Patent Reform – The Real Solution?

10 April 2007 Publication
Author(s): Courtenay C. Brinckerhoff

The Pulse

The United State Patent and Trademark Office (PTO) is promoting substantial rule changes as the way to reform and thereby help companies avoid long delays in obtaining patents and also prevent irregular and uneven patent examination; however, increased funding and staffing may provide needed relief without the risk of new problems that the proposed rules may bring.

The medical device industry is no stranger to the PTO. Medical device innovators file numerous patent applications every year, and medical device manufacturers must keep an eye on the ever-changing patent landscape to avoid freedom-to-operate issues. Current problems at the PTO affect medical device businesses on both sides of the patent fence. Medical device businesses seeking to protect their innovations must grapple with delays in the patent examination process and uneven examination quality. On the other hand, medical device businesses seeking patent clearance for a new product sometimes must contend with granted patents of dubious merit.

The PTO has promised reform, but more practical changes at the PTO may be more likely to benefit the entire medical device industry. For example, for the fiscal year 2008 budget, President Bush requested $1.916 billion for the PTO, which represents its full anticipated fee collections. The PTO also plans to hire an additional 1,200 patent examiners during the 2008 fiscal year. Adequate funding and staffing of the PTO examining corps should translate into a better examination process and higher patent quality — improvements that both medical device innovators and manufacturers will enjoy.

In contrast, there has been much debate over the proposed rule changes behind the promised PTO reform. While the PTO says that the rules are designed “to make its operations more efficient, to ensure that the patent application process promotes innovation, and to improve the quality of issued patents,” it is not clear how they will solve the issues at hand. The four major rule changes relate to Claims Practice, Continuation Practice, Information Disclosure Practice, and Accelerated Examination. Although the proposed rules are directed to different aspects of the patent examination process, they are unified by a common principle of shifting burdens from the PTO to the patent applicant. Thus, the Claims Practice rules would require the applicant to identify “representative claims” for the patent examiner to focus on; the Continuation Practice rules would limit the number of continuing applications an applicant may file, and the Information Disclosure Practice rules would require the applicant to explain the relevance of submitted documents. The Accelerated Examination rules, which are the only proposed rules to have taken effect, require applicants seeking accelerated examination to conduct a pre-filing search and submit an analysis of the “most closely related” references. While it is easy to see how these rules will lighten the PTO’s burden, it is not clear that the benefits will outweigh the significant costs they will impose on medical device innovators, both in terms of increased patent prosecution costs and increased risk of litigation.

Each of the proposed rules will markedly increase patent prosecution costs for which medical device innovators will have to budget. For example, the Information Disclosure Practice rules will dramatically increase patent attorney input required to prepare an Information Disclosure Statement, because the proposed rules will require an explanation of cited documents and their relevance to each patent claim. In some cases, this may require consultation with the inventors. Thus, medical device innovators also may experience increased costs in terms of the time their scientists may have to spend on patent matters.

The proposed rules also are likely to increase the risks of patent litigation, particularly with respect to charges that a patent is unenforceable due to inequitable conduct. For example, the designation of certain claims as “representative” under the Claims Practice rules, the explanations required by the Information Disclosure Practice rules, and the search and analysis required by the Accelerated Examination rules each could be the basis of an inequitable conduct charge. In this way, the proposed rules may undermine the value of new patents, at least until the courts reject frivolous challenges on these grounds.

While the costs these rules would impose are easy to identify, their benefits to the public are much less clear. It is difficult to see how any of the proposed rules would increase patent quality or reduce the number of questionable patents. Why should medical device manufacturers expect innovators to do a better job at uncovering and analyzing relevant prior art than the PTO has been able to do? Some say that shifting these burdens to the applicant will ease the burden on individual patent examiners, leaving them more time to conduct more thorough examinations. However, any saved examination time simply may be spent on examining more applications, particularly with political pressure to reduce the ballooning pending patent application backlog.

While the PTO may have other valid reasons for the proposed rules, it is more likely that the promised increased funding and staffing, and not the new demands on patent applicants, will bring changes to the examination process and patent quality that will benefit both medical device innovators and manufacturers.

This article is a part of the April 2007 edition of The Pulse, a newsletter for leaders in the Medical Device Industry.