (including the recent Jang v. Boston Sci. case).  In this situation, a patent owner proposes new claim language they believe is patentable over the prior art.  And with respect to the new claim language, as Jang held, the “burden of proving patentability of the hypothetical claim rests with the patentee.”

Initiating a rulemaking to set the burden of proof on the patent owner should be considered right away.

Setting Fees—Authority And Restructuring

Right now, the Patent Office has the authority to set its own fees.  This is generally a good thing—as Profs. Wasserman and Frakes have shown, Patent Office budget shortfalls can have negative impacts on patent quality.

The problem is that this authority expires on September 16, 2018.  Congress will need to reauthorize the Office’s fee-setting authority, and that might take some time.

But while requesting a renewal of fee-setting authority, I’d recommend also taking a serious look at one of the proposals made by Profs. Wasserman and Frakes.  In particular, I’d give serious thought to eliminating the Patent Office’s reliance on issue fees to cover examination costs.  

Right now, the fee an applicant pays to have their application examined is significantly less than the amount the Office spends to examine that application.  That shortfall is made up by the fees applicants pay to have their patents issued and maintained.  But this structure leads to a situation where a crop of patent applications can actually cause a budget shortfall if they aren’t allowable—maybe they’re of poor quality, or intervening changes in law have made them not allowable.  Profs. Wasserman and Frakes have shown that this exact situation can cause an increase in issuance rates, meaning that marginal patent applications are being approved instead of denied.

There’s a simple solution to this situation.  Charge applicants the true cost of examination, and don’t charge them an issue fee.  This simple change would eliminate the financial incentive to grant marginal patents in times of financial stress, improving overall patent quality, while not impacting the total amount paid by patent applicants.

While this change is within the Patent Office’s fee setting authority under the AIA, it would be helpful for Congress to support such a revision of the fee structure by eliminating the statutory baseline issue fee and raising the statutory baseline examination fees.

Revising IPR

As long as Congressional actions are being considered, I would recommend asking Congress to add § 101 and § 112 to the scope of invalidity arguments that can be raised in an inter partes review.  As noted by Rep. Nadler during a subcommittee hearing last year, doing so would essentially remove any need for the covered business method review program.  In addition, the Patent Trial and Appeal Board brings together a group of experienced patent practitioners with relevant scientific knowledge.  Rather than requiring lay judges to determine whether a person of ordinary skill in the art would have reasonably certainty to the meaning of a claim term, review of § 112 by the PTAB would allow judges who actually are persons of ordinary skill in the art to do so.

Trust Your Experts

The PTAB is a group of experienced patent practitioners, judges who provide an unbiased analysis of complex technical issues.  They are, without a doubt, the most well-informed as to what goes on in their cases.  The same goes for the PTO as a whole.  The PTO contains a wealth of knowledge and expertise regarding what goes on in patent examination and in post-grant review, and has made that knowledge available for internal and external analysis.  For example, the PTAB studies on amendment practice and multiple petitions have clearly laid out responses to comments directed at the PTO, and shown that many criticisms of the PTAB are baseless.

So my recommendation here is simple.  Listen to the experts at the PTO.  A director’s starting point and lodestar should be the experts working for the PTO.  The director will hear from parties who are unhappy because their patent was justifiably invalidated.  They’ll complain that the Office doesn’t treat patent owners fairly.  The experience of a director who was previously a practitioner should tell them that it’s untrue, but their own experts will be able to provide the data confirming that the Office’s processes are fair and provide the correct outcomes.

Take An Active Role In Developing Patent Jurisprudence

While the Patent Office does a generally good job, it could do better.  I don’t think anyone would disagree with that statement.  But saying “do better” is easy; figuring out how to do it is the hard part.

One role is in thinking through how the Patent Office can anticipate new issues in patent practice, rather than responding to those issues after the fact.  For example, the first wave of design patents focused on virtual reality and augmented reality interfaces is arriving at the Office.  Instead of reacting piecemeal to decisions by individual examiners, or applying guidance directed to static computer GUI icons to dynamic interfaces that interact with the real world they overlay onto, provide specific guidance before the issue becomes widespread.  

Similarly, instead of updating examiners as each new § 101 decision is issued and expecting them to analogize to individual decisions, synthesize an approach that examiners can apply across the board.  The Patent Office has a role to play in developing § 101 jurisprudence; embrace that role.

Similarly, the director should continue the PTO’s quality initiatives and the successful use of pilot programs to develop new examination tools.  Not every program will succeed, but the use of pilot programs as a whole will improve the quality and efficiency of prosecution.

Some of these goals can be achieved quickly.  Some may take your entire tenure.  Some may be concerns of the Patent Office for its entire existence.  But all of them would be worthwhile investments towards producing the ultimate goal: a better patent system for everyone.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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