USPTO needs to be forced to do its job and reject bad patents

For those who remain critics of America’s pathetically easy to abuse patent system, arguably the original sin in that system is the so-called patent backlog. That means when one files a patent with the U.S. Patent and Trademark Office (USPTO), it doesn’t just go to a patent examiner to be approved or rejected. No, instead, it ends up in an impractically long line of patents that the examiners have yet to look at.

For understandable reasons, this state of affairs satisfies just about no one. Inventors hate it because it prevents them from monetizing their inventions.

{mosads}Reformers hate it because the backlog overwhelms the USPTO, causing its examiners to lower the standards for what deserves patent status to try and shovel their way out from under the backlog.

Indeed, only one group has any reason to like the patent backlog —people who profit most from the U.S. patent system being broken. Namely, the so-called patent trolls, who thrive on snatching up vague, overbroad, or otherwise weak patents, and weaponizing their weakness as an excuse to sue as many companies and individuals as possible.

Or, at least, so those of us in the reforming camp assumed — until very recently — the assumption that patent trolls and weak patent standards were mutually reinforcing was pure conjecture.

Now, we have data to prove it. A recent study from Harvard University shows that patent trolls deliberately snatch up patents granted by lenient USPTO staff, knowing those patents are more likely to be flawed in a way that favors indiscriminate litigation.

This follows similar research showing that the USPTO faces systemic problems that permits the government to grant rights over patents that are neither legally nor economically viable. 

Funding for the USPTO comes mostly from the fees paid by patent applicants. This means that  it is in the interest of the USPTO for people to file as many patents as possible, regardless of their quality.

The only way to ensure this, naturally, is to err on the side of approving patent applications, so that more and more people feel encouraged to file.

What usually happens in Washington is that the problem amounts to regulators who want money. Those same people abdicate their duties to get that money, then leads to lawyers monetizing the failings of these regulators to get more money finally and the people who actually create value will end up losing their money.

It’s a perfect storm, and D.C. is entirely responsible for it and, unfortunately, only D.C. has the power to fix it.

Fortunately, courts and Congress have taken some steps to do so. Occasionally, they even act in concert. Consider the creation of the Patent Trial and Appeal Board (PTAB), a commonsense quality control panel that can invalidate bad patents, if those patents are submitted to them in what is called an Inter Partes review.

Trolls — and everyone else who makes money from weak scrutiny over patents — hate this process. In fact, one pharmaceutical company even tried to sell their patents to Native American tribes, hoping their tribal sovereignty would exempt them from the process. Mercifully, the PTAB asserted its authority against this ridiculous Snowflake-esque premise.

But as useful as the inter-partes review process is, it ultimately suffers from the same problem as all post-hoc remedies for the failings of the patent system. It is reactive and tries to kill bad patents after they’ve already been issued, rather than trying to stop them being issued in the first place.

The problem is systemic and starts at the front end of the process. The only way to stop abuse of the process is for the USPTO to be forced to do its job and actually reject bad patents, rather than rubber stamping as many patents as possible to drive up its number of applications.

It can do this by pushing through legislative reforms that strike at the perverse incentives faced by the USPTO. This will hold examiners accountable for what they approve.

Patent reform is not as enticing as the numerous other issues that face this Congress or this president.

However with the pending retirement of Sen. Thad Cochran (R-Miss), which will reduce the Senate to a 50-50 body, patent reform at least bears one mark in its favor: it is richly bipartisan.

Moreover, given President Trump’s desire to cut down on the mischief in D.C. cracking down on regulatory agencies would be consistent with the White House’s overarching vision.

Mytheos Holt is a senior fellow at the Institute for Liberty. He previously worked as a speechwriter for Sen. John Barrasso (R-Wyo.).