Brian Kahin on CCIA Statement on Patent Reform

http://www.ccianet.org/modules/patentPDFs/CCIA_WP_PatReformDigEcon.pdf

As you know, I applaud the vision and goals of the Peer to Patent Project.  We need to aggressively align the patent system to the flow of knowledge within technical as it created and used by those expert in the subject.  We need to ensure that the processes of the patent system are optimally informed and efficient. This is not the case in information technology, and especially not in software, where patents are both ignored and ridiculed by the technical community. 

The Project will succeed if the communities it seeks to engage feel that they can have meaningful input into the project and the long-term health of the patent system.  Smart people contribute to the development of open source software either because they are paid to so by companies with complementary business models – or because the feedback is immediate and concrete, their skills are respected, and they are able to see meaningful results from their contribution.  In order to elicit similar participation from the technical community for reviewing patents, it will ultimately be necessary to fix problems in the patent system that limit the public disclosure function and allow the persistence of questionable patents. 

As is well known among lawyers, the enhanced presumption of validity accorded to issued patents encourages the hoarding of prior art for use only if and when the party holding the prior art is directly threatened or sued for infringement, so the prior art can be disclosed to optimal effect in negotiations or litigation.  Unless technical experts is advised of this problem, they may contribute prior art that their employer would prefer not to disclose for tactical reasons.

Secondly, the threshold standard of nonobviousness is not an expert standard.  In fact, the Federal Circuit has belittled the PHOSITA as a mere journeyman, “one who thinks along the line of conventional wisdom in the art and is not one who undertakes to innovate, whether by patient, and often expensive, systematic research or by extraordinary insights, it makes no difference which.”  Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 454 (Fed. Cir. 1985).  The Federal Circuit views patents as entitlement with the burden on the examiner to show that the patent should not be granted.  Since the examiner makes the call on nonobviousness, technical experts will feel that they have consigned to the role of a librarian.

While I commend the role of the companies supporting the project in voluntarily exposing their patent applications to expert review, the experts need to have some assurance that their participation will be taken seriously by policymakers and the PTO over the long term. Otherwise, this will be a forgotten failed experiment, such as the Software Patent Institute or Bountyquest.

The following have been taken or adapted from CCIA’s recommendations for patent reform.  (See recommendations 2, 3, 4, and 7 in the white paper, Patent Reform for a Digital Economy, at http://www.ccianet.org/modules/patentPDFs/CCIA_WP_PatReformDigEcon.pdf )

[2.]  Raise the basic threshold: eliminate the “ordinary” from patent law.

Abraham Lincoln spoke of the patent laws as adding “the fuel of interest to the fire of genius.”  He would be shocked by today’s entitlement program, in which anything more than the obvious gets a patent.  Today, undistinguished patents in IT are so plentiful that innovative producers often inadvertently infringe the patents of others. 

Only by fixing the statutory language of the standard for patents can Congress convey the message that the threshold is too low.  A clear signal could be sent merely by eliminating one word, “ordinary,” from the standard of skill used to determine obviousness.  A hypothetical “person having ordinary skill in the art” may have been appropriate for the local artisan-based economies of the early 19th Century, but not for today’s intensely competitive global economy.  In IT, constant innovation is necessary for day-to-day survival. 

It may be preferable to raise the standard higher to guard against erosion and to make it more objective.  This could be done with a standard of “recognized skill in the art,” which could be presumptively tied to peer-reviewed publications and, once the higher standard is implemented, patents.  This would provide greater objectivity and an expert standard consistent with the levels of skill needed for genuinely inventive and meaningful contributions to the state of the art. 

[3.]  Implement peer review for patent applications.

A uniform ex parte examination process may have made sense when innovation was irregular and rare, especially for inventions that could be maintained as trade secrets.  The examination process needs to be rethought, not only in terms of the outcries of concern over patent quality, but in light of the speed of innovation, the likelihood of independent invention, and the need for higher standards.  An experiment on peer review as an adjunct to examination is underway in the Community Patent Review (“Peer to Patent”) project supported by IBM and other companies, in collaboration with the USPTO.  Participating companies have agreed to lay their patent applications open to scrutiny earlier than required in order to facilitate timely peer review.  These initiatives deserve support as steps toward a more flexible, high-quality patent system.

The PTO strategic plan argues the case for a menu of examination options. This could include peer-review alternatives to conventional examination, a level of review which would fully merit an enhanced presumption of validity.  Initial secrecy, currently required for a full 18 months after application, could be retained as an option for inventors that may lose meaningful trade secret protection by publishing a patent application.  But secrecy imposes risks and costs on others and adversely affects patent quality.  These costs should be recognized in the form of differentiated application fees.

[4.]  Reward submissions of prior art that invalidate defective patents.

The persistence of questionable patents is costly and potentially disruptive for innovators, producers, distributors, and users of technology.  However, there are disincentives to challenging these patents.  Attacking a patent or patent application suggests that the challenger is a present or potential infringer, who becomes an obvious target for the patent holder should the challenge fail.  The challenger’s competitors get a free ride on the costs and risks borne by the challenger and can reserve prior art for trial or for settlement negotiations.  None of this will change substantially if and when the law provides for opposition proceedings (post-grant review).

These disincentives must be countered with strong incentives to promote efficient flow of knowledge about the state of the art and to eliminate unworthy patents early on, preferably before the patent is granted. Rewards should be paid to those who bear the costs and risks of locating, documenting, and asserting prior art.  Timely submission of relevant knowledge would save PTO resources, encourage expert involvement in monitoring patent applications, and reduce waste for applicants, examiners, and competing innovators. 

Although it is possible for third parties to submit prior art in response to a published patent application, they must pay a fee ($180) for the privilege of doing so, and they are not permitted to comment on it.  At present, very little prior art is submitted.  The reform legislation would require a statement of relevance, but the fee would still be required. 

If those who know of prior art have to pay to do the work of the applicant and the examiner, they should be rewarded to the extent the prior art invalidates the application.   If a commensurate amount of the application fee proves insufficient to elicit relevant prior art missed by the applicant and the examiner, the reward should be augmented by providing it from a bond required of all patent applicants.

7.]  Put PTO at the forefront of knowledge management and information science

If peer review is to gain an enduring interest from the technical, the PTO must treat the challenges of patent examination openly, aggressively. and scientifically.  Indeed, as an agency devoted to furthering innovation, the PTO should be at the forefront of research in knowledge management and information science.  It should be engaged in researching techniques and strategies for locating, organizing, and evaluating prior art.  It should reach beyond the community of patent professionals to researchers and other agencies working in these fields, including the National Archives and the National Science Foundation. 

To this end, the PTO should be required to expend two percent of its fee income to support research to help it better perform its job.  This would give it the credibility and dedicated resources needed to build a community of expertise both inside and outside the agency.  It would help ensure that important initiatives, like the peer review project, receive the broad attention, feedback, and support that they deserve.

In addition, the agency should reorient its information infrastructure around open distributed systems, along the lines suggested by the Open Technology Development roadmap plan commissioned by the Department of Defense  http://www.acq.osd.mil/actd/articles/OTDRoadmapFinal.pdf.  In the past the PTO’s IT procurement strategy has been inwardly focused grand-design, big-iron projects that have been a recurrent management problem and that limit its visibility and interaction with the distributed resources and technical community beyond the agency’s walls.

Lower the presumption of validity to a level that rationally reflects the circumstances of examination.

I classify this as an industry-consensus issue for the IT sector.  It was one of the FTC’s recommendations, but it has not been introduced in the reform legislation for obvious political reasons.  Yet, as indicated above, it reflects unrealistic, irrational expectations about the functioning of the patent system that invite tactical behavior and work against the principle of public disclosure.  The problem of patent quality cannot fixed without admitting that the problem exist.

If these reform initiatives, including the Community Patent Review project, are to succeed, they need to be pursued in a coordinated systematic manner.  The Community Patent Review project in particular needs to convince the community of  technical experts that they can be a meaningful part of the system, not just volunteer librarians working without pay for the benefit of lawyers and bureaucrats.  We have to recognize that there is already widespread hostility toward the patent system, especially in the area of software and business methods.  We need to show that we are serious about reform and that the vision of peer review that you and your colleagues have so artfully put forward does not lose its lustre.

Best regards,

Brian Kahin

Senior Fellow
Computer & Communications Industry Association
bkahin@ccianet.org

Adjunct Professor & Research Investigator
School of Information, University of Michigan
304 West Hall, 550 E. University
Ann Arbor, MI 48109-1092
http://www.si.umich.edu/~kahin/bio.html

Comments

[Dan Dobkin]

Dear sir:

I would like to respectfully suggest that the existing voluntary peer review is not nearly a drastic-enough change. Obligatory peer review has served science well for over 300 years. It should be used in patents.

Every patent should be reviewed by at least 3 people skilled in the relevant art, who should be compensated for their time according to a set fee schedule (possibly considering seniority or qualifications) to minimize the financial stake they have in the result of their review. The resulting documents needn't be considered in the prosecution process but MUST be disclosed as evidence in the case of litigation related to the relevant patents. Having done some patent litigation, I can assure you that the more-or-less unbiased observations of a reviewer are MUCH more convincing than the testimony of paid experts, even those of us who do aspire to accurately represent the truth for the jury.

Availability as a reviewer might reasonably be interpreted as a professional obligation for those who hold licenses (e.g. as professional engineers), or be a pre-requisite for an individual filing their own patents.

Thanks for your consideration.