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2/17/2006
04:45 PM
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The U.S. Patent System In Crisis

The U.S. patent system is in disarray. Change requires not just a better system, but better patents, too.

Change Afoot
Doll thinks his office has some solutions. He's proposed hiring 1,000 examiners a year over the next five years to augment the 4,258 examiners the agency already employs. He wants to restructure training so new examiners are proficient at their jobs within a year, rather than the current two to three years. Beyond staffing, Doll wants limits on the amount of information applicants can provide examiners early in the application process and the number of appeals allowed when an application is turned down. He's also hoping to require applicants to share the costs involved with examining extensive documentation.

Most of Doll's proposals, which could take effect in a matter of months, are designed to speed patent approvals rather than ensure patent quality. Critics of the system are calling for more fundamental changes.

One such change proposed in legislation that Rep. Lamar Smith, R-Texas, introduced in June would let third-party experts furnish evidence--called "prior art"--during the examination process to demonstrate whether an invention is unique. Under current rules, only the patent applicant can provide such evidence. Outsiders can get involved after a patent is granted by requesting a review and submitting prior art that might discredit the patent. If third parties could participate in the process, examiners would have more relevant information to decide whether to grant a patent.

In addition to the legislation, another group is working to take prior art investigations online. The Peer-To-Patent Group, spearheaded by New York Law School associate law professor Beth Noveck and backed by IBM, proposes an online system where experts in a given field would submit prior art to be ranked by other experts using the same type of software tools that let people recommend books at Amazon.com. This collaborative filtering system would forward only highly ranked prior art to patent examiners.


''Good patents create a financial incentive for innovation; bad patents impose costs on the economy and on national competitiveness.'' --New York Law School professor Beth Noveck -- Photo by Sacha Lecca

"Good patents create a financial incentive for innovation; bad patents impose costs on the economy and on national competitiveness." --New York Law School professor Beth Noveck

Photo by Sacha Lecca
Another proposed reform in Smith's legislation would expand the scope of challenges permitted after a patent is granted. Currently, when a patent is challenged, the petitioner is only allowed to submit evidence to the reviewer. No testimony is given.

The proposed legislation would establish a minitrial, where parties would make legal arguments before three administrative law judges who'd determine the patent's legitimacy. Patents that successfully navigate such a review would be deemed higher quality and less likely to be overturned in court. That process should dissuade the opportunists from filing further legal challenges.

Expanding the scope of post-grant challenges isn't all that contentious. But there is disagreement over when such challenges should be allowed. The legislation proposes two points at which people could file for reviews: nine months after a patent award and, more controversial, years later, when a company starts to enforce its patents.

Many large tech companies support adding the opportunity for a later review. But emerging enterprises with businesses based on homegrown patented technologies and companies that generate revenue mostly from enforcing patents contend this second window would let big vendors string out the review process over many years. "It gives someone with a large budget the power to never have to respect someone's patent," says Brent Frei, executive VP at Intellectual Ventures, a company headed by former Microsoft CTO Nathan Myhrvold that generates much of its revenue from enforcing patents. Frei calls the provision in the legislation "the infringer's Bill of Rights."

But since most patents aren't enforced, having the opportunity for a later review makes sense to some. If challenges are allowed only right after a patent is granted, then companies and courts end up wasting a lot of resources "trying to validate a bunch of patents that will never get asserted," says Jason Schultz, staff attorney at the Electronic Frontier Foundation. The later window is aimed squarely at patent trolls, Schultz says, companies that "are notorious for finding old patents that no one has ever used, dusting them off, purchasing them, and going after people and asserting them. Without the second window, you have no effect on patent trolls, period."

A streamlined review process might have helped in the NTP-RIM case. The Patent Office appears to be slowly moving toward invalidating seven wireless patents that NTP holds; it has issued a preliminary ruling to that effect but may not have a final ruling for years. Concurrently, a federal judge has ruled that RIM violated those possibly invalid patents, and the court could issue an injunction this week to shutter BlackBerry service in the United States. RIM is prepared for the worst with a software workaround that customers would download to continue using their BlackBerrys--all because one branch of government appears blind to what the other branch is doing.

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