Business & Finance
04:45 PM

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.

Not Just A U.S. Problem
It's not just U.S. patent law that gets people agitated. The European Union is more restrictive when it comes to granting software patents and doesn't grant patents for business processes at all. The open source community as well as those wanting to maintain national rights successfully opposed legislation last summer that would have brought Europe's software rules closer to the United States'.

Critics of the U.S. system say too many patents have been issued in the last decade for software and business processes that hardly deserved special treatment. Weak patents are the ones that get challenged, first as part of the Patent Office's review and then in the courts, and this diverts to legal battles money and resources that should be earmarked for innovation. "Good patents create a financial incentive for innovation; bad patents impose costs on the economy and on national competitiveness," says New York Law School's Noveck, who's also director of the school's Institute of Information Law and Policy.

Patent quality is an issue in nearly all of the most visible patent suits. And the stakes are high: a $521 million judgment, for instance, in the Eolas-Microsoft case. Vague or weak patents lead defendants to argue that the descriptions of the inventions in the patents don't apply to their use of a technology or that the patents should be invalidated because the innovations depicted were neither original nor nonobvious, two requisites of a patent.

Moments In Patent History
1449 King Henry VI issues first modern patent to John of Utynam for making stained glass
1646 Massachusetts issues first mechanical patent in North America to Joseph Jenkes for making scythes
1981 In Diamond v. Diehr, the Supreme Court holds that software is patentable
1998 Court upholds business process patents in State Street Bank v. Signature Financial Group
2001 NTP sues Research In Motion, charging the BlackBerry infringes on NTP's wireless patents
2005 Patent Reform Act of 2005 is introduced, proposing new ways to contest patents
2006 Supreme Court will hear MercExchange v. eBay and rule on whether injunctions should be mandatory
Data:, Wikipedia, M-Cam, Patent and Trademark Office

Quality Vs. Speed
So why aren't patent examiners granting good patents? For one, they're overburdened. It takes an average of three years for the Patent Office to grant a patent, but examiners spend as little as 20 hours reviewing each application--not nearly enough time for a thorough examination, particularly when it comes to tech patents. "When the input exceeds the ability to deal with what comes in ... you get a big backlog," says Dave Kappos, IBM's senior intellectual property counsel. "You get all kinds of other problems. You get people who have to push things out till the end of the process so that patents don't get appropriately examined."

Patent Commissioner Doll's push to hire more examiners could help, as could some of his other proposals, such as limiting the number of claims--statements made about the unique properties of the invention--a patent applicant can submit. Under the existing rules, applicants can inundate examiners with scores of claims. Doll's proposal would limit them to submitting the 10 claims they think are most important. Examiners would use those initial claims to decide whether an invention is novel enough to proceed. Other claims could be added as the process progresses, and the more claims examiners accept, the stronger the patent. In addition, Doll says, applicants would be asked to help defray the cost of reviewing the additional claims. "If an applicant wants us to examine a hundred claims, we're going to examine a hundred claims, but we're going to ask them to share the burden," he says.

Another proposal would cut back the number of times an applicant could refile a rejected application. The office now allows an unlimited number of refiles; the proposed rule would allow four. "I don't know of any other agency or court in the land that allows you to retry your case until you get the answer you'd like," Doll says.

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