Does the America Invents Act
create a process for patent amnesty? The economic ramifications of the newly
created supplemental examination process are discussed by Professors Jason Rantanen and Lee Petherbridge in their highly engaging article, Toward a System of Invention Registration: The Leahy-Smith America Invents Act.
Section 12 of the America
Invents Act outlines a new method for supplemental examination. During the supplemental examination process, a patent owner may
request that the Patent Office consider, reconsider, or correct information
believed to be relevant to an already issued patent. Importantly, the patent will not be held
unenforceable based on conduct relating to information that was incorrectly,
inadequately, or not considered during the initial examination, so long as the
information is provided during the supplemental examination.
Rantanen and Petherbridge
categorize section 12 of the AIA as a means for patent amnesty. The authors persuasively argue that this new ability to
“cleanse” a patent through supplemental examination will allow attorneys to violate
their duty of candor during the original prosecution with little fear of later being
sanctioned. Patent owners might be
tempted to intentionally leave out prior art that would be detrimental to the
prosecution of their application, knowing that they can later protect
themselves with a supplemental examination. The repercussions of this amnesty
will inevitably jeopardize the commercialization of patents by increasing the
costs of competition, research, and market entry. This prediction stems from the idea that, at
the foundation of patent law, is the need for the Patent Office to efficiently
gather, record, and apply information. Only when this process is at its most
efficient can the PTO issue the highest percentage of “valid” patents. By
having an avenue that threatens the complete and honest disclosure of information,
market participants may take a pessimistic view towards the validity of issued
patents.
The article highlights the importance
of practitioner disclosure by addressing the tradeoff between the costs of administering
“correct” patents versus the economic impact of issued patents. The authors contend that close to half of all
issued patents have a monetizing effect on the marketplace. Monetized
patents include patents that are litigated (1-2%), licensed (5-29%), or deter the
market entry of a competitor. Because
only a small percentage of these patents are litigated, the patentability
decision made by the PTO is usually the final say. If a poor quality patent is
issued, the mistake will rarely be rectified. Therefore, it is vital that the
costs and benefits of the patent system do not become unstable.
Rantanen and Petherbridge assert
that in the first years of issuance, patent owners are likely to take their
overly broad claims and monetize the patent as quickly as possible. If a competitor or licensee threatens
litigation, the owner may simply request a supplemental examination and remove
potential grounds for a lawsuit. Patent owners may also use the supplemental
examination process to bolster the quality of their patents by adding art to the patent file. Low quality patents will force valid technologies to
either pay “rent” or defend against nuisance litigation that should not exist.
This will inevitably lead investors and market participants to look with
skepticism at the quality of patents that have not been through supplemental
examination.
Rantanen and Petherbridge touch on an
interesting topic that deserves more consideration: Should market participants and courts
distinguish between patents that have gone through supplemental examination
and those that have not? I think several observations are important to this
discussion. Under the new law, it is the right of the patent owner and not the practitioner
to request a reexamination. Thus, a licensee might be justified in conducting a prior art search if
the owner prosecuted his own invention. But, market participants should be less
skeptical of patents that have not been prosecuted by the owner of the
patent. Without the ability to initiate
supplemental examination, it is less likely that a non-owner practitioner
would risk violating his or her duty of candor without the guarantee that he or she would be
able to rectify the omissions.
Second, research has shown a
correlation between a patent’s economic value and the number of prior art
citations listed on the patent. See
Hall, Bronwyn H., Jaffe, Adam B. and Trajtenberg, Manuel, Market Value and Patent Citations: A First Look, Vol. 7741 NBER Working Paper Series (2000). This seems to indicate that investors value the
information offered by an increase in cited prior art. In an era of supplemental examinations, will
patent owners sacrifice the value associated with upfront disclosure for a
potentially quicker examination process? Interestingly, data also suggests
that examiners are reluctant to utilize the information provided by disclosure
statements. See Cotropia, Christopher Anthony, Lemley, Mark A. and Sampat, Bhaven N., Do Applicant Patent Citations Matter? Implications for the Presumption of Validity, Stanford Law and
Economics Olin Working Paper No. 401 (2010). If disclosure is as important as
the article suggests, should Congress allow courts to apply a lower standard of
proof for references not considered by the PTO to protect the creditability of
patents that have not gone through the supplemental examination process?
Posted by Bryan Parrish (bparrish@smu.edu), a registered
patent agent, research assistant to Sarah Tran, and a 2014 Juris Doctor candidate at SMU Dedman
School of Law.
