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					Feature                                                                                                 Patent quality

                         Quality is the key to a
                         bright patent future

                       Ask anyone in the world of patents to name their top three issues and
                       you can be sure that the importance of quality will be mentioned. A panel of
                       leading IP professionals discuss the importance of first-rate patents

                                                                           over half were allowed to expire. A rational
                       By Sara-Jayne Adams                                 decision maker would renew a patent only if
                                                                           the expected future economic benefits from
                       Patent quality is an elusive term that seems        the patent exceeded the cost of maintaining
                       to mean different things to different people        it. Thus, patents that have been renewed
                       depending on their relationship to the patent       (and especially those carried to full term)
                       system. There is no denying, however, that it       arguably hold greater value than those which
                       is an issue that affects patent holders             have been allowed to lapse. By examining
                       worldwide and for which there is no one             the characteristics of patents that were
                       objective measurement.                              renewed relative to those that were
                           In order to see whether there is any kind       abandoned, we can begin to make certain
                       of agreement, IAM approached a number of            predictive assessments about the quality
                       stakeholders in the patent community to             and likely value of other patents that share
                       hear what they had to say. And while they           statistically similar attributes.
                       each have their own take on what patent                  Unfortunately, in the US, the issue of
                       quality means and how best to measure it,           patent quality has been adopted as a
                       they all agree that it is vital to innovation       politically convenient poster-child to support
                       and economic growth.                                more broadly aimed legislative reforms.
                                                                           Much of the patent reform debate currently
                                                                           raging is squarely framed within the context
                       Jonathan Barney, Managing Director of               of perceived patent quality problems, but the
                       Ocean Tomo and Chief Executive of Ocean             debate is really a political one concerning
                       Tomo PatentRatings, LLC, USA                        fundamental issues of public patent policy.
                                                                                Despite the perceived patent quality
                       Like beauty, patent quality can often be            problems at the USPTO, statistically
                       measured only in the eye of the beholder.           examining several objective factors going back
                           While a certain degree of precision may         five years, it seems like they are currently
                       never be attained in objectively measuring          doing a good job and that patent quality is as
                       patent quality, there are certainly ways to probe   high, if not higher, now than it was five years
                       the issue, or at least to draw statistically        ago. Maintaining high patent quality is very
                       informative conclusions using objective criteria.   important to ensure that applicable public
                       For example, we believe significant insights can    patent policies are being faithfully carried out,
                       be drawn from analysing past renewal                that patents are validly granted and that the
                       decisions of patent owners.                         public is able reasonably to rely on the work
                           The natural attrition effect of the             of the patent office.
                       maintenance fee system discourages the
                       renewal of less valuable, poorer-quality
                       patents by placing substantial recurring            Duncan Bucknell, IP Strategist, Lawyer and
                       costs on all patents. For example, of the           Patent Attorney, Melbourne, Australia
                       patents issued in the US in 1986, only
                       42.5% were maintained beyond 12 years:              Patent quality is an important issue, but it                                                         Intellectual Asset Management April/May 2008 55
Patent quality

                                                      Alison Brimelow
                                                      President of the European Patent Office,
                                                      Munich, Germany

doesn’t have to be. The level of importance,          Simply put, patent quality is the degree of    contrary, there is no hard empirical evidence
the quality of granted patents and the way            compliance with legislation and, in            that patent quality has substantially
that this is achieved are really the result of a      particular, when this is achieved in a         deteriorated in the last five or 10 years.
bargain between the general community and             timely manner. When achieved, the              Frequently cited indicators such as
the government. In essence, the community             legitimate expectation for certainty of        opposition or revocation rates have to be
allows the government to spend public money           patentees is met, and companies and the        treated with great caution as they do not
on a patent office in return for the                  public are not subjected to unwarranted        provide statistically sound data. With regard
government providing an effective service.            costs. Trying to measure patent quality,       to the timeliness characteristic of quality,
Effectiveness will vary from one situation to         however, even if possible, is expensive        which is not covered by legislation, there
another. The key things that the community            due to the costs of redoing search and         has been deterioration.
wants to see are: (i) an acceptable standard          examination work. Better investments are           Patent offices face tremendous
of thoroughness in the review undertaken              made in process improvements combined          challenges due, among other things, to the
(which gives at least some comfort about              with regular checks on quality aspects.        backlogs that have built up and the increase
validity); and (ii) consistency in applying that          Low patent quality can lead to             in foreign-language – particularly Asian –
standard. It costs a lot of money to run a            prohibitively expensive litigation that can    prior art. Patent offices are addressing
patent office and so, in my view, the                 have a devastating impact on business          these issues, implementing quality
community cannot reasonably expect an                 models, especially of small and medium-        management systems and ensuring
exhaustive validity review. However, it is            sized companies. As valuations of              continuous improvement of processes as
reasonable to expect the review to be of high         companies are increasingly based on            never before. If the challenges mentioned
quality (for the price paid) and consistent.          intangible assets, poor-quality intellectual   can be dealt with, and if real and effective
    There are many ways to achieve this. For          property rights have negative impacts on       mutual exploitation of search and
example, it is possible for a community to            free market economies rather than              examination work can be achieved, I believe
prefer a ‘user pays’ system, where the                providing incentives to innovation, which is   that quality of granted patents will improve.
minimum is spent on checking patents and              ultimately their purpose.                      Quality management will, however, need to
responsibility for unearthing invalid patents             In spite of anecdotal evidence to the      be taken seriously and investments made.
sits with those individuals that wish to litigate.
Therefore, patent quality really must be judged
on the agreement that the patent office has
with the community in each instance.
    But what is patent quality? To my mind, it is
the consistent examination of patents to a high
standard as allowed by the revenue that the
community agrees to spend on the process. In
essence, it refers to a minimum level of
assurance about the validity of granted patents.

Jonathan Barney                                      Alison Brimelow                                 Duncan Bucknell
Managing Director of Ocean Tomo                      President of the European Patent Office         IP Strategist,
and Chief Executive of Ocean Tomo                                                                    Lawyer and Patent Attorney
PatentRatings, LLC

56 Intellectual Asset Management April/May 2008                                                                      
                                                                                                                                Patent quality

 Jon Dudas
 Under Secretary of Commerce for Intellectual Property and Director of the
 United States Patent and Trademark Office, Washington, DC, USA

 The most fundamental measure of patent          of affirmances at the Board of Patent                  I believe that this can be objectively
 quality is validity. At the US Patent and       Appeals and Interferences – we’ve                 measured. On a population basis, we can
 Trademark Office (USPTO), we assess             determined the quality of patents granted         retrospectively compare patent offices based
 whether a patent should be granted by           has been improving, and we expect this to         on the number of patents that are
 determining whether the claimed invention       continue because of current and future            commercialised and look at the percentage
 is “new, useful, and non-obvious”.              quality initiatives.                              that are subsequently found to be invalid.
     Issuing quality patents is vital, because       A major concern we have at the USPTO          Then we’d need to consider what the
 they are key to economic growth. Every          – and it is a concern I have heard from           grounds for invalidity were and judge whether
 nation focusing on innovation recognises        many IP offices around the world – is the         it was reasonable for the patent office to
 that patents are the best way to protect        room for improvement in applications              grant the patent in that form. So, for
 and promote innovation.                         coming through our door. There has been a         example, a patent office which has a lot of
     In the United States, our intellectual      dramatic decrease in the allowance rate, or       patents subsequently invalidated due to lack
 property is worth US$5.5 trillion, and we       the percentage of patent applications that        of enablement should really be doing a
 recognise that this value begins with a high-   ultimately get approved. Our allowance rate       better job. However, those offices that have
 quality patent examination process. The         has dropped from 72% in 2000 to 44% in            patents mostly invalidated by obscure prior
 standards of this process determine the         the first quarter this year. This is due partly   art are probably already doing a pretty good
 level of trust on the part of the markets. If   to our quality initiatives, but much is due to    job. On an individual patent basis, however,
 the markets have faith in the quality of        the lack of quality in many applications we       we never know the quality until it is tested –
 patents being granted, many of the issues       receive.                                          by looking into its validity, and ultimately
 and problems that could exist down the line         The US Congress is considering                having a court of law test it.
 are resolved.                                   changes to patent law that will have a                 Overall, I think we’ve seen an increase in
     At the USPTO, our objective                 significant impact on our patent system. In       patent quality over time. The major patent
 measurements tell us that patents today are     response to concerns about application            offices are doing a good job of keeping up with
 of a higher quality than they were 10 or        quality, a provision under consideration is       the sheer number of patents that are filed and
 even five years ago. In 2006 and 2007, the      one known as applicant quality                    must be examined: a much larger number than
 USPTO had its lowest examination error          submissions (AQS), which requires                 10 or even five years ago. Of course, this
 rates in the last quarter-century – which is    applicants to provide high-quality, relevant      doesn’t mean that fewer patents are being
 mainly due to adding significant new quality    information at the beginning of the review        invalidated now than in the past, but you need
 measures in recent years. By every objective    process. AQS represents the most                  to look at the number of invalidations as a
 measurement – including end-of-process and      promising way to improve both patent              proportion of all patents granted.
 in-process reviews, certification and           quality and the efficiency of the
 recertification of examiners and percentage     examination process.
                                                                                                   Douglas Clark, Managing Partner, Lovells,
                                                                                                   Shanghai, China

                                                                                                   Ensuring patent quality at the examination
                                                                                                   stage of the patent process requires that an
                                                                                                   examiner is not allowing claims of a patent
                                                                                                   that are obviously invalid – due to lack of
                                                                                                   inventiveness, obviousness or insufficiency –
                                                                                                   to be granted. For the majority of patents, it
                                                                                                   is possible for those skilled in the field to
                                                                                                   look at the drafting, disclosure and claims,
                                                                                                   and objectively say whether the patent is of
                                                                                                   a sufficiently high quality.
                                                                                                        A good-quality patent tells others clearly
                                                                                                   the scope of the patentee’s monopoly and
                                                                                                   allows others to design products that do not
                                                                                                   infringe it or, if necessary, to seek a licence.
                                                                                                   It also enables the patentee to work, enforce
                                                                                                   or license its patent, with the comfort that it
                                                                                                   is valid.
                                                                                                        In China, examination of pharmaceutical
                                                                                                   patents has tightened, resulting in the
                                                                                                   standard of patents improving over the last
                                                                                                   decade. However, utility models are still not
Douglas Clark                                    Jon Dudas                                         examined here and the majority are clearly
Managing Partner, Lovells                        Under Secretary of Commerce for Intellectual      junk. Unfortunately, I don’t hold out much
                                                 Property and Director of the United States        hope for the quality of patents improving in
                                                 Patent and Trademark Office                       the coming five or even 10 years, as most                                                                                Intellectual Asset Management April/May 2008 57
 Carl Horton
 Chief IP Counsel, General Electric Co, USA

 For GE, patent quality obviously starts with     •   Open GE’s access to new markets.                  The big developing markets, such as
 making sure we meet the technical                •   Help GE manage our suppliers.                China and India, should also see the quality
 requirements specified by the patent             •   Influence our customers’ buying              of patents increase in the coming decade
 offices around the world. However, for the           behaviour.                                   as they increase staff levels and their
 most part, I see real patent quality as more     •   Guarantee choice of partners when going      experience continues to grow. In
 a question of substance than an analysis of          to market jointly with another company.      jurisdictions with developed patent offices,
 the form of a patent. Thus, the more             •   Be licensed or enforced for cash/share.      however, I would expect there to be
 important items on which GE focuses in                                                            significant pressure on quality as they face
 defining and managing the substantive                A solely objective analysis of patent        productivity issues and significant backlogs.
 quality include the following:                   quality (as we define it above) will be, at      Ideally, if the major offices were able to
 • Ensuring we are identifying and                most, directionally correct. If you wish to      work more collaboratively, they could
     patenting the right innovation.              assess the quality of a patent in terms of its   potentially overcome their productivity
 • Deciding on the right type of IP (patent,      ultimate effectiveness rather than simply its    issues. If not, I expect the developed
     trade secret, publication, etc) to protect   ability to survive an attack of form, you must   offices to shift more responsibility onto
     the best innovation.                         not understand only its intended purpose,        applicants to help address the potential
 • Identifying the IP with the highest            but also the landscape in which the IP is        erosion of patent quality.
     potential to contribute significantly to     situated and the scope and content of the             At the macro/political level, patent
     GE’s growth so that we can tailor the        claims, not to mention the activity of the       quality is an important issue because it is
     level of quality processes to which we       competitors or other third parties that are      being viewed as the lynchpin balancing the
     will subject an asset according to its       impacted by your IP.                             two sides of the quid pro quo underlying the
     potential (eg, the highest-quality               I would say that the quality of patents in   whole patent system. As such, making sure
     processes for the best innovation and        Japan and Europe has been relatively             the patent systems are turning out quality
     less strenuous processes for lower-          constant, or slightly improved, over the past    IP and that the public is appreciating the
     potential innovation).                       decade. This is due to higher patentability      quality of those assets plays into the
 • Defining upfront the specific intended         standards and greater time being spent on        integrity and long-term stability of the whole
     purpose of the IP so that we know            each case relative to five or 10 years ago, as   IP system.
     exactly how to measure the quality for       well as greater access to digital tools to            At the operating level inside our
     that particular asset.                       facilitate basic processes such as prior art     company, we believe quality is important
                                                  searching. The US was headed in the other        because when you measure quality
    With that done we turn our attention to       direction over the past five or more years       from the back end of the process (the
 addressing the specific content of the           due to relaxed application of the standards      overall effectiveness of your portfolio)
 patent to ensure it will survive substantive     of patentability. However, thanks to the KSR     rather than the front end (how clean the
 and procedural attack and still:                 decision, we expect a rather sharp               portfolio is), then quality is arguably all we
 • Prevent free riding on our R&D                 correction/improvement of patent quality in      care about.
    investment.                                   the US.

Tom Ewing                                         Horacio Gutierrez                                Carl Horton
IP Value Added Consultant                         Vice President & Deputy General Counsel,         Chief IP Counsel, General Electric Co
                                                  Intellectual Property & Licensing Group,
                                                  Microsoft Corporation

58 Intellectual Asset Management April/May 2008                                                                    
                                                                                                        Patent quality

                       countries are not investing sufficient            the underlying invention; and the quality of
                       resources in recruiting qualified examiners       the legal document and the related
                       and providing adequate training.                  prosecution procedure that defines the
                                                                         patented invention. Patent quality speaks to
                                                                         the latter, but has no impact on the inherent
                       Tom Ewing, IP Value Added Consultant,             commercial value of the invention itself. An
                       Gothenburg, Sweden                                invention of minor commercial significance is
                                                                         patentable and probably should be, so long
                       Most issues related to patent quality will        as it satisfies the legal tests for patentability.
                       resolve themselves once a discussion on               You need only look to Charles Dickens’
                       patent valuation has been completed. Current      A Poor Man's Tale of a Patent to see that
                       valuation metrics are not well calibrated from    the Patent Office has always been an
                       one patent to the next (assuming one can          unappreciated and unloved government
                       even find comparable data), and patent            department. There is a range of complaints:
                       valuation is not well calibrated with other       • Legal practitioners and inventors have
                       product cost drivers. Studies show that nearly        long complained that the Patent Office
                       80% of the value of the S&P 500 lies in               takes too long to review applications and
                       intangibles, and for many technology                  rejects claims that should be allowed.
                       companies their IPRs represent the lion’s         • Economists generally disdain any
                       share of their intangibles. So there are strong       economic power that arises from a
                       incentives to sort out the valuation question.        legal right.
                           Patent quality is a key component of          • The open source movement probably
                       patent valuation. The two components of               cannot achieve its original goals so long
                       patent valuation are: the commercial value of         as patents exist.                                                       Intellectual Asset Management April/May 2008 59
Patent quality

•   Multinational incumbents have lately           regularly cited by other patentees in the
    adopted a “Goldilocks” approach in             industry, and we cite more prior art in our
    which they would like to see a “just           patents – particularly more scientific and
    right” number of patents, which would          research papers – than most other patent
    still allow them to retain significant IP      holders. Those two factors are key
    assets while not having to worry much          contributors to why Microsoft has achieved
    about IP threats from smaller                  the top rankings in the two leading patent
    competitors.                                   portfolio quality indexes.
                                                        The IEEE (Institute of Electrical and
    In short, much, but not all, of the            Electronics Engineers) and the Patent Board
complaints about patent quality are really         objectively assess patent portfolio quality by,
part of a larger argument about patent             among other metrics, looking at the degree
valuation. And many of the loudest voices in       to which a company's patents are cited as
the discussion primarily advance arguments         prior art by subsequent patent applications,
to support a particular agenda rather than         as well as the number of scientific
reporting the results of a dispassionate           publications referenced in a company's own
study on the topic. The rate of patent             patent applications. The number of times a
invalidity in litigation as a fraction of the      patent is cited in other patents is considered
number of patents granted is likely lower          a good indication of how innovative and
now than it was 20 to 30 years ago.                influential it is. Microsoft’s patent portfolio
                                                   is now ranked #1 by both the Patent Board
                                                   IT Industry Scorecard and the IEEE Patent
Horacio Gutierrez, Vice President & Deputy         Power rankings (both overall and for the
General Counsel, Intellectual Property &           Computer Systems & Software Industry).
Licensing Group, Microsoft Corporation,                 For Microsoft, and the IT industry as a
Redmond, WA, USA                                   whole, IP is the currency of innovation, so
                                                   maintaining the quality of that currency is
From our perspective, patent quality starts        critical. We are one of the biggest investors
with patenting inventions that are aligned         in R&D in the world, spending US$7.1 billion
with our business strategies, goals and            last year. Our patent filings maximise the
priorities. In general, the proof in the quality   value of that R&D by capturing the innovation
of a patent can be measured by how often           it represents and the intellectual property it
patents are cited as prior art in other            produces – particularly innovations that are
patents and applications. Furthermore, the         aligned with our business strategies. We
amount of prior art cited in a patent is a         have entered into over 475 IP licensing
good indication of its quality. Microsoft is       agreements since 2003 with like-minded
                                                   companies who believe the sharing of quality
                                                   IP fosters innovation throughout the IT
                                                   ecosystem and ultimately benefits
                                                        There is no doubt that IT and other
                                                   industries have placed a growing demand on
                                                   the world's patent offices because of the
                                                   accelerated pace of innovation we have all
                                                   fostered. That is why we are working
                                                   collaboratively with other like-minded industry
                                                   participants, patent offices and universities
                                                   around the globe to help facilitate
                                                   technological solutions to some of the
                                                   challenges patenting bodies face, to ensure
                                                   the quality of patents being granted does
                                                   not suffer.

                                                   Masanobu Katoh, Corporate Vice President
                                                   and President, Law & Intellectual Property
                                                   Unit, Fujitsu Ltd, Japan
Masanobu Katoh
Corporate Vice President and President,            In general, I think that the quality of a patent
Law & Intellectual Property Unit, Fujitsu Ltd      depends on its incontestability. A high

60 Intellectual Asset Management April/May 2008                                             
                                                                                                      Patent quality

                       standard of examination, with detailed            Patent quality is an important issue because
                       guidelines and well-trained examiners             of the business expectation and reliance
                       producing consistent examination results,         associated with the property right that a
                       is vital to ensuring this quality.                patent represents: you do not buy a house
                            Quality, however, means different things     with the expectation that it will collapse
                       to different people. Our company looks at         around you the week after you move in.
                       the issue of quality from two perspectives –      It becomes difficult to justify a major effort
                       that of the patent owner, but also through        to acquire patent rights if those rights turn
                       the eyes of society in general. For the           out to be ‘weak’ (ie, invalid and/or
                       patentee, a quality patent provides broad         unenforceable) and thus not useful for the
                       coverage that enables them to enforce their       chess game that is licensing and litigation.
                       rights against third parties where necessary.         Patent quality is extremely contextual
                       Society benefits from a thorough disclosure       and validity is a moving target. It is difficult
                       of an invention providing information on its      to evaluate patent quality without considering
                       technical use.                                    business value and validity/enforceability.
                            The most important factor in the             In general, a quality patent is one that has
                       objective measurement of the quality of a         claims of broad enough scope to provide
                       patent is its market impact. We, as a rights      a useful swath of exclusivity to the patent
                       holder, evaluate inventions using multiple        holder, while at the same time being valid
                       indexes including the possibility of use in       and enforceable at face value.
                       the market and the scope of such use.                 With respect to Europe, patent quality
                       Some would argue that the quality of              has continuously been improving since the
                       inventions should be evaluated based on           establishment of the EPO. Whereas, leaving
                       the level of useful contribution to the           aside software and business method
                       economy and industry.                             patents, we believe that the overall quality
                            Patent enforcement cases have                of US patents being awarded today is
                       increased extensively in Japan over the           approximately the same as it was five or
                       last decade – most probably, due to the           10 years ago.
                       improvement of the quality of patents                 The quality of patents is directly linked
                       granted. However, while we have seen              to the functionality of the USPTO which,
                       improvements, we are not totally satisfied        unfortunately, is not moving in the right
                       with the current status of patent quality.        direction. Having said that, it is important
                       There are many inconsistencies in the rules       to remember that patent quality is
                       of different countries and, even within one       fundamentally under the control of patent
                       country, the practices of examiners are not       applicants; it is a direct reflection of the
                       necessarily consistent.                           quality and scope of innovation that leads to
                            However, I predict that we will see
                       significant improvement in the quality of
                       patents granted in the coming years. Thanks
                       to initiatives such the trilateral PTO talks,
                       significant steps towards harmonisation are
                       being taken. There are moves not only to
                       harmonise laws and rules in different
                       countries, but also to create more consistent
                       and compatible examination practices.
                                As a technology company, Fujitsu
                       recognises that intellectual property is one
                       of our most important assets. Improving the
                       IP system will inevitably increase the value of
                       our technology. Since companies today have
                       international corporate strategies and
                       initiatives, it only makes sense that
                       intellectual property systems must improve
                       globally as well.

                       Lars Kellberg, Corporate Vice President and
                       Head of Corporate Patents, Novo Nordisk,          Sherry Knowles
                       AS, Denmark and Reza Green, Chief Patent          Senior Vice President Corporate Intellectual
                       Counsel, Novo Nordisk, Inc, USA                   Property, GlaxoSmithKline                                                      Intellectual Asset Management April/May 2008 61
 Pauline Newman
 Judge of the United States Court of Appeals
 for the Federal Circuit, USA

 The question of patent quality requires a        circumvented, is of diminished quality, no       well as concern for finding the optimum
 threshold focus on the standard by which         matter how elegant its technical content.        balance between the innovator and
 quality is measured, which in turn is            And a patent system that is uncertain, or a      improver. As we face these difficult and
 determined by the purpose of a system of         patent law that is unpredictable, places a       complex questions, let us not lose sight of
 patents.                                         burden on innovation for which there is no       the overarching purpose of patents, to
     The purpose of a system of patents is        balancing benefit. In turn, clear and            support the creation and dissemination of
 to serve the public interest in advances in      objective standards for the grant and            products of new technology.
 science and technology, as manifested in         enforcement of patents are essential.                 These questions are of ever-increasing
 the products of technology-based industry.           In implementation, quality starts with       importance, for today science and
 Patent quality is measured by the                the first step: the examination in the Patent    technology are the foundation not only of the
 effectiveness of the patent in contributing      and Trademark Office. This is the strongest      industrial economy, but also of vast societal
 to the economic incentive to develop and         reason for a system of public participation      changes. Familiar legal principles are being
 commercialise advances in science or             such as opposition and re-examination, to        tested in new arenas, as scientific advances
 technology, with the resultant public benefit    catch errors and oversights in the               are brought to public benefit. Patents provide
 of new products, new industry and new            examination process, to provide an               the broadest, most equable and most
 opportunities, all tending to national           inexpensive way of eliminating or adjusting      available incentive for technological creativity
 economic growth. A patent that is                the patent grant. Today much is heard about      and industrial commitment. The quality of a
 vulnerable because of legal or technical         problems of patent examination, enlarged         patent is measured by how effectively it
 flaws, or a patent that can readily be           backlogs, appeals and judicial review, as        fulfils that purpose.

a patent application. Therefore, the question     •   A strong patent system to provide an
of future patent quality is linked to the level       adequate return on investment and
of true innovation.                                   encourage innovation.

                                                      When any of these three factors are
Sherry M Knowles, Senior Vice President           missing, the economy and the country suffers.
Corporate Intellectual Property,                      From this strong patent system must
GlaxoSmithKline, USA                              come quality patents. I would define a quality
                                                  patent as one which adequately teaches
In order to have a first-tier economy, a          someone of ordinary skill in the art how to
country must provide:                             make and use an invention. It must
• Commercial laws that protect and                effectively demonstrate that the applicant
    incentivise innovation.                       was in possession of the invention at the
• A strong, intelligent and impartial court       time of filing. It must furthermore include
    system to resolve business disputes.          claims that are clear and adequately define

Chris Mercer                                      Pauline Newman
President of the EPI                              Judge of the United States Court
                                                  of Appeals for the Federal Circuit

62 Intellectual Asset Management April/May 2008                                                                     
                                                                                                        Patent quality

                       the metes and bounds of the invention over         turnover, give examiners more time (and more
                       prior art.                                         office actions) to reach well-considered
                            It seems to me that the quality of            decisions and increase examiner pay.
                       patents awarded today is mixed. The                Economic disincentives may be considered to
                       standard of those issued for established art       motivate patent applicants to consider carefully
                       units, where the search and examination            the number of applications and claims filed,
                       requirements are well worked out, is fairly        and to account for increased work burden –
                       high. Newer areas of technology – such as          something that is currently used by the EPO.
                       software and business method patents, in
                       which the requirements for patentability and
                       the ability to conduct a thorough search are       Chris Mercer, President of the EPI, UK
                       difficult – yield more variable results. A lack
                       of adequate examination time is another            The only way in which you can define patent
                       reason for variable patent quality. In the         quality without inventing other criteria which
                       United States, patent examiners are urged to       then cannot be effected is by judging a
                       give only one non-final office action before       quality patent as one that meets all the
                       providing their final decision. This often does    requirements of the relevant law. Thus, an
                       not allow for a meaningful dialogue between        EPO patent is of good quality if it meets the
                       patent office and patentee. Sometimes this         criteria of the EPC. It seems to me that there
                       is not enough time to understand the               are those that say that the quality of patents
                       invention or the relationship of the prior art     is too low without saying why.
                       to the claims, resulting in mistakes.                   The quality of patents at the EPO seems
                            To increase the quality of patents granted,   to have remained much the same, if not
                       patent offices need to reduce examiner             improved, over the last decade. And while                                                        Intellectual Asset Management April/May 2008 63
Patent quality

the quality of patents issued by the USPTO         The term “quality” covers a multitude of
has declined, it has not done so                   sins. To me, a quality patent should cover an
dramatically. The main problem that                invention that is meaningful; creates
dissenting voices raise is that there are too      commercial advantage; has well-written
many patents and that, therefore, the              claims, maximising the coverage; and has
standards must have fallen. However, there         been filed and prosecuted correctly. It’s
is no inevitable connection between numbers        worth asking the following questions:
and quality. The number of granted patents         • Has a large area of subsequently
reflects the number of applications as well            interesting activities been protected by
as the quality of the granting procedure.              the patent?
     Over the coming five years, we will           • Does the patent protect an invention that
hopefully see the quality of examination at            is shown to be important over a period of
the EPO become more consistent and there               time?
will be fewer exceptions to the usual high         • Has the patentee been able to generate
standard. I feel that it will be more difficult,       value that wouldn’t have existed without
however, for the USPTO to raise its                    the patent?
standards as the main problem there seems          • Would the patent stand up in front of the
to be that they cannot retain examiners, and           highest possible court in which it could
while this remains the case, the quality of            be litigated?
examinations will not improve.
     Costly re-examination of a patent is the          The quality of patents today is higher
only objective way of judging its quality. The     now than it was five or 10 years ago, and
problem, however, lies in determining the          there are several indicators that we should
presence of inventive step, which is really a      see further improvement over the coming 10
matter of judgement. At present, the final         years. Patents are being attacked by a wide
arbiters of validity of any patent are the         variety of disparate interests and I believe
supreme courts in the relevant countries.          that this competition will drive inventors to
However, as these see only a very small            do a better job of protecting them.
selection of patents, this does not give any           Patents are becoming increasingly liquid
real idea as to whether all patents that are       assets and their value – helped by the public
granted are in fact obvious. The Appeal Board      auction process – is increasingly
at the EPO sees more granted patents than          transparent. In these circumstances it is
any other body and, therefore, an analysis of      becoming clear that most patents are not
decisions of the Boards of Appeal might give       worth the paper they are written on, and that
some idea as to whether patents have been          some are worth a hell of a lot. This will drive
correctly granted. However, that will also         inventors and lawyers to question and focus
depend on whether new prior art has been           their patenting.
cited. Thus, it may be possible to review              Patent quality – as given by the different
quality by reviewing BoA decisions. However,       parameters I've mentioned – creates and
probably the best way to measure quality is        drives value. I agree that, for many of the
for an independent body to review whether a        parameters, it is a quality judged by
representative selection of patents meets the      hindsight and is extraordinarily difficult to
requirements of the legislation. The main          foresee. It is also highly dynamic: the patent
problem with this is that it will be expensive     laws may change, and technologies and
and no one seems to be prepared to pay.            markets are growing and dying ever more
     The real problem comes if there are a         rapidly – just look at how drastically the
large number of patents in existence that          invention and commercial quality of the
should not have been granted. These                “Vioxx” patent changed between 2000 and
present unfair obstacles to companies who          2008.
may wish to enter a particular market and,             I am extremely suspicious of attempts to
thus, will inhibit economic development. It is     create an “ISO” type of evaluation for patent
costly to prove that a patent is not valid and     quality and value, leading to statements that
so companies will rather not bother than           “the average value of a European patent is
invest the money to clear the way to enable        Euros 300,000”. I'm worried that this will be
them to enter the market.                          a waste of time and effort whose results, if
                                                   any, will be highly misleading, and lead to
                                                   poor economic and business decisions.
Stephen Potter, a director and immediate               Intangibles are now the most valuable          Stephen Potter
past chair of the R&D Society (UK), based in       assets that organisations have and, sooner         A director and immediate past chair
Glion, Switzerland                                 or later, CEOs will have to realise that all the   of the R&D Society (UK)

64 Intellectual Asset Management April/May 2008                                                                      
                                                                                                       Patent quality

                       legal ways of protecting them, including           quality, and that applicants have a
                       patents, must be a key strategic and tactical      responsibility to do so. We therefore initiated
                       board subject and be treated accordingly.          several patent quality initiatives in
                                                                          cooperation with other companies and
                                                                          academia to enhance patent examination
                       Manny W Schecter, Associate General                and measure patent quality.
                       Counsel Intellectual Property Law, IBM                  To enhance examination, IBM
                       Corporation, USA and Marian Underweiser,           established the Open Source as Prior Art
                       Intellectual Property Law Counsel IP Law           (OSAPA) and Peer to Patent (P2P) projects.
                       Strategy & Policy, IBM Corporation, USA            The OSAPA project attempts to capitalise on
                                                                          the inherent transparency of open source
                       Strong intellectual property systems               software to make it more available as prior
                       encourage innovation. Today, a major threat        art. The P2P project is a pilot with the
                       to innovation – and the business and               USPTO that allows the public to collaborate
                       societal benefits it generates – is the issue      and identify prior art relevant to pending
                       of patent quality.                                 published patent applications. More than
                            Patent quality refers to how well a patent    36,000 registered users from around the
                       meets the legal criteria for patentability. This   world are participating and have provided
                       includes both differentiation over the prior       nearly 150 prior art citations on a few dozen
                       art and appropriate clarity, so that the public    test applications.
                       can delineate the scope of patent coverage.             To measure patent quality, IBM
                       Quality is to be distinguished from value,         established the Patent Quality Index (PQI)
                       which reflects characteristics such as the         project. The PQI will compare measurable
                       market for the invention.                          characteristics of patents that have been
                                IBM believes that patent quality has      found valid by the Court of Appeals for the
                       suffered in recent years, as patent offices        Federal Circuit with those of patents that
                       have been overwhelmed with an expanded             have been found invalid. The characteristics
                       scope of patentable subject matter and an          which correlate to patent validity will be
                       increasing volume of ambiguously worded            weighted and aggregated into an index that
                       applications. Overly broad patents for ideas       will be useful in monitoring trends in patent
                       without merit lead to speculation and              quality over time and between industries,
                       litigation that divert resources from research     and should encourage better applicant and
                       and development, stifle real innovation and        examiner behaviour.
                       increase prices.                                        Patent quality is important because
                            IBM also feels that patent applicants,        patents convey powerful rights to inventors
                       and even the public, can help improve patent       which impact on their competitors and, more

                       Manny Schecter                                     Marian Underweiser
                       Associate General Counsel Intellectual             Intellectual Property Law Counsel IP Law
                       Property Law, IBM Corporation                      Strategy & Policy, IBM Corporation                                                       Intellectual Asset Management April/May 2008 65
Patent quality

importantly, the public. Patents themselves          currency potential or acts as a successful
will become more important as our global             deterrent to others to stay away from the
economies continue to shift to become                patent owner’s business interests.
knowledge-based economies. It is
imperative, therefore, that we address
patent quality issues today, to ensure that          Margareta Ydreskog, Group Patent
our patent systems can promote innovation            Manager, Corporate Strategy and Business
in the 21st century.                                 Development, Saab AB, Sweden

                                                     Patent quality has very little to do with the
Peter Spours, Director, IP Transactions &            invention itself, but everything to do with
Strategy, TomTom, The Netherlands                    how the invention is defined in the patent.
                                                     The description should be a complete and
Patents are business tools often considered          clear description of the inventor’s
as ‘transaction currency’. The right to stop         contribution to the state of the art, including
infringers is usually converted to the               a set of claims that covers the invention –
extraction of a financial remedy, this being         and only the invention.
one measure of a patent’s worth. But what                      In order that patents granted are of a
is quality? Many would say that it is the            high quality, efficient search and examination
same as worth. It is easy to say that a              proceedings are required, and a final              Peter Spours
patent that has achieved a high financial            decision on the application should be formed       Director, IP Transactions & Strategy,
return is a high-quality patent, but this is a       without undue delay. It is also essential that     TomTom
judgement that can only be made after the            there is a possibility for third-party
event. How can we make a judgement before            contribution in the administrative process.
pursuing an adversary or setting up a                     I strongly believe in the patent system as
licensing programme? Here follow some                a motor for innovation and a tool for
pointers:                                            technology transfer. In order to serve as
• Is this an early patent in its field? A good       such, patents should be granted only for
     test is to look at citations. If the patent     inventions that clearly provide a contribution
     cites few other patents as prior art, but       to the state of the art. Improved patent
     lots of later inventors refer to it, that’s a   quality would enhance trust and confidence
     great start.                                    for the patent system – something I believe
• Are the claims short and in plain                  would open the system up to new users.
     language? Business people need to ‘see’         SMEs, in particular, need a patent system
     infringement.                                   that awards true inventions and discourages
• Would a jury understand the invention?             patent applications for ordinary innovation.
     Companies take licences only if they                 The requirement for accreditations, such
     believe the licensor would litigate and         as the EQE (European Qualifying
     they could face an injunction. If the           Examination), has led to greater consistency
     invention is too esoteric, it will be lost in   in the work of patent attorneys, which is of
     the courtroom and the prospect of a             course beneficial to patent quality. However,
     successful outcome far less certain.            there is a worrying trend of applicants
• Is the patent key to a valuable area of            attempting to cover much more than the
     commerce? There is little point in              invention in their patent application. I would
     licensing a patent if the royalty return is     prefer to see specifications that are more to
     small.                                          the point, and of course examiners that
• Are there standards involved? Is there a           react and object to vague language.
     history of licensing in this field? Is there         Furthermore, it appears to me that
     a real need for the technology underlying       requirements for inventive step have been
     the patent? Can these patent claims be          lowered. An application put in the right
     avoided?                                        language and the right format may proceed
                                                     to grant without the invention having made
    All these issues either add to or destroy        sufficient contribution to the state of the
value in a patent, but it would be a brave           art to merit the grant of the patent.
executive who tried to evaluate each element         A combination of low inventive step, unclear
objectively. Rather, these issues point to a         description and vague claim definition
judgement that those skilled are able to             provides for low patent quality, at the cost
make and act upon. But are they measures             of all involved.                                   Margareta Ydreskog
of quality? I think so, because a patent is                                                             Group Patent Manager, Corporate Strategy
worth having only if it has transaction                                                                 and Business Development, Saab AB

66 Intellectual Asset Management April/May 2008                                                                         

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