The U.S. Patent System has always been under the attack, the shifting of the policy has rendered it more vulnerable and shifted the focus on the patent quality. According to Patent critics, patents are low or bad quality, justifying major changes to the patent examination and review system. Argument is that the patent quality is a proxy for attacking patent validity, which has a complex history. Patent critics, particularly market incumbents, obtain a free ride when the bar is set low to attack patent validity. The changes to standards for patent obviousness have been a core source of lowering the standards for patent validity. The recent Inter Partes Review (IPR) program has overzealously applied the weak obviousness standards, causing a broad range of problems for innovators.
The introduction of IPR pushes patent validity determination out of federal court, which enable due process into a politicized administration agency that generally denies due process for patent holders, after a patent is presumed to be valid from original PTO examination and grant.
The introduction of after grant reviews based largely on myth of patent quality, have been used to justify wholesale changes to the patent system that deviate dramatically from validity test the court have applied for over a century. The increase in transaction costs to defend a patent in after grant reviews in enforcements, after challenging free riding efficient infringers alter the economics for innovators and market entrants, with a tendency to diminish patent valuation. While once market force were key determinates of an invention values, artificial factors associated with reproving patent validity that originate with false narrative of bad patent quality, have altered technology economics and have ultimately diminished incentives to invest in technology, with adverse consequences to productivity growth and aggregate economics growth.
U.S.Patent System at a glance
When the U.S. Constitution was ratified in 1790, one of the first law of the young country was patent act of 1790. Into the constitution itself was embedded the intellectual property clause in order to supply investors with the “exclusive rights”, to their discoveries for limited time, thereby tracking both british limited monopolies approach and French private property right approach. The Patent Act 1970, just two months after ratification of the constitution, supplied a 14 years term of exclusive right in a patent because it often took many years to commercialize an invention. In addition, foreigners were not allowed to obtain a U.S. Patent. Only the secretary of state, secretary of wars or Attorney generals were allowed to grant a patent.
However, according to the statute, each patent application required examination in order to assess its originality and utility, which was time consuming. Only 55 patents were granted in the three years of activity of the 1790 Act.
With intense influence of the big tech cartel, Congress passed the Patent Act of 2011, the America Invents Act, which was largely written by large technology company lobbyists. With consensus from both parties, the congressmen followed the big tech narrative completely in order solve two main perceived problems in the patent system. First, the Patent Office was issuing bad software patents that were overly vague and impinged on big tech operations. Second, the problem of “patent trolls,” conceived very broadly as companies that did not manufacture goods but rather licensed patents, needed to be controlled.
The solution to these perceived problems was creation of a second window of patent examination in the Patent Office in the form of post-grant reviews, including Inter-Partes Review (IPR), Post-Grant Review (PGR) and Covered Business Method (CBM). All of these post-grant review procedures were organized in the Patent Trial and Appeal Board (PTAB) within the PTO.