This episode is audio of the Solutions and Alternative Paths panel from the Engelberg Center's Rethinking Patent Prosecution, Review, and Litigation event. It was recorded on March 28, 2024.
Panel Four: Solutions and Alternative Paths
Michael Weinberg (moderator), Engelberg Center on Innovation Law & Policy
Dave Kappos, Cravath, Swaine & Moore
Arti Rai, The Center for Innovation Policy - Duke Law School
Michael Frakes, Duke Law School & Melissa Wasserman, The University of Texas at Austin School of Law
Michael Weinberg 0:00
Welcome to engelberg center live a collection of audio from events held by the engelberg center on innovation Law and Policy at NYU Law. This episode is audio of the solutions and alternative paths panel from the engelberg center is rethinking patent prosecution review and litigation event. It was recorded on March 28 2024.
All right, so as I, as I mentioned, the, the the earlier panels were all about identifying problems and detailing how things work. And this is the panel where all of the problems that were identified in the earlier three panels get solved in a tidy 45 minutes. It's like, it's like a network drama. And so we're going to have a Fortunately, we have panelists who have been giving a lot of thought to these questions before the beginning of the event today. So they aren't just sort of piecing it together based on what we've heard. But I think a lot of what we've heard, really matches up with some of the work that they have done, and I'm sure they're they've been listening attentively to all of the issues that have been raised. So we're going to let everyone give a quick series of presentations, and then we're going to open it up to some broader questions. And we will start with dynamic duo of Michael Frakes, who is the A Kenneth pi, Distinguished Professor of Law and professor of economics at Duke law. And Melissa Wasserman, who is the chair for Charles Tilford McCormick McCormack Professor of Law, and the Associate Dean for Research at the UT Austin School of Law. Take it away, please.
Melissa Feeney Wasserman 1:44
So a couple of things like So Michael, I've had a large research agenda that's looked at the Patent and Trademark Office and the paper that we're going to present today is going to empirically look at the whether the judicatory powered P tab brings uniformity to patent examiner's decision makers. But we also have a number of papers that have really looked more at this ex ante ex post question. Where could we or do we think it's a normatively desirable to increase the resources at the Patent and Trademark Office so we get better decisions initially, rather than relying to the extent we do on on the federal courts, right to read out invalid patents and I just wanted to mention that work where we really do think giving examiner's more time right to make patentability determinations, which would include searching for prior art would really help the system and result in weeding out quite a few and valid patents initially, so I just want to highlight that work before we move to this. So the motivation of a lot of our work has come under concern with patentability to determinations from patent examiner's and in particular, and consistent decisions of patent examiner's now there's about 9000. So it's not that surprising, that examiner's would have divergent grant rates, which would implicate concerns about whether the decisions always been driven by the merits of the application, or how much of its being driven by examiner characteristics, right, because applications tend to be randomly assigned to patent examiner's. And there's a number of harms, I think associated with the fact that if we have similar applications, right applicants going and filing at the PTO, that they would be treated in dissimilar ways. So we may just be concerned that this is a symptom of examiner's missing the mark, they're not applying the patentability standards the way they should be. Or there's theories about bureaucratic justice, that price uniformity and agency determinations. So when we think about what are some ways that agency heads, right, or designers of administrative agencies try to bring more uniformity to examiner decision makings or low ranking official determinations is subjecting them to higher level review. Right? So a classic way of doing that is to have your patent examiner decisions that you can appeal to a judicatory board. And that's what we have through P tab. Now, P tab has been the subject of a lot of scholarly attention and court decisions but they haven't focused as much on its ability to bring uniformity to examiner decisions and that's what we're going to do here and you can think of P tab as bringing uniformity to examiner decisions at least a couple of different ways. One is in a law making capacity right where it's trying to fill gaps in the law and try to Britain and thus bring uniformity for examiner's of applying the same law and now there's just straight up error correction right examiner's are applying the law incorrectly or the facts to the law and correctly. Now let me say a little bit more historically, right. The judicatory board could largely just do this one sided Right, because it was just rejections, pen examiners or application rejections that could be appealed up to the board. And it wasn't until we got the American Invents Act, that we got this robust way, right where P tab now can also come back and look at arguably erroneous grants. And so we can look and we're going to look in this paper the ability of P tab to maybe correct examiner's that happen to be too restrictive, versus ones that are overly permissive. And so we're going to have a number of hypotheses that we're going to test right. So if this adjudicatory board is really about bringing more homogeneity, and promote the uniform application of patent law, right, then you would expect P tab to really focus on that as examiner's that are kind of at the end those that are rejecting way too much or that are overly permissive that have really high grant rates. So our first hypothesis is right, we're going to look at whether examiner's ever experience a P tab reversal of an application rejection from those that happen to have very low allowance rates right and then alternatively, whether the likelihood that examiner ever experiences the validity challenge of a patent before P tab and whether that's going to be higher for examiner's that happen to have very high grant rates if you're looking at the distribution of examiner's now we know that there could be some sort of mechanical relationship here right because examiner's who have really low grant rates are rejecting way more than examiner's that have higher grant rates. So, we also tried to explore the way to look at this right taking out that mechanical relationship. And that leads us to our second hypothesis, right where we say the likelihood that an individual application rejection will become the target of P tab appeal will be higher for examiner's that the lower ends of the examination grant distribution. And similarly the likelihood that an issue patent will become the target of a P tablet the challenge will be higher for examiner's at the upper end of the grant rate distribution. And then finally, really if we think P tab is going to bring uniformity to examiner decisions, what we would want is that it may be so not only correcting erroneous decisions, but that it also may have some long term impact on examiner's decisions, meaning you get reversed by P tab, you are going to correct your sort of decision making as you move forward. So consider a restrictive examiner, maybe an examiner who rejects a lot more than the average examiner, they get reversed. Are we going to see their grant rate kind of move more towards the average grant rate of examiner's? And so that's the last thing that we test for, right upon the reversal of a board. Do we see a lenient or restrictive examiner's granting tendencies converge more to the average grant rate of examiner's? And if we find that all of these are true, then we think taken together. Right? This suggests that the board is providing some uniformity function. Right, and that this is going to be at least maybe one positive kind of solution that we could be looking at right that the PTO of the judicatory board is helping to kind of harmonize decisions. So I'm gonna turn it over to Michael, who's going to walk through some of our actual results. Oh, here's the day that you want to talk about the data first.
Michael Frakes 8:21
Yeah, actually, we're basically sort of pulling sort of data on individual sort of patent applications over, you know, really over a close to a 16 year period. And we have about sort of 4 million applications we have a we have information about the disposition of the applications, we can ultimately sort of trace it to ultimate board, board decisions board outcomes. So in like in the pre 2010, pre 2011 area, we're sort of at this point, we're sort of looking at sort of rejection decisions going up to the board. And we're looking at BPI decisions at that point, and I guess, really 2012 afterwards is where we're now really sort of bringing into the P tab era, we could sort of look at both sort of evaluations of rejections and evaluations of grants. One other thing I want to say on the methods front when we're sort of at we're kind of looking at examiner's and their grant rates. We're not, we're doing more than just sort of figuring out the average of the grant rate of the examiner, we're trying to really get a sense of the inherent granting sort of proclivity of the examiner. So we have our main set of approaches, we're actually sort of adjusting the examiner grant rates for various factors. So because we're really trying to get it down to individual level so we can do adjustments for the technology, they aren't unit that they're in. We can also there's other sort of important determinants a literature has sort of revealed that over the course of a career, your grant rates were evolved. There's experience effects, there's there's general schedule level effects, and so we actually adjust for all those to try to really get a sense of the examiners inherent granting proclivities. And when we do that, and we sort of we could plot and actually should have had the graph of that I don't think we added it to the slide deck here. You see a really wide distribution of these inherent grant rates across examiner some really on the on the restrictive en and some really on the permissive end. And as sort of like really the next exercise just to sort of recap as Melissa, it sort of indicated, we want to get a sense of really where I like to think of this as really a like a rationality check if what the if the if the P tab process, the BPA process is really sort of inducing sort of consistency and examiner decision making ultimately at the end of the day, when we're sort of evaluating the the rejections that but if hypothetically, if the board were always just challenging the rejections of the really sort of permissive examiner's it would seem like we're kind of missing the mark and missing the ability to actually get this consistency enhancing function. So do we really see them on the rejections front? Are they really actually targeting those rejection evaluations on the examiner's that are in the on the rejection end of the distribution? And vice versa? And thinking about sort of evaluating the grants. So that's, that's our sort of our next exercise. And what we see is actually we kind of passed this rationality check. So sort of I don't want to get too much into the into the specifics here. I'll just say the following we, we figure out these inherent grant rates and then we group examiner's into sort of into quartiles differ for different bends, sort of reflecting the degree of sort of granting proclivity. And the first exercise we sort of see that is there is it an examiner sort of ever subject to a reversal on their rejection decision, we see that's like, you know, that's actually kind of heavily concentrated in the examiners on them on the low end of this the first quartile, the most restrictive examiners, and sort of as we sort of go up the quartiles and we look toward the most permissive examiner's they're less likely to sort of actually have a rejection sort of decision evaluated over reversed over the rejection, reverse that peak, dab or BPI over their lifetimes, it sort of passes this rationality check. And as Melissa says, to some extent, this just might be mechanical. Because if you just reject more over your career, there's just more likelihood mechanically that you'd have a rejection reversal occur. And we actually can, without getting into the specifics, we can actually sort of do a trick to actually just see even even beyond the mechanical point, where's the P tab or BPA eyes sort of rejection activity really focusing on on the rejection front, it truly is inherently on the most sort of like rejection prone examiner's. And then we find sort of like the without really also get into the specifics of the graph, we also find kind of the, the, you know, the the mirror image of that when we're sort of focusing on the grants are in P tab. And this is really focused on P tab. Now, where are they focusing, they're sort of kind of poke post grant review, it really is on the more permissive end of this sort of inherent examiner grant rate distribution. So that's sort of the first part of the analysis. I think the more interesting part of the analysis, were to really get a sense of of is there's a speed lap feedback loop between the P tab and ultimately the examiner decision making is we could sort of look at individual examiner's that have actually seen their work challenged at the BPI BPI for thinking about reversals prior to 2012 or the P tab sort of after 2012 on both ends, do we see the behavior change accordingly. So take examiner's that actually. So here we're sort of looking at we're kind of looking at an examiner over the course of time, before and after. And in the time leading up to and afterwards, they actually are sort of having one of their rejections evaluated by the board. And if you think that sort of think about like an a specific deterrence type concept, Guy and context, you have an examiner that Oh, somebody is sort of second guessing sort of my rejection decision, theoretically, that might cause them to actually move in a more permissive direction sort of afterwards. And that's really, really what we're seeing then this sort of event study design, where we're sort of looking at the the examiner sort of grant rate over time, leading up to that particular event where ultimately they're the rejection decision is is challenged at the board and we see them become more permissive. After that, after that moment in time, happy to talk offline about the more specifics here, we actually have kind of like a real quasi experiment built into this where we're sort of looking at examiner's experiencing these events and looking at examiner's that are not experiencing those events at the same period of time to give us like a control group. There's a lot more going on here that I just in the interest of time going to skip over. Now. But the the other side here is I'm going to skip over this slide to the other side here is actually well, what's that? What's Now let's imagine an examiner who's grant decision has ultimately been challenged, do they ultimately become sort of more permissive at that period of time? And we do a little bit weaker evidence here. And actually also this is I think we need to update this because our data was a limited little bit limited at this period of time. But we also see some indication that examiner's do become sort of more restrictive after the moment in time where they're experienced this first challenge at p tab of their grant decision. So I'm going to stop
Melissa Feeney Wasserman 14:50
do the last just put the last letter. Yeah, yeah. And so a part of this is what what are the implications Right? that come from this and So one, it's a positive story, at least we think P tab is bringing in some homogeneity, right like outlier examiner's that seem to be particularly restrictive or overly permissive. When they get reversed by the board, their grant rates are moving more towards the mean. But at least from the results that we find right now, it seems to be doing a better job on the rejection side, right? If you're overly restrictive, right and rejecting too much, and part of that we just think is how the system works. Right? You as an examiner, tend to be involved in that rejection decision as you go to the board. Right. And it's it happens more closely related to when you make the decision. So the learning from the examiner seems to be much stronger. And this is, in part what Judge Chen has talked about multiple times today, right is, is that on the other side, we find some kind of learning effect for those that are overly permissive and get their grant reversed. But it doesn't seem to be as strong. And so there are reasons why we think that, in part, it's because the examiners that decision, usually part of that P tab, that IPR PGR decision, right. But also, there's this, we think, lost opportunity for this feedback, right, like what's happening on in the PGR and IPRS, that they're learning, right, really, we think needs to be fed better back in for the examiners to learn, right. And that would just increase. We think the ability of the board to work in this kind of consistency enhancing function.
Michael Weinberg 16:28
Fantastic. Thank you so much. The next presenter, I'll ask Artie Rai to step up to the podium for us to rise up Yes, yes, we'll rotate it through is the Elven our Laddie Distinguished Professor of Law and the co director for the Center for Innovation Policy at Duke law. We're doubling Duke here today.
Arti Rai 16:52
We lobbied Michael Yeah. A representation of Duke. Sorry, Melissa. Anyway, so Well, thanks for staying till the bitter or not so bitter. And hopefully, we'll we will give you some solutions. And so things will be peachy keen, really excited to be here, thanks to the organizers for inviting me. So my brief remarks are going to focus on a bunch of issues and some potential paths forward. Most of the issues have been discussed at some live today. So I can be briefer than I need to be in the exposition, and perhaps spend a little more time on the paths forward. So I'm going to talk about us. Not surprisingly, Section wildlife, including some original data I have on molecular diagnostics, and section 101. That does provide a little bit of a ray of hope, although perhaps not a complete ray of hope. We'll also talk about IPRS. And that has been the subject of a lot of discussion already. So I will try to not repeat that discussion, but go a little bit beyond it. And then finally, we'll talk about what I call the system generally. And what I mean by the system generally, is simply how the judicial administrative processes work in terms of allocation of power over decision making authority with respect to patent validity. And that is obviously a question that was, or the allocation decision making. Authority was very much in the forefront in the America Invents Act. So it's related back to IPR. But I'm going to open or widen the lens a little bit and talk a little bit about the maybe for some of us who do administrative law, the 100 pound gorilla in the room, which is what the Supreme Court has been doing in administrative law. So that will be probably where I conclude and some thoughts on that. Okay, so first, like many in this room, I suspect, I think, section 101 is a real challenge. I think the chaos is real. And I do not envy judge Chen or anyone else who has to actually apply the section 101 jurisprudence. That said, I'm not sure that it's working as badly in some areas as in others. And this is where, for molecular diagnostics, it's clearly the case that a lot of folks, including folks who have testified before Congress think the sky has fallen, and we really need some significant course change. I think that's potentially true. But here's a little bit of a silver lining. I think the Federal Circuit has actually done some things that have helped molecular diagnostic companies out any part it's because the Federal Circuit has developed some I think, frankly, a little bit jerry rigged case law Law in particular the Vanda case but even jerry rigged case law can be useful, particularly if it's represents a bright line that companies know how to follow because companies want certainty. And if you can get certainty even with a jury, right case, decision, good good on you. And that's, I think what our data shows I've worked with Professor chan at Berkeley Law School, and Janet Clark, who is a PhD empiricist on these data for a long while now, probably too long. But the data do show that at least four in overall molecular diagnostic filings have not tanked. So the the dotted line on the left is more accurate diagnostic filings overall. And were our comparator is the rest of life sciences, not including bioinformatics, which was affected by Alice. But we do think that the rest of life sciences is a reasonable comparator, because although some composition of matter patents were perhaps affected by some of the dicta in myriad regarding products of nature, I think overall, people would say that most small molecule and biologics patents are not severely affected. So we use that as a comparator. And on the left side, we show that with mayo as our, obviously our treatment, the trends, just basic descriptive data and nothing as sophisticated as what Michael and Melissa have done. Although we do have some regressions that we're working on right now, that will control for some of the issues that if you were I was facing an audience of economists would immediately be confronted by. So that's the left side. So the what you have to be concerned about is the dotted line and it doesn't look terrible. It doesn't look necessarily as good as it might have been, if Mayo had come out the other way, but it doesn't look terrible. The right side is smaller, US based companies. I know, many policymakers, for good reason are concerned about small US based companies, and there we do see a challenge. So the dotted lines there look much worse than the comparator particularly on the grant side. And in our view, that's not good. So the question then becomes, what to do about it, we do think part of the story here might be a informational story, in other words, tell the small, US based firms that there is a potential for adapting to the Mayo Ellis to step test. And this is how we've gotten our adaptation story. So we see that again, in the aggregate, a lot of firms in the molecular diagnostic space are increasing the number of words and claim one, and this is a way that at least economists test for the breadth of the claim. And I know claim one is not the be all and end all and people can, Kentucky in important claims all sorts of places. But we do see that overall, there's been an increase in the number of words in molecular diagnostic claims, both total words and unique words. So the left is total words, and the right is unique words. I think that that suggests there's been a bit of a bit of learning on the part, at least overall of firms understanding that the Vanda case, which is a case, some of you probably know, well, that said basically, if you have a method of treatment piece to your molecular diagnostic claim, it'll go through and it'll be enforceable even in the court scene. But even at the Federal Circuit. I think that story has gotten through, at least to some in the molecular diagnostics community. And anecdotally, I can say that it's gotten through to a lot of the tech transfer officers I talked to you at universities. Turns out that a lot of these micro diagnostics come from universities, and even though you might be most focused on some of you who follow this area might be most focused on the Stanford case involving care dx that sued, which sued the Terra and had its patent invalidated. That claim actually didn't have a method of treatment component to it and had it done. So it might have things might have been different. So again, I'm coming from Duke and I've been told from my colleagues at Duke that they always put their method of treatment step into any claim they file. All right, so that's a little bit of a ray of hope, potentially. In a, maybe a third best way. So, in in legal speak, we talked about first best solution second best third solutions. And this might be a third best solution, at least for the molecular diagnostic space. All right, what about IPRS? Well, there's been a lot of discussion of this so I can go really quickly here. We know it's not a death squad. That's clearly the case. And point of fact, the data suggests that maybe in some respects, it's not doing enough. We can talk about that in the context of the definitive story. And then I want to conclude by talking about what I see as a very significant looming administrative law challenge not restricted to IPRS. But including IPR certainly, but for the PTO more generally. And that's the challenge that's being created by the fact that the current Supreme Court really dislikes administrative agencies, and doesn't hesitate to show it as quickly as it can when challenges are abroad. So death squad, well, this is data just from the PTO reiterating what I think a bunch of people have already said that this is not a death squad. So I'll skip quickly through that. In fact, I'll just skip it.
Parallel litigation inventive. Well, I worked on this a little bit. I was in the Department of Commerce Office of General Counsel as an advisor in 2021. And we thought a lot about FinTech and thought a lot about what to do about fintech. And I think the the issue has been taken off the table to some extent by a lot of what Director of it all ultimately did, but even before that, even before Director of Adult was able to do what she did, and regrettably, as somebody mentioned, PTO directors, unlike director Kappos who was confirmed very quickly, oftentimes don't get nominated until very late in the process. But in any event, so we think, or I think that the Finn Tiv issue has been addressed quite significantly. I think the data show that there have been there's been a huge decline in vintage denials, starting in 2021. With the advent of the idea of a sotera stipulation that has been discussed in the prior panel, I think this chair stipulations have worked pretty darn well. And so, even before Director of Adult could come out with her 2022 guidance where she talked about how a time lease to sotera stimulation, stipulation compelling merits and the ITC moving really fast would not be reasons for offensive denial, we saw a decline, the guidance resulted in even more decline. I'm not as necessarily happy with CommScope technologies decision was suggested that you might have to look beyond compelling merits in some cases. But and that has caused a little bit of an uptick infinitive. But even so I think in the in the main where we've addressed the Phantom issue, I think a lot of the other issues with serial petitioning have been addressed through general plastics. So I think these are good things. These are good things that the patent office has done to try to think carefully about how to deal with the so called waste problem. And I wish that some district court judges would think more more about this particularly, shall we say, in the Eastern District of Texas, but that's not under my control. And, and certainly probably not under the control of anyone, given that they have life tenure. So last, but not least, is Supreme Court and administrative law. So some of you who follow the Supreme Court or even if you don't may know, Well, you certainly probably know that the P tab has taken quite a few visits to the Supreme Court, six in total, and a lot of them have been almost near death experiences. So Arthrex, arguably was a near death experience, oil states certainly was a near death experience, and it survived. So that's the good part. And that's the happy story, that the P tab still exists, in my view, it's a good good part. Not so good. And this is not specific to the P tab, it's more general to the PTO. These are cases that are likely going to eliminate what is known as Chevron deference. And some of you might say, well, it doesn't really matter because the PTO doesn't have rulemaking authority over patent validity, the core components of patent validity All it has is all it has, quote unquote, is rulemaking over quote unquote, procedural questions. Well, as we've discussed throughout the day today, procedural questions are incredibly important. And many of you have said notice and comment rulemaking is the way to go on procedural questions and in its infinite wisdom, Congress gave a lot of authority to the PTO or procedural questions. If this goes, if Chevron goes, Why would the PTO engage in notice and comment rulemaking? You won't get any Chevron deference for notice and comment rulemaking. So why bother? Why spend the years that it takes all the resources? It's just not worth it? Why not just do some easy guidance, and maybe you get challenged on it for not doing the right notice and comment rulemaking, as has happened with the on the trademark side of the house quite recently. But really, it's not something that I think it would, if Chevron goes really survive a cost benefit analysis for a director. And with that, I will close and sit down. Thank
Michael Weinberg 30:50
you. Our last, our last presenter is day CAFOs. Decapolis does not have a named chair right now. So I will just call him the David J CAFOs. Partner acrobat. And, as mentioned, the former director of the USPTO. So please.
David J. Kappos 31:11
Okay, thank you, Michael, great to be here at NYU this afternoon and spend time with folks talking about something super important, which is the PTOs work in doing good job administering our nation's patent system. So, and thanks for the NYU people putting this program together. It's great to be back and doing things here. And I hope there'll be a lot more of these, I thought I would, you know, really get very practical with some suggestions that I have long, even before I was at the PTO while I was at the PTO. And since it felt like, you know, we could get traction with some of these, and I was pleased to hear them in some forms of the problems that motivate them coming up earlier in the day. The first thing I'd start by saying, and I love Melissa's comments and presentation before, because they my mind recognized that the problem or the challenge of patent quality is a two sided challenge. There is a problem when a government agency grant a patent that it shouldn't grant on an invention that isn't an invention or isn't clearly enough described. But there's also a problem. When the government agency refuses to grant a patent on an invention that should be granted and and some research that I'm working on right now and a paper soon to come out. We show that, in fact, more denials occur at the USPTO that are false denials than Miss grants that shouldn't have been granted. And I believe the cost of those to our economy is actually greater than the cost of granting some patents that shouldn't be granted. We don't want either of those either of those two sided errors to occur. But we need to be very cognizant, when we try and prevent the first side of errors. And we focus all our attention on preventing the issuance of patents that shouldn't be issued, we almost certainly wind up over correcting and then denying the issuance of many patents that should issue. So let's go to some specific suggestions. Some again, some of which seem to be very much motivated by discussions today. So 112 claim terms that are unclear terminology used in specifications that unclear applicants being their own lexicographers to fault. Right. I think that was mentioned earlier. There is a solution for this. And it's one that we studied back when Artie and I were working together at the USPTO. And and I think the agency could nudge further in this direction, which is encouraging, giving some credit to I wouldn't quite say mandating but encouraging and giving some credit for and some costs associated with not clearly defining terms, either by including a glossary of terms or by otherwise, you're not using coin terms or if you do use coined terms, actually defining them somewhere in your specification and there are various means to put benefits and costs associated with that. Right presumptions and narrowing presumptions on the other side for for putting terms and in claims that aren't defined. And then of course, the ultimate backstop. And I'll get to that in a minute is more assertive and appropriate use of 112 by the PTO, which is something that again, we struggled with when when we were at the agency and need to be struggled with some more second item. And this one hasn't been addressed, at least since I got here. I was just a little bit late this morning. I did I haven't heard it talked about which is 112. F. So means plus function claims which have been a challenge for the agency forever. I think Judge Chen very correctly referred to one of the ways these become unmanageable, which is the so called results obtained claim. And the worst species of that genus in turn is where the point of novelty is claimed as a result, and not a way of achieving that result. And I strongly agree, those kinds of claims should be directed, rejected minimally under 112, and maybe even under 101. So what's the solution? For one to about this was another thing that we studied and determined there was something that could be done about it. But you know, you kind of can't implement everything you want to in a period of one administration, and that is to to expect applicants to come clean with whether they want their claims interpreted under 112. F. Right. My view has always been look, applicant, this is your patent, it's your claim, it's your thing, we're trying to help you curate it, but it's your job in the first instance, you ought to know whether that claim with nonce words in it or means land, what appears to be purely functional language is a claim that should be examined under 112. F or not just tell us and if you tell us we'll do it either way, no harm, no foul and saying yes or no. But if you don't tell us there needs to be some, again, some presumptions and some some consequences to that. So that could in my view, go a long way toward rendering clarity, just let the people who, who wrote the application tell us how they want them examined under what about limitations on continuation. So this came up earlier, this is a really hard problem. Remember, we had the claims and continuations rule package of around 2007 That resulted in the PTO getting sued, and it was a meltdown. We do not want to go back there. And we want to be able to do better than that. So So what do you do? Well, minimally, now that the PTO has fee setting authority, and this is a problem we solved under the AIA use it, the PTO can get significantly more aggressive about escalating fees associated with multiple continuations. And as has correctly been pointed out in studies that the agency has done, it doesn't affect most applications, because most applications get issued after the first or maybe the second continuation. But for that long tail, right, the I don't want to say bad actors, but those who push the system very hard, start paying Jack those fees up order of magnitude, I don't mean like 25%, I mean, like 1,000% and start charging people. And by the way, there wouldn't be arbitrary or capricious, because the real cost of examining those kinds of applications is extraordinary. It gets to be huge. The examiner time going through file histories moving from one examiner to the other. So simple solution. The second point, part of the solution to continuations was mentioned earlier, and I just want to come back and put a exclamation point on it, which is some version of prosecution latches when we're seeing that doctrine get more air pumped into it, I think by the Federal Circuit, which I happen to agree with in some of these recent cases, involving the few pre AI pa application. So the 17 year from issue of from issuance term applications, there are still a few 100 of them pending. And there's no reason my view why the Federal Circuit shouldn't be very skeptical of those. But the same concepts can be applied to these cases where applications under the 20 year from filing rule are kept pending. Very long periods of time are where you get into many continuations. And I get that there are reasons why sometimes multiple continuations are needed, but some version of consequences would help with that just Have more comments in and I'll stop because I think probably folks want to have a discussion here. So
I love the point that Melissa raised of giving more time to examiner's This is one of the details of history that's probably been forgotten, I'm sure already remembers, one of the very first things we did when we started at the PTO was to go into the Secretary of Commerce despite the fact that he wanted us to get application Pendency down to the same time it takes to get a driver's license in the state of Washington. And we told him Mr. Secretary, despite all the pressure that you're putting on us to reduce the backlog and reduce Pendency we think what actually makes sense is to give examiner's more time on every application and we get that your head's going to explode because that's going to mean the same number of examiner's are spending more time they're getting fewer applications process. It worked. He agreed and it worked. And it actually both benefited in quality we were able to show that and it caused Pendency and backlog to start going down because examiner's were getting things done. They actually weren't like time out of being able to think they were able to finish thinking so giving even more time. Absolutely. Look, the PTO is swimming in money. It's now got like a $4 billion budget you can give more time to examiner's I wouldn't give more time in every single case. But this is where it speeds and group art directors can use some judgment and help examiner's and give ample time on those cases where it's needed. That my mind is like low hanging fruit. Just a couple more interviews, not something I've heard discussed much today. Interviews work Bob stole did mention that interviews absolutely work. And we should keep having interviews. We toyed with the idea even when we were there of recording all interviews. Now of course we can record everything with our smartphones. It's easy to do. The problem is it chills interviews too much applicants won't conduct interviews, but we need them to conduct interviews. So the answer there is better notetaking and better assertions by examiner's have an interview summary that's not overextended and it's appropriate. But helps put in the record what was and wasn't agreed to. I would definitely do more in that regard. And then And then lastly 112 examination, we got to get better at that we've got better law in that right whether you love or hate the Amgen decision, and my firm was on the losing side of that decision. So I have my problems with it. But it has tightened the law of 112 as have other Supreme Court and Federal Circuit decisions. And, you know, we we worked we spent millions on examiner training when we were at the PTO on improving the MPP on putting new case law into the NPP to try and get examiner's to examine under under 112. And like the needle moved a tiny little bit. Gotta go back and do more of that with the recent case law and give examiner's more time to examine under 112. And have specialists come in and help the examiners examined more to 112. I think that's an important part of the solution to the problem too. So all practical stuff, hope it's helpful.
Michael Weinberg 43:25
Fantastic. Thank you. I want to I have questions. But I also I want to actually jump to opening the floor to the audience. If people have questions they want to jump in. I know we've been unable to get some of those at the beginning. So I want to kind of give a moment right now if anyone has a comment or response to any of that. I will give you space to do that. But if not, I will ask my question. And actually my question is for everyone. And this is maybe it's a little bit of a political economy question. Right. But if identified problems identified places that there can be solutions. What is the barrier to implementing those like what are the what are the countervailing forces that are preventing us from doing this thing right now? And that may just be kind of general friction in the system. But if there are kind of specific interests that say no, to some of these, I would love to hear your thoughts on them.
Melissa Feeney Wasserman 44:28
To anyone who will also a little bit I mean less so about the paper that would present and more so about increasing time allocation. So the agency has been doing some of this right, they've gone in and increased time allocations for various different art units. Right, etc. So that was kind of a good thing. I think that we've seen. Another thing that we've wanted to see reform on that we didn't talk about today was kind of the fee structure of the agency how the application fees are really low. Right? So the agency gets over half of its budget through only if it's granting patents, right. For patent grants and renewals. And we've done some of our work. It suggests that when they're cash strapped, right, they grant additional patents to get money. So I would, we would love to see some fever form. But I think there are limitations on that with how the AI is written that their fees hat like. So I loved what Dave said about ramping up the fees for continuations. But there are some limitations with they have to have their fees can't be more than what their costs are. So it hamstrings their total ability to use fees, I think in the best way. Moreover, because the agency funds itself through user fees they're trying to it's hard, I think, to set the right incentives for the agency, as well as for public policy. Right. So we have renewal fees for good reasons. Because if you don't pay them, the patents go out into the public, and that's good for us. But we don't maybe renewal fees don't create the best incentives, I think always for the PTO. So I think there's some challenges there. Just
David J. Kappos 46:12
Just one other comment on that we've actually an RD, remember this, we ran a conference on renewal fees, when we were getting a fee setting authority, and it was an academic conference, so it was, you know, kind of like this with lots of professors. And the strong suggestion was to ramp up renewal fees more towards the back end to encourage patents to be dropped and put into the public domain. And we absolutely implemented that. But I totally take the point, you need to come back and keep doing that stuff and look at the data and then do it again, or do something different in order to respond to the current data.
Michael Frakes 46:48
Yeah, I just want to reiterate, I think that when they get most of the saying, Is it it seems like we're with the fee structure trying to kill not just two birds, multiple birds with one stone? I think that their answer lies in the challenge, because there's totally economic rationales behind the renewal fees, but sort of, but when it also when it's all said that all of the fees just collectively have to sort of do the financing uncovered the cost, then you're going to run into the problem of potentially sort of subversive incentives that are being imposed on the agency, like so much is being loaded on under finance and the agency only when there's actually grants in the first place. And it might need a statutory reform here. I think this was Melissa is insinuating. So there's a little that's, like a frustration on our end.
Arti Rai 47:28
So I would say that, in my view, anyway, the current Supreme Court is a significant obstacle. And I think that it's fair to say that the the constant kind of challenging of every agency decision through all of the ways one can do that, under the current Supreme Court jurisprudence and future jurisprudence, a creates a certain level of risk aversion that I think is unhealthy. And that's a maybe a difficult statement to to make, and a roomful of practitioners who like to challenge agencies. But I do think that as a consequence of that, given that Congress is very hamstrung in all sorts of ways. At the end of the day, agencies need to act and they're not able to act given these decisions, or at least they're very risk averse and acting and there has to be a lot of parsing of the distinctions between substantive and procedural. And in this in the particular context of the PTO, a lot of parsing of questions with respect to, as I indicated whether whether notice and comment, rulemaking is worth it, because in addition to everything else, if the notice and comment rulemaking doesn't take into account all the comments properly, then there can be challenges to agencies for failing to implement the notice and comment rulemaking properly. So it's not a Get Out of Jail Free card, it's actually quite the reverse. It's a way of setting up setting yourself up for challenges of all sorts. And so I mean, this is in part because perhaps I've spent a lot of time working with agencies prior previously, the Department of Justice before the PTO, but there are real costs to to hamstringing agencies.
Michael Weinberg 49:30
Unfortunately, we are over time for those in the audience. I give you a chance I just want to bring us home here.
Judge Raymond Chen 49:37
No, no.
Michael Weinberg 49:40
What do you what do you say?
Judge Raymond Chen 49:45
Yeah, I just, there were some interesting discussion here about you know, obviously today I was really focused on the concern of improperly granted patents, but this panel has also been talking about Up to the converse of improperly denied patents. And I was just wondering if anybody has any information of what the main cause or causes could be, is it? Is it just a misunderstanding of the law? Is that a flat out bias? Maybe it's examiner's maybe a collection of examiner's that just have too high an expectation on what makes a claim non obvious and therefore patentable advance? Is it technology or tech sector based? Just wondering what what's going on on the other side, which is stuff that I don't see unless it's, it comes up there an ex parte de appeal, after the board affirms one of these incorrect projections.
Melissa Feeney Wasserman 50:47
Do you want to take that because?
David J. Kappos 50:48
Well, I can. Yeah, I can start anyway. It's a great question to agenda. And so my observation is that if there's any tech component to it, it's that in new technologies, you tend to have the false positive situation where patents get granted, that shouldn't be granted, because the there's a lack of access to priority initially. So I don't think it's a tech issue, the false negative problem. More so what I've seen is overly aggressive application of prior art, especially under 103.
Michael Frakes 51:31
I would just say that, I think that I'm with you that it's still sort of an outstanding question. With Melissa and our work, admittedly, over our, the trajectory of our research agenda, we have been mostly Theorizing the What could cause the false false positives, and then thereafter sort of constructing an empirical test to see whether I would think it's sort of bearing out. So we have done less of the theorizing upfront about what about sort of the false negatives that being said on that, and totally interested to see Dave's paper when it comes out. We certainly have done some of our own work just descriptively. Also, that actually validate it seems like there are both false positives and false negatives. Happy to talk about and maybe Dave, we should sort of follow up. We are using EPO benchmarking analysis as a way to sort of get it. That's what we've done in multiple papers. But we actually do see there's descriptively evidence of sort of in both directions, assuming our benchmarking analysis, right. But we were also in the same, you know, we had the same question you did. Okay, what could be causing it? We just we haven't let our minds go there yet, I guess would say.
Michael Weinberg 52:39
All right. We are, as I said, we are over time. Thank you all. Thank you for our panelists for all of our panelists. Please join me in giving them a round of applause. Thank you to Katrina and Nicole who are actually the speakers that back in the back of the room while he said that and Nicole for helping set this event up and make this event actually happen. For everyone who helped us put together the panels. Thank you so much. We are this is our last event of the semester. But we have a big lineup coming up for the fall semester. So if you aren't already signed up for our email list, I recommend doing that. That's the best way to find out about it. There'll be a whole trove of events coming your way this fall. So thank you all again, have a great rest of the day.
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