Director Iancu will be appearing for his first oversight hearing tomorrow, Wednesday, April 18. This follows on his recent speech at the Chamber of Commerce, at which he emphasized two areas of focus:
- Patent rights should be more predictable and the system should be more stable.
- When discussing the patent system, dialogue should be more positive, focusing on successes rather than failures.
This has been interpreted by many as taking the position that inter partes review (IPR) and the law of patentable subject matter eligibility are flawed, and that the Director plans to change them.
Tomorrow, members of the Judiciary Committee will have the opportunity to point out to Director Iancu that predictability, stability, and positivity are in fact already here, in large part due to the implementation of IPR and § 101. Instead, the Director’s focus should be on improving examination and on continuing to implement successful Congressionally-created programs such as IPR.
Predictability and Stability
Director Iancu’s speech at the Chamber linked changes in patent law over the past few years to a “system in which the patent grant is less reliable” and one in which it’s harder to determine whether a patent is valid.
But for innovators, the environment has actually become more reliable—litigation risks have declined, particularly with respect to nuisance and low-value litigation where results were driven more by legal costs than by whether the patented technology was valuable or even whether it was actually new. This reduction in risks—both legal fees and the other impacts of patent litigation—has resulted in increases in startup activity, venture funding, and R&D spending over the past few years.
Now, instead of being faced with high legal risks, innovators can defend themselves effectively against patents that never should have issued using the inter partes review procedure. Instead of trying to educate lay jurors regarding the background of the area of technology and the specific details of the patent and the prior art, defendants present that prior art to PTAB judges with experience and education in both technology and patent law. And all of this happens at far less cost than a jury validity trial.
And when faced with an overbroad patent covering an abstract idea rather than a specific implementation, innovators can use § 101 when challenging the validity of a patent at an early stage in the case. 1 This allows inventors to patent specific approaches to solving a problem, while not allowing them to patent all approaches to solving that problem, preserving the basic building blocks of technology. This doesn’t harm innovation—in fact, it incentivizes it by providing others with the ability to come up with new ways to solve that problem that aren’t covered by the patent.
Far from reducing stability for innovators, the changes Congress introduced in the AIA and the Supreme Court described in Alice and its companion cases have actually created a more stable environment for innovation. It’s no wonder we see increases in R&D spending and VC funding since the introduction of IPR and the Alice decision.
Instead of trying to fix what isn’t broken by changing IPR and § 1012, improvements in predictability and stability can be achieved by making sure that the front-end process—patent examination—continues to be truly world-class. Our examination process should produce patents with a clear and easy to understand scope after the examiner has had access to the best prior art. By creating a world-class examination system, patents will remain predictable and reliable.
Director Iancu made a reasonable point in his speech—all too often, the discussion gets lost in the flaws of the patent system and fails to identify its successes. As a patent attorney, hearing inventors discuss some of the truly creative and novel ideas they came up with is a joy, and their creations contribute to a better society. A full discussion of the patent system must include recognition of the successes represented by these new innovations. As Director Iancu is fond of saying, the cure for cancer will almost certainly pass through the doors of the USPTO someday.
But at the same time, in order to make sure that innovation continues, in order to make sure that that cure for cancer can be created to pass through those doors, we need to identify the areas where the Office must improve. We can’t focus on the positive aspects of the system to the exclusion of the negatives. Only this week, it became apparent that one out of every twelve inventions created by a woman won’t receive a patent when it would have if a man had created it. There are a series of longstanding issues, highlighted by the GAO’s 2016 report, identifying ways in which poor quality patents can harm innovation and suggesting steps the PTO could take to address quality, steps which—to a large degree—have not been implemented. In order to make sure the patent system continues to be successful, we must always seek to improve it, and that is achieved by identifying and fixing its flaws.
More specifically, one positive aspect of the patent system that deserves recognition is the inter partes review process itself. Far from the “death squad” critics describe, IPR is a fair process with results that have been overwhelmingly upheld on appeal. Most patents—even litigated patents—will never face an IPR petition. And of those that do, the majority—58%—will remain completely unchanged, with an additional 5% upheld in part.3
Ensuring the success of the patent system requires acknowledging its flaws and seeking to fix them. A focus on positivity, without that balance, would ignore flaws that harm innovation.
Change Needs To Be Measured, Not Unrestrained
Director Iancu’s Chamber speech negatively characterizes patent reforms over the past few years, stating that “our system has been pushed and pulled, poked and prodded.” But, as Director Iancu notes, the solution isn’t to throw out the baby with the bathwater. We need IPR in order “to effectively address invalid claims.” Rather than making sweeping changes based on unsubstantiated complaints, the Office should make measured changes to address specific issues identified by data. And those changes must be based on trustworthy data. The Director should ignore commentators who use misleading statistics or completely incorrect data to justify their positions.
There are areas for improvement in the patent system, especially in examination. Moving forward, the Director should ensure that he acts based on reality, rather than listening to critics who have plenty of negative rhetoric but lack any facts to back it up.
- At least for now—the Federal Circuit has recently issued opinions that restrict the availability of § 101 at early stages of cases. ↵
- While I disagree that substantive changes to § 101 are necessary, there is certainly room for the Office to improve the guidance being given to examiners, guidance which practitioners also use. ↵
- And if we truly need to move past negativity, I would suggest that we start by ignoring the baseless negative commentary on IPR. ↵