New PTO chief must continue fight for high patent quality

For the members of the software industry, the U.S. Patent and Trademark Office is one of the most important agencies in the government. Without a doubt, the success of America’s information technology sector is due in no small part to a strong and balanced intellectual property system. 

We congratulate Director Andrei Iancu on his Senate confirmation as head of this critical agency and look forward to working with him in his new role.

{mosads}In addition to running an organization with thousands of employees, the director is responsible for implementation of the America Invents Act (AIA), which passed Congress on an overwhelmingly bipartisan basis in 2011.

Before it passed, the health of the patent system had become threatened by a serious problem: too many patents —particularly software patents — were of poor quality.  

The AIA’s enactment reflected a bipartisan recognition that these poor-quality patents represented a threat to American innovation and a burden on American industry. The AIA has not eradicated the problem of poor patent quality and the related problem of patent trolls, but it has certainly helped. 

From the software industry’s perspective (and we are not alone in this), the AIA’s reforms have been an enormous success. The act addressed this problem by allowing the patent office to, on limited grounds, revoke patents that should not have been granted in the first place. 

The petitioner’s task is front-loaded: All of the relevant evidence has to be included in the petition, and the patent office will only take a serious look if there is a “reasonable likelihood” of invalidity.

The evidence consists of printed material intended to demonstrate that the patent issued to an invention that’s obvious. After hearing all the evidence, if a panel of patent experts believes that the office made a mistake in issuing it, they invalidate the patent.

This procedure, called inter partes review (IPR) has a balanced record of rejecting bad patents and upholding good ones. Although it has affected a small percentage (less than half a percentage point) of the roughly 2.8 million patents currently in force, this procedure has been enormously successful. 

The largest slice of patents in IPR (roughly 81 percent of them in fiscal year 2017) involve computer, business method or mechanical technology. What’s really striking, however, is that the Federal Circuit affirms the patent office’s IPR decisions roughly 74 percent of the time and splits the difference an additional 10 percent of the time (e.g., if more than one patent claim is appealed). 

Patent owners win more often in front of the patent office than they do in federal court, where their patents are invalidated 42 percent of the time.

Thus, the patent office is getting the law right, and it’s having a positive effect on innovative activity that has benefitted broad swaths of the American public.

That’s why, for example, Software & Information Industry Association (SIIA) and other members of the technology industry were joined by golf and automobile manufacturers, retailers, the AARP and generic drug manufacturers in supporting IPR before the U.S. Supreme Court.  

With that said, it’s both natural and appropriate for a new director to examine both existing and contemplated practices to see what might be improved.

For example, we would encourage the director to look into modernizing the patent office’s information technology system that would allow examiners to research more efficiently.

Similarly, it would be worth examining the extent to which the office’s focus on (and credit for) the number of applications an examiner processes creates perverse incentives for examiners to grant poor-quality patents.  

Put another way, the better the quality of patents the PTO issues, the stronger and healthier our patent system will be. 

Ken Wasch is the president and CEO of the Software & Information Industry Association (SIIA), a trade association for the software and digital content industry.