Anyone who has been even marginally associated with patent world in the last few years is aware of the severe backlog in patent examination at the USPTO. The Director of the USPTO under the previous administration tried to remedy this by forcing through rule packages that would have made it difficult for even the most worthy applicants to gain allowance of their patent applications. The rules were challenged by Dr. Tafas, a solo inventor, and by SmithKline Beecham, one of the world’s largest pharmaceutical companies, in Federal District Court in the Eastern District of Virginia. In April 2008, the district court struck down the rules as exceeding the USPTO’s authority, ruling that the rules were substantive rather than procedural.
Two days ago, at the behest of the parties, an en banc Court of Appeals for the Federal Circuit dismissed the appeal of the case, vacating an earlier appellate panel decision but leaving the District Court decision in place. The result is that not only are the new rules out the window, but also, as a practical matter, the USPTO Director will be unable to try to pull the same stunt in future, unless Congress grants the Director substantive rule-making power.
The jury is still out on the current USPTO Director, David Kappos, who took over the job a few months ago, but his willingness to dismiss the rules packages that prompted the Tafas suit is promising, and so far he seems willing and able to think outside the box (insofar as possible in the context of a large government office saddled with government employees and government employment rules).
When it comes to the examination backlog, thinking outside the box is undoubtedly what is required. As Professors Michael Abramowicz and John Duffy note in a recent article, the basic problem is the underlying assumption that every patent office needs to substantively examine each patent application that comes its way. As national economies become increasingly intertwined, and more companies file more patent applications in more countries, that assumption becomes impractical; even large countries cannot justify the large expenditure of resources to examine every application thoroughly and quickly. Most of the article is devoted to setting forth a model which, according to the authors, would enable the job of patent examination to be outsourced to the private sector. Before doing so, however, the authors also note that worksharing among patent offices is another potentially viable solution for increasing global patent examination efficiency.
In this connection, the authors point to Israel as being progressive. Israel is a substantive examination country, or at least it tries to be. But Israel, while technologically advanced, is a small country, and cannot devote the resources necessary to thoroughly yet timely examining all the patent applications filed at the ILPTO. That it has neighbors whose idea of friendly relations is blowing up civilian buses or firing missiles at day-care centers further depletes the resources available for activities like patent examination. So since the 1980’s, Israel has allowed applicants to piggy-back the examination of an Israel patent application on the grant of a corresponding patent in certain foreign jurisdictions, principally the USA and the EPO. Although initially adopted as a procedural rule by the ILPTO, in 1995 this practice was codified into law as §17(c) of the Patents Law. Over the years, the Commissioner has made it even easier to utilize §17(c), by deeming a Notice of Allowance (rather than the actual ministerial act of the patent grant, which can occur months later) or a favorable PCT examination report to be sufficient grounds for implementing §17(c).
From the ILPTO’s perspective, §17(c) practice works. §17(c) is widely utilized by applicants seeking to lower global patent prosecution costs; and with the hiring of dozens of new examiners in the last several years, the examination backlog at the ILPTO has been reduced.
I used to think of §17(c) as simply a way for Israel to externalize the cost of examination, placing the burden on the EPO and USPTO and then reaping the fruits of their labors. But as Abramowicz and Duffy note, if enough patent offices raise their quality of examination to mutually acceptable levels, worksharing among national offices can facilitate a reduction in the duplication of efforts, resulting in overall greater global efficiency in patent examination. Perhaps, now that Israel has been authorized to become a PCT search and examination authority, Israel will be able to carry its fair share of the global patent examination load; I may discuss this a bit in a future post. In any event, as long as there are other patent offices conducting sufficiently good examination, there is no reason not to rely on the results of those examinations. And, as a famous twelve-step self-help program notes, the first step on the road to recovery is admitting you have a problem. At least Israel was willing to admit it couldn’t handle the examination workload, and that the solution was not to stop granting patents (as the USPTO under the previous Director tried to do with its now-defunct rules package and “quality = reject, reject, reject” mantra).
What does this have to do with the self-flagellation in the title of this post? Well, there seems to be a certain segment of the Israeli population that believes that Israel can’t possibly do things as well other developed countries. In the patent examination context, this means that they will poo-poo the ability of the ILPTO properly examine cases. Thus, for example, in an Israel Supreme Court decision from around 20 years ago, the Court said, “In Israel, as opposed to the United States, the examination of an application and the grant of a patent are no guarantee that the patent is valid (§37 of the statute). The examination performed by the Patents Commissioner in accordance with §17 of the statute is not done in a diligent and thorough manner”.
I mention all this because of a discussion I had a few months ago with one of Israel’s leading IP litigators, who asserted that (a) patents examined by the Israel PTO shouldn’t be accorded any deference, because the ILPTO is incompetent, but (b) patents granted through the 17(c) process should be afforded even less deference because they weren’t substantively examined by the ILPTO.
It’s rather disconcerting when the country’s highest court takes such a dim view of the work of its patent office – particularly when it turns out that at least some of the local examiners do at least as good if not a better job of examination than their counterparts in the U.S.A. It’s even more disconcerting when local litigators seize on outdated court statements like the one above to besmirch the local examination process per se, and to try to undermine the validity of all granted patents on the grounds that Israeli examination as a whole is deficient – especially if they’re going to ignore improvements in local examination and draw comparisons to U.S. examination, which these days is as spotty as Israeli examination. (Applications in Israel are for the most part filed in English; but I’m not sure which patent office, the USPTO or the ILPTO, has a higher percentage of native English speakers in its examining corps.)
But in my view it’s absolutely unconscionable, not to mention logically inconsistent, for local litigators to assert, on the one hand, that the ILPTO is itself incapable of conducting good examination, and to assert, on the other hand, that patents granted via the §17(c) procedure should be afforded even less deference than those granted after substantive examination by the ILPTO. If the ILPTO is incompetent in comparison to certain other patent offices – a suspect assumption – then we are no worse off by relying on the findings of those offices in making patentability determinations.
I take some comfort in observing that, unsurprisingly, the ILPTO has rejected the notion that a patent granted under §17(c) is necessarily weaker than one substantively examined by a local examiner. The Commissioner has had plenty of opportunity to observe the operation of both his own corps of examiners as well as the products of other examination systems, and is well-positioned to assess which patent-granting regimes are the best ones. Nevertheless, my litigator acquaintance’s assertion that §17(c)-granted patents are weaker than those examined by the ostensibly weak Israeli examining corps continues to disturb me. It is a thinly-veiled way of saying that there are no valid patents, and I am sure he will advance this argument before the courts when it suits his purposes. If this position is ever adopted by the courts, it will mean victory for the Luddites and be a blow to Israeli innovation. And an even more egregious example of Israeli self-flagellation.
It seems to 'cheapen' the Israeli patent system in that Israeli will accept the examination of other patent offices, but not vice versa... on the other hand, it makes it easier to file in Israel and might be the tipping point on whether someone brings a product to market in Israel ($15,000 barrier to entry or $3000 barrier to entry for Israeli patent...). Also, with PCT applications, there is now some reciprocity initiated by Japan. Ultimately, I think it's a good thing... no point in duplicating the work of others, but Israeli should seek to do it bilaterally with other countries.
Posted by: Feigin, Patent Attorney | November 16, 2009 at 10:35 PM