"I think the biggest sin committed by far is there's no strategic thought that goes into the [patent] filing in light of the applicant's incentives."
Gene Quinn, a patent attorney, is the founder of IPWatchdog.com, a patent law blog, and a professor of law at the Concord Law School, an online law school. He earned an undergraduate degree in electrical engineering from Rutgers College of Engineering in 1992 and a law degree from Franklin Pierce Law Center three years later. Quinn offers an update on developments at the U.S. Patent and Trademark Office as well as on recent case law affecting the prosecution and litigation of patents.
BB&T: You state in a recent blog entry that relations between the patent bar and PTO had deteriorated over the years. Can you tell our readers a little about that?
Quinn: "This happened when Jon Dudas became director."
Dudas was "trying to increase the quality of issued patents," Quinn acknowledged, stating that PTO's senior management "started to blame the patent bar for all the problems PTO was facing." He stated further that while the bar tried to communicate its concerns regarding patent pendancy and growing review times, PTO "treated most of us like we were in third grade."
Quinn said the proposed rules to limit claims continuations and the number of claims embodied in a patent application sparked "a record number of comments," including 350 unique comments. PTO "summarily rejected each and every one of them," he said,
"Those rules were held up in federal courts and those comments were all" referred to in the district court ruling that concluded that the changes were not administrative in nature and hence ran afoul of the law (PTO is legally limited in terms of the kinds of changes it can unilaterally impose).
Quinn said PTO's attempt to impose limitations on the numbers of patent claims and continuations is not without merit. "There are bad actors," he said, who "will bury the patent office with thousands of references and try to hide the relevant ones" in an application, but he said PTO's practice of "treating the 98% of us the same way as the bad actors is not helpful."
BB&T: In one of your blog entries, a former patent examiner said he typically approved about 67% of the patent applications he reviewed when he worked at PTO. Do you know what the average rate is for examiners now?
Quinn: "The allowance rate in the first quarter of 2009 was 42%," Quinn said, adding that this figure "is a low for the last 30 to 40 years."
This difference is not necessarily an artifact of bad work at PTO, Quinn noted. "In order to do a competent job, you need more time across the board than a generation ago," he said, remarking that even 20 years ago, "the length and complexity in just the write-up was dramatically less than today," a difference he said is driven largely technological advances. The patents are also potentially more valuable, so the applicant must "go to a much greater depth to describe it."
BB&T: How long does it take a patent examiner to really get the hang of the job?
Quinn: "It takes two to three years for the examiner to see everything they need to see to be able to function without a lot of supervision," Quinn said, but the agency has seen an exodus of experienced personnel. "Increasingly there are fewer and fewer [experienced examiners] because people leave" due to few prospects for advancement.
Another problem with retention is a familiar one to FDA. Quinn said salaries are "also a problem, and I don't know that [the retention problem] is going to change because they're paid extremely low" salaries compared to those paid in most patent-intensive industries, which means industry plucks the better among them for work in the private sector.
However, "right now, the majority of the bleed-out is people who are retiring," Quinn said, adding that hiring at PTO is frozen.
BB&T: If you had to pick one common sin committed by applicants and/or the patent bar in their patent applications, what would it be?
Quinn: "I think the biggest sin committed by far is there's no strategic thought that goes into the filing in light of the applicant's incentives," Quinn replied.
He said the typical filing consists of a general claim and a number of subsidiary claims, which is "the way it's been done forever," but when an examiner rejects the broad claim, the subsidiary claims also die and the applicant gets no clarification on the patentability of those subsidiary claims.
"The chief thing from the client's perspective is getting a patent as quickly as possible, no matter how narrow it is," Quinn said, adding that claims construction should be "very specific; that is, it should be able to get the examiner to allow it relatively quickly." An applicant can later apply to broaden the claim if necessary.
Quinn said clients, for the most part, are not necessarily the drivers of this traditional approach, a view he holds because he sees a lot of ignorance of the alternatives among business owners. But they're not the only ones whose work is affected by ignorance.
"Some patient attorneys don't understand what their clients need to accomplish. They're good at telling you what you need to do to get a patent," but not so adroit at business strategy, Quinn said.
"I don't think patent attorneys are good at giving advice to clients so that people who are not patent attorneys can make good business decisions," Quinn asserted. He said "CEOs are good at making business decisions once they have all the information they need," but this state of affairs does not always prevail. He suggested that company executives who do not have an in-house general counsel should "start acting like you're a general counsel" because that information gap is crucial, especially for small firms.
"The best thing a CEO could do is take a five-day intensive course on patent law and patent prosecution and learn what goes on," Quinn commented. If executives get a feel for how intellectual property considerations mesh with the company's business plan, "they'll be able to ask the right questions" of their patent attorneys.
Some law firms have offered such a program and many of them charge as little as $2,000-3,000. Quinn acknowledged "there's not a lot of interest out there and I don't understand why. I guarantee that every CEO would get that back in the first month, maybe the first week."
BB&T: Is 36 months the generally accepted duration of pendancy right now?
Quinn: "That's not a bad estimate of the general number. In some areas, it's so much longer and in others shorter," Quinn answered.
He remarked that one of the factors that torques the average time of pendancy is that PTO starts the clock all over again when an applicant requests a new examination of a previously rejected application, which makes the reported average duration of pendancy shorter than might actually be the case. Quinn noted that in some cases, an applicant will be on hold for as many as five years in pursuit of a patent.
BB&T: The Court of Appeals for the Federal Circuit has agreed to re-hear the lawsuits filed by Triantafyllos Tafas, MD, founder of device maker Ikonisys (New Haven, Connecticut), and GlaxoSmithKline (London) regarding continuations, but the new director of PTO, Dave Kappos, filed a friend-of-the-court brief while he was still employed at IBM in favor of Tafas and GSK. Recently, however, the litigants and PTO have filed a request to hold up the hearing. Can Kappos withdraw the rule without creating a problem?
Quinn: "I think he can now."
BB&T: Do you expect Kappos to do that?
Quinn: Yes, I do. Once the Department of Justice asked CAFC to hold off, I think that's a signal that this is what is going to happen."
Quinn said that beyond some of the more obvious problems with the rules, one of the judges at CAFC was apparently of the view that continuations are only available so long as the original patent application is still pending. "Its never been interpreted this way before," Quinn noted. This fact among others would make it relatively easy for the federal government drop the proposed regulations altogether.
BB&T: Is there some legitimacy to the idea of putting a limit on the number of patent continuations?
Quinn: "Not under the current way the PTO operates because it's becoming almost impossible to get a patent on first application."
Quinn said that the difficulty of getting a patent through PTO on the first go-round is due partly to the use of quotas. Examiners get a quota check for first action and a second check on disposition, and can pad their quota numbers by refusing patents. Examiners get only 12-14 hours for each application "but there's no way you can do a competent job in that length of time," Quinn asserted.
PTO "needs a qualified HR person to understand how people respond to incentives," Quinn remarked, adding that he is "hopeful that Kappos is more in tune" with how examiners work. Quinn also noted that Kappos said during his confirmation hearings that he would be interested in changing the quota system. The quota system has been in force since the early 1980s, Quinn said. PTO has about 6,000 examiners, which sounds like a lot until one considers the patent backlog of well in excess of 700,000 applications.
"It does make some sense to have production goals," Quinn said, but a talented human resources manager at PTO could help supervisors understand how quotas affect patent examiners. "For the more complicated stuff, they get more time, but it's a not a lot more time on average," Quinn said of examiners, adding that they do not get nearly enough time "to do what we're asking them to do."
BB&T: Do you see any legitimacy to the notion of limiting the number of independent and total claims?
Quinn: "I think there is. To the extent that PTO can get more uniform sized applications, it makes it easier to set a more reasonable quota system."
Quinn suggested that the rules PTO attempted to put into play would have a suppressive effect on the level of invention. "The limit of claims together with limits on continuations was an all-out assault on the number of inventions" that could be patented, he said. "I think they're going to stay away from this because it would cause tremendous angst" for industry, he said.
BB&T: The Supreme Court decision in the case of KSR v. Teleflex was expected by at least some observers to unleash a flood of challenges to existing patents over the obviousness question. Have you seen that?
Quinn: "That hasn't materialized," Quinn said, adding that in terms of the way patent applications are reviewed, "there's little or no difference." He said he sees "some difference at district court level" in terms of the number of challenges, but whether this will translate into outcomes is unclear. PTO cannot use the case-by-case approach in examining patents, which Quinn said the outcome of the Supreme Court's decision in KSR would seem to have mandated.
BB&T: What do you see as the no-brainer elements of the two current patent reform bills currently in play on Capitol Hill?
Quinn: "Inequitable conduct, although the CAFC addressed that, but the longer this legislation gets dragged out, the more the courts will take matters into their own hands," Quinn said.
"First-to-file seems to be something everyone is interested in," he observed, "which would harmonize our laws with the rest of the world." Quinn also said the venue shopping issue is on the list of no-brainers, but there is also a lot of interest in changing the rules of discovery where electronic communications are concerned.
All the same, "inequitable conduct is the biggest no-brainer," Quinn said.
BB&T: Makers of medical diagnostics see method patents as essential to their patent portfolios and both the Advanced Medical Technology Association and the Biotechnology Industry Association recently issued statements and a friend-of-court briefing on the Bilski case. Care to speculate on how the Supreme Court might decide the Bilski case?
Quinn: "I think they're going to change the ruling," Quinn said.
"Any time the Supreme Court has reviewed patent matter, they've erred on the side of [allowing] more technologies to be patented," Quinn explained. He opined that the Supreme Court will probably conclude that the test applied by CAFC is "too narrow and too rigid."
However, use of the pen-and-paper standard of determining whether the Bilski case has any legs might mean "that almost nothing can be patented," at least in terms of software. "They brought out a jackhammer when what they needed was a pair of tweezers" to apply a rational ruling, Quinn said.
BB&T: It appears that the inequitable conduct defense was not always used as freely as in the past decade or two. Was the expansion of its allowed use rather incremental or did some specific incident lead to its broader use?
Quinn: "Incremental creep and quite frankly, some members of CAFC [started] ignoring precedent," Quinn observed.
He said the pertinent legal bedrock was "put to rest and we all knew what it was as a result of the Kingsdown case" of 1988, a state of affairs that persisted fairly reliably for about five or six years, "and then you started seeing this creep." Attorneys started responding to this chipping-away at the then-prevailing standard for proof of inequitable conduct, using any inaccurate statements to try to prove the allegation.
"Then you started seeing pendancy go out of control," Quinn said, and although the inequitable conduct defense was not the only reason applicants started loading down patent applications with marginally relevant material, applications did grow in part to fend off such allegations.
Quinn noted that CAFC fairly decisively addressed inequitable conduct in the case of Exergen v. Wal-Mart, which was decided in August and which should take the wind out of the use of inequitable conduct.
BB&T: Do you believe that a substantial number of defendants who intend to use inequitable conduct to defend themselves will drop the idea?
Quinn: "I think every single patent case will be affected because" the allegation has always been made in the past, Quinn said. "Most cases have stronger defenses, but inequitable conduct is a silver bullet because if you committed it, you lose all the claims" whereas other defenses go claim by claim.
BB&T: Would Bruce Saffran have won his lawsuit against Boston Scientific in any jurisdiction other than east Texas?
(Editor's note: Bruce Saffran, MD, a radiologist from Princeton, New Jersey, sued Boston Scientific, claiming that its Taxus and Libert drug-eluting stents infringed on his 1997 patent covering technology to deliver injury-healing medication inside the body. Saffran was awarded nearly $501 million following a week-long trial in February 2008, and the company ultimately settled with Saffran for $50 million in March 2009.)
Quinn: "I would say probably not," Quinn responded, noting that in the courts in Chicago and Los Angeles, "I don't think the case would have come out the same."
Quinn said the U.S. District Court for the Eastern District of Texas does a lot to earn its nickname of the patent rocket docket, but cautioned that a litigant cannot assume that a trip to Marshall, Texas, guarantees a win. He pointed out that the rulings in that court clearly demonstrate that juries there "are plaintiff friendly and ... are certainly not averse to awarding big money." However, not all decisions in the eastern district of Texas have hewed to this trend.