The word ‘patent quality’, when heard for the first time, sounds a bit mysterious and esoteric. A close friend of mine, when I told her my next post is on patent quality, she was a bit lost and asked me, “What does patent quality mean?” Yet, patent quality has been a hotly debated topic and also a concern raised both in India and abroad. Previous bloggers have raised questions on the quality of patents granted by the Indian Patent Office (IPO). In the US, the Government Accountability Office (GAO) on May 7th released a report stating that “Patent Office Should Strengthen Its Efforts to Address Persistent Examination and Quality Challenges”. A recent paper written by Gaétan de Rassenfosse argues that the existing incentive structure for examiners in the USPTO places emphasis on quantity/volume over quality, leading to the issue of ‘weak patents’. In light of this paper, it is useful to analyse how the performance metrics, as they exist in the IPO, affect patent quality.
I will divide this into two parts. First, I will define patent quality, followed by a discussion, based on publicly available information, on the specific measures the IPO has in place to address patent quality. In Part 2, I will discuss the existing quota system in the IPO for both examiners and controllers and argue how it is unreasonable and burdensome. Finally, I will discuss what it means for patent quality in the Indian patent landscape.
When one tries to grapple with the issue of patent quality in the Indian IP landscape, one is left with a lot of questions. Does it also suffer from the same issue as the USPTO, with emphasis on quantity over quality? What kind of quality benchmarks does the IPO have? What effects do the string of unreasoned orders in recent times and perverse incentives to file more patents have on patent quality? First, before one attempts to answer all these questions, one must ask, What is patent quality?
Defining Patent Quality:
Firstly, it is useful to think of a patent document and the invention it discloses as separate and distinct entities. This is crucial because definitions surrounding patent quality in some instances are concerned with the patent document, and in other instances, are concerned with the invention disclosed (here).
Thus, patent quality in one sense is defined as a measure of the ability of the patent administration system to grant ‘good patents’, i.e. patents that are in line with the statute, case laws, and can withstand invalidity challenges (see here and here). Thus, it is a measure of the effectiveness of the patent office to correctly apply the statutory mandate and case laws and reduce errors (‘error’ here means granting a patent to an application that should not have been given a patent in the first place). It’s useful to keep in mind, a patent might face examination/scrutiny at two stages, the first stage before the Patent Office (including related pre- and post-grant oppositions) and the second stage before the Courts when it is subject to litigation.
Patent quality in another sense focuses on the value that a patentee or the public or both might derive from the invention that has been disclosed in the patent. Thus, emphasis might be on how many of the patents are renewed by the patentee and for how long (paying the renewal fees signals that the patentee derives value from the patent being active). Another important metric might be a robust working statement (Form-27) requirement (‘robust’ because form 27 in its current form is would not be helpful for this purpose), which requires the patentee to disclose licensing details and details of the quantum of working of the patent, which in turn can signal how commercially valuable the patent in question might be. Thirdly, instances of litigation involving the patent, which might again indicate value in imitation and also enforcement, which in turn might tell us that the invention the patent discloses is valuable or from which the patentee draws some economic value. But one can also argue the other way around, that unclear and legally suspect patents are also subject to litigation. Fourthly, forward citations or, in other words, how frequently the patent is cited after it has been published by subsequent applications, can also be a measure of its value/quality. Yet I must add a caveat here, that all these proxies for patent quality might in some instances only signal the private value that is derived by the applicant. It might not reflect the public benefit nor the public cost incurred in granting a set of exclusive rights to the patentee.
There is also another way of looking at this, patent quality can encompass both legal and policy elements. In the first instance, one is concerned about how effective the patent office is in granting patents that are legally robust. In the second instance, one is concerned about the economic value (policy angle) the invention disclosed brings to both the patentees and the public as a whole.
Patent Office reforms can reasonably seek to address patent quality as it affects the patent document, so that it acts as an effective screen that only allows legally valid and robust patents to pass through. As to the quality associated with the invention disclosed and its impact on stakeholders, the Patent Office can, through its rules and functioning, induce information disclosure by the patentees, which then can be put out to the public (for example, aggregated information on the working of patents, renewal fees, etc). This information disclosure function of the Patent Office is critical as the meaning and definitions of what constitutes good or bad patents are always contested, and with more information put out, the debate can be more democratised and grounded on empirical data.
Why should the Patent Office focus on Patent Quality?
In an ideal world, we would want the IPO to have perfect information ex-ante (i.e. before the grant) about the patent application that has been filed and act as a perfect screen to let only legally robust/valid patents get through examination. But unfortunately, the Patent Office might not have the information, motivation, time or resources to act as that ideal screen. This can lead to the grant of ‘bad patents’, which in turn can raise the administrative costs of the Patent system.
If the IPO, for example, is unable to catch potentially legally invalid patents or ‘bad patents’ at the examination stage (for multiple reasons) and allows them to go for grants. Later down the line, a few of these bad patents can be a source of litigation and further adjudication, thus demanding additional resources (for example, species patents that have been granted by the IPO even though there were concerns of novelty due to the existence of a genus). How significant this increase in administration cost is an empirical question, as Prof Lemley had argued that it might be rational for a country’s patent office to be rationally ignorant, as most granted patents are never asserted or litigated before the Courts. It serves no purpose to do a thorough examination of a patent that will never be asserted. Also in India, rarely do disputes go to trial, with matters reaching only the interim stage and hence reduce admin costs. But it can also have an adverse impact on access as legally suspect patent holders can always threaten litigation and interim measures to appropriate private value, knowing full well it might be more costly for the alleged infringer to duke it out in the Court.
‘Bad patents’ also allow patentees to appropriate information that should have stayed in the public domain, or keep information in secret that ideally should have been in the public domain. For example, if an invention that lacks inventive step is granted, it would mean information that was meant to be available for all has been privatised. Likewise, lax enforcement of disclosure norms can allow applicants to protect information as a trade secret when it should have been public.
What are the patent quality standards in India? Does the IPO have high error rates? How does one judge patent quality when jurisprudence surrounding an issue has not been settled? (For an instance of this, see the fragmented Section 3(k) jurisprudence). At least, in the context of relatively more settled jurisprudence like jurisprudence surrounding Section 3(d), some have argued that in the case of secondary patents, every 7 out of 10 patents might be granted in error! This claim is limited to the patents in the pharmaceutical sector, and that too to a subset of patents (secondary patents). With the increasing frequency of unreasoned orders being remanded back to the IPO by the Courts. One wonders about the extent and scale of unreasoned orders allowing for the grant of a patent. These are concerns of patent quality and only solid empirical data will help us answer these questions.
Patent Quality and the Indian Patent Office
How does the IPO deal with patent quality?
Praharsh, in his wonderful post on show cause notices and other internal turmoil plaguing the IPO, discussed in detail the incentive structure and the performance review that the patent officials go through. An office order, which, as per the latest publicly available information, is still in effect, provides for “targets” for both Examiner and Controller. The Order does not discuss patent quality directly, but does bring up ‘examination quality’, which does often act as a pre-cursor to patent quality. It states:
“If the Technical Controller (the Controller to whom the case is allotted by the system) is of the view that an examiner is habitually not doing the examination of application properly and timely or the examination is of inferior quality, the Technical Controller shall inform the same to Administrative Controller who will record the· same and report it in the APAR of said examiner.”
Two things stand out, firstly, reference to quality is limited only to the Examiner, who is only part of the supply chain (if I could call it that) in producing the patent (preparing the FER, preparing examination reports and supporting the Controller, etc). Secondly, there is no mention of specific metric(s) by which the examiner is judged by the Technical controller. Likewise, it’s unclear how quality metrics are measured for Controllers who are responsible for vetting the FER and also for issuing the final rejection or allowance order.
Chapter 21 of PCT International Search and Preliminary Examination (ISPE) Guidelines provides for a common quality framework and requires submissions of a initial and a annual report by the respective national Patent Offices which are ISPE Authorities under the treaty (For some reason the WIPO website only has the initial report and not the final report). The IPO, being one, has submitted periodic initial reports, which can give us additional information on quality measures taken by the Patent Office. It shows that the Patent Office has a Quality Management System (QMS) in place in line with the guidelines and other regular reviews of quality objectives. Unfortunately, the document does not provide substantive information on the details of the Quality management system and the objectives it seeks to achieve. Likewise, here too, the focus seems to be on examiners, whom I had pointed out earlier are responsible for only preparing the FER and assisting the controller in disposing of applications and oppositions.
Now digging a step further, one stumbles across a PPT presentation made for the WIPO and an IPO webpage, which shows us the quality policy of the IPO. Regular readers would know I had previously criticised the Calcutta High Court for referring to a PPT to narrow down a statute. I hope I will be forgiven just this one time for referring to a PPT to make a point. The PPT and the webpage, on a quick read, say the right things. The values it espouses are reliability in search reports, predictability in examination reports, and dissemination of information, which, if followed, will improve patent quality. Yet, as we will see in the next part of this post, the performance metrics that are in place at the moment in the IPO paint a different picture and tell us a different story.