Intellectual Property: Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity
Highlights
What GAO Found
GAO found that district court filings of new patent infringement lawsuits increased from about 2,000 in 2007 to more than 5,000 in 2015, while the number of defendants named in these lawsuits increased from 5,000 to 8,000 over the same period. In 2007, about 20 percent of all defendants named in new patent infringement lawsuits were sued in the Eastern District of Texas, and by 2015 this had risen to almost 50 percent. According to stakeholders, patent infringement suits are increasingly being tried in the predominantly rural Eastern District of Texas, likely due to recent practices in that district that are favorable to the patent owners who bring these infringement suits. GAO also found that most patent suits involve software-related patents and computer and communications technologies. Several stakeholders told GAO that it is easy to unintentionally infringe on patents associated with these technologies because the patents can be unclear and overly broad, which several stakeholders believe is a characteristic of low patent quality.
The U.S. Patent and Trademark Office (USPTO) has taken actions to address patent quality, most notably through its Enhanced Patent Quality Initiative, but there are additional opportunities for the agency to improve patent quality. For example, USPTO does not currently have a consistent definition for patent quality articulated in agency documents and guidance, which would be in line with federal internal-control standards and best practices for organizational performance. Most stakeholders GAO interviewed said they would define a quality patent as one that would meet the statutory requirements for novelty and clarity, among others, and would be upheld if challenged in a lawsuit or other proceeding. Without a consistent definition, USPTO is unable to fully measure progress toward meeting its patent quality goals. Additionally, USPTO has not fully assessed the effects of the time allotted for application examinations or monetary incentives for examiners on patent quality. Specifically, most stakeholders GAO interviewed said that time pressures on examiners are a central challenge for patent quality. Based on GAO's survey of patent examiners, GAO estimates that 70 percent of the population of examiners say they do not have enough time to complete a thorough examination given a typical workload. According to federal standards for internal control, agencies should provide staff with the right structure, incentives, and responsibilities to make operational success possible. Without assessing the effects of current incentives for examiners or the time allotted for examination, USPTO cannot be assured that its time allotments and incentives support the agency's patent quality goals. Finally, USPTO does not currently require applicants to define key terms or make use of additional tools to ensure patent clarity. Federal statutes require that patent applications use clear, concise, and exact terms. Based on a survey of patent examiners, GAO estimates that nearly 90 percent of examiners always or often encountered broadly worded patent applications, and nearly two-thirds of examiners said that this made it difficult to complete a thorough examination. Without making use of additional tools, such as a glossary of key terms, to improve the clarity of patent applications, USPTO is at risk of issuing patents that do not meet statutory requirements.
Why GAO Did This Study
Resolving disputes over patent infringement and validity in court often costs millions of dollars. Legal scholars and economists have raised concerns about an increase in the numbers of low quality patents—such as those that are unclear and overly broad—which may lead to an increase in patent infringement suits and can hinder innovation by blocking new ideas from entering the marketplace.
GAO was asked to review issues related to patent quality. GAO examined (1) recent trends in patent infringement litigation and (2) what additional opportunities exist, if any, to improve patent quality. GAO reviewed relevant laws and agency documents; analyzed patent infringement litigation data from 2007 through 2015; conducted a survey of a generalizable sample of USPTO examiners; and interviewed officials from USPTO and knowledgeable stakeholders, including legal scholars, technology companies, and patent attorneys, among others.
Recommendations
GAO makes seven recommendations, including that USPTO more consistently define patent quality and articulate that definition in agency documents and guidance, reassess the time allotted for examination, analyze the effects of incentives on patent quality, and consider requiring applicants to use additional clarity tools. USPTO generally agreed with GAO's findings, concurred with the recommendations, and provided information on steps officials plan to take to implement the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to develop a consistent definition of patent quality, and clearly articulate this definition in agency documents and other guidance. |
USPTO concurred with this recommendation. USPTO has defined a quality patent as: "one that is correctly issued in compliance with all the requirements of Title 35 as well as the relevant case law at the time of issuance." This definition is included on USPTO's Quality Metrics and Correctness Measures web pages, as well as its Performance and Accountability Report for fiscal year 2017.
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| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to further develop measurable, quantifiable goals and performance indicators related to patent quality as part of the agency's strategic plan. |
USPTO concurred with this recommendation. USPTO has developed a series of correctness measures and quantifiable compliance targets for fiscal years 2017 and 2018, which are available on its website. According to USPTO's website, these correctness measures provide statutory compliance rates for 35 U.S.C. 101, 35 U.S.C. 112, 35 U.S.C. 102, and 35 U.S.C. 103. USPTO calculates these measures using data from reviews on randomly-selected Office actions conducted by the Office of Patent Quality. USPTO also included its fiscal year 2017 compliance rates to compare with the targets on its website.
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| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to analyze the time examiners need to perform a thorough patent examination. This action could be taken in conjunction with the recommendation in our report on USPTO's prior art search capabilities (GAO-16-479). |
USPTO concurred with this recommendation. USPTO officials formed a team of staff who analyzed the time that examiners need to perform a thorough patent examination. According to USPTO documentation, this team engaged external and internal stakeholders to get their input on possible changes to the time needed to perform a thorough patent examination. As part of its analysis, USPTO identified a number of additional technology areas for which more time for searching is warranted, which has increased the overall time for patent examinations for about 1,825 examiners. USPTO's Extension Time Analysis team completed its analysis and USPTO increased the time available for certain art units as of March 2018.
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| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to analyze how current performance incentives affect the extent to which examiners perform thorough examinations of patent applications. |
USPTO concurred with this recommendation. USPTO has conducted a number of analyses of how current performance incentives affect the thoroughness of examinations, including an analysis of examiners' production counts in the last weeks of a quarter to determine whether examiners are meeting a production threshold for an award, but working so quickly that the patents approved are of a lower quality. USPTO is hiring additional staff to, among other responsibilities, conduct additional analyses of performance incentives.
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| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to establish a process to provide data on the results of the Patent Trial and Appeal Board (PTAB) proceedings to managers and staff in the USPTO's Technology Centers, and analyze PTAB data for trends in patent quality issues to identify whether additional training, guidance, or other actions are needed to address trends. |
USPTO concurred with this recommendation. USPTO created a new tab for information on PTAB proceedings for a given patent; this tab notifies an examiner that a related patent is involved in an America Invents Act (AIA) trial and provides the examiner with access to the trial documents. In addition, USPTO established a process to collect information about the outcomes of ex parte appeals and provide to the technology centers and examiners. Specifically, USPTO refocused their efforts to provide timely training on case law to patent examiners, and tailored the training specifically to address legal issues that have come up by technology center. Such training was delivered by the Office of Patent Legal Administration in January 2017 and discussed key developments in the law, such as those related to Business Methods.
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| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to evaluate the effects of compact prosecution and other agency application and examination policies on patent quality. In doing so, USPTO should determine if any changes are needed to ensure that the policies are not adversely affecting patent quality. |
USPTO concurred with this recommendation. USPTO has studied the issue of applicant readiness, meaning the quality of the patent applications when they arrive at USPTO, as it relates to compact prosecution. As part of the study, USPTO developed an Application Readiness Review Form (ARRF) to score applications to help determine whether an applicant has provided enough information and details to have an effective application. The study identified application characteristics that had the largest impacts on quality and pendency and are serving as the basis for additional studies. In addition, USPTO also looked at how the number of patent claims and requests for continuing examination affect patent quality scores. USPTO plans to continue to identify potential correlations between application attributes and quality based on data collected.
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| Department of Commerce | To help improve patent quality, the Secretary of Commerce should direct the Director of the USPTO to consider whether to require patent applicants to include claim clarity tools--such as a glossary of terms, a check box to signal functional claim language, or claim charts--in each patent application. |
USPTO concurred with this recommendation. According to the USPTO, they have taken a number of steps to consider such a requirement to include claim clarity tools in patent applications. USPTO considered adding this requirement by engaging with stakeholders in the Federal Register and at public meetings, and these stakeholders have not supported a requirement to include claim clarity tools, such as a glossary of terms or a claim chart. Therefore, USPTO has decided not to require any claim clarity tools, after considering the different issues involved in such a requirement.
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