Continuing my discussion from the first part of this post, in this post, I will examine the performance metrics put in place by IPO and try to calculate the number of hours available for an Examiner and the Controller to complete a task and how even with generous assumptions, it is clear that the current quota system is too unreasonable and burdensome. Finally, I will discuss what this means for the Patent Office and the Indian IP landscape.
Too little Time?
As has been pointed out in the context of USPTO (see here, here and here), any hard incentives/penalties (like a quota system) being tied to the ability of the examiner/controller to produce a certain quantum of output would automatically translate into prioritising quantity over quality. This is because, when a specific output is required, only a set number of hours can be dedicated to an application and usually this set number of hours is not enough. This can be mitigated if there are some measures in the system that correct for this bias and focus on improving quality.
In the IPO, as can be seen from the above image, there are hard incentives/penalties at play with emphasis on set quotas and little or no attempt to control or influence the quality of orders and office actions being issued. To calculate how much time an examiner and a controller can dedicate to an application, I have done some rough calculations.
I have made some generous assumptions. First, that both the Examiners and Controllers do only these tasks during their working hours and nothing else (which would most probably not be accurate!). Secondly, I have also assumed 25 working days in a month. The point is to show that even a very generous set of assumptions illustrates that the targets seem too high to reach.
I am also assuming that a new application requires more attention since the examiner has to prepare the FER, look at prior art and look at patentability standards, etc. With regards to an amended application, work might be limited since the applicant cannot bring in new subject matter through amendment and can only reduce or clarify the scope of their claims. Hence, allocated more time to the task of preparing the FER. While I have equally distributed the working hours between the two tasks assigned to the Controller (since the controller might have to attend the hearing, and he will be only vetting the FER prepared by the examiner, see here and here for more details on their functions). After assuming these details, the following table emerges.
| Role | Task | Targets per month | Total Working Hours Available for the targets per month | Working Hours available per task |
| Examiner | New Application | 15 | 133 (25 * 8 * (2/3)) | 9 |
| Examiner | Amended application | 15 | 67 (25 * 8 * (1/3)) | 4 |
| Controller | Issuing FER | 45 | 100 (25 * 8 * (1/2)) | 2 |
| Controller | Application Disposal | 30 | 100 (25 * 8 * (1/2)) | 3 |
Even if an examiner is to dedicate around 2/3rd of all his working hours in a month (ignoring admin tasks, assisting with opposition matters, training or any other meetings) to a new application. He would have only around 9 hours per new application and 4 hours for a amended application!
Likewise, a Controller will get only 2 hours for vetting and disposing of an FER and around 3 hours for disposing of an application!
Thus, even with generous assumptions, it is clear that the Examiners and the Controllers might not have enough time to spend on a application and this is reflected by the mass show cause notices issued stating poor performance (which were later scrapped), the increasing number of unreasoned orders being issued by the Patent Office and instances of applicants being ambushed by new documents at the hearing stage. Concerns about overburden have also been raised previously. The next question is-
What does this mean for Patent quality?
Firstly, both the Examiners and Controllers have very little time to dedicate to each application. Irrespective of how effectively the quota system is followed, the haunting spectre of the quota is enough to incentivise both Controllers and Examiners to prioritise the disposal of targets and fulfilling quotas. This would mean that they would not have adequate time to sit and examine each and every application as thoroughly as you would want them to. In addition to this, patent officials (Controllers) have an additional incentive to issue a grant order rather than reject an application for the simple reason that rejection orders need to be more legally robust as they have higher probabilities of being appealed by the applicant, this is not the case with orders allowing for grant. After all, who is there to appeal against unreasoned grants? While post-grant mechanisms do exist, they are hardly used and can only be filed by an interested party. If a frivolous patent is filed that doesn’t affect anyone else, why would a third party go through the hassle of a post-grant opposition? Yet, certainly with University rankings, national pride, what not tied to patents – there are more and enough incentives to keep filing them. Another angle to look at this is, how much does the threat of an appeal against an unreasoned order loom over the heads of a Controller?
We know there are serious consequences if an unreasoned order goes up to the High Court (show cause notices!). Looking at the latest Delhi High Court IPD report, from 2023 to June 2024, around 92 appeals have been filed. One does not have similar data for the other HCs; there are reasons to believe that this might be equal or less. In the IPO Annual report, even though 2023-24 was an odd year (over 1 lakh 20 thousand disposals!), the previous four years show the disposal rate around 44K roughly on average. Hence, it is reasonable to assume that a good portion of the orders are not appealed. How does this factor influence the behaviour of patent officials? It is possible that this has no effect due to the high cost associated with an unreasoned order getting appealed (irrespective of the probability of it getting appealed). Patent officials can also engage in strategic behaviour wherein they might spend more time on applications that are prone to appeal (big corporations who file a lot of applications and are not hesitant to appeal and have appealed previously) or might display a greater propensity to grant such applications due to the increased likelihood of appeal. But all this is in the realm of speculation, and I am happy to stand corrected.
Hence, there are four factors at play:
a) Firstly, the focus on quantity over quality due to the presence of quotas, which in most cases is very unreasonable and burdensome.
b) Secondly, very minimal attempt by the existing metrics to incentivise issuance of more robust and reasoned orders and office actions.
c) Thirdly, an incentive to grant (due to the possibility of an appeal being higher for an unreasoned rejection order) rather than reject, since rejection would mean you have to prepare a more robust and reasoned order, which obviously will take more time.
d) Fourthly, the patent officials might behave strategically based on who the applicant is.
Thus, in conclusion, the metrics in their current form, with their blind focus on volumes and related actions by other stakeholders, disincentivise patent officials from focusing on quality.
With all this said, I also wish to point out that there is a countervailing force in place. Prof. Basheer had long discussed the policy style reasoning of the IPO, who at that point in time, seemed to have a desire to grant as few patents as possible. He had in another context discussed the lamentation of a senior patent official who stayed up all night thinking about how to reject a patent! What is the fate of this policy style reasoning in the face of hard-hitting quotas? Rejections might require more cogent legal and technical reasoning, and that in turn would mean more time (which they don’t have!) spent on an application. Yet despite this, unreasoned rejection orders are being issued, and they are also being appealed (see here). Can policy-style reasoning explain at least partially the phenomenon of unreasoned rejection orders?
What does this all mean?
The takeaway is clear: the IPO’s performance metrics privilege volume over quality. Secondly, the costs of issuing an unreasoned rejection order are higher than the cost of an unreasoned grant order. Hence, the system as it exists incentivises the patent official to issue grants wherever he can to avoid a potential appeal.
With the rise in the number of patent applications filed and issues with recruitment, the performance metrics as they exist can exacerbate the systemic issues plaguing the IPO. The existing measures to address patent quality are inadequate and, in worst cases, prone to abuse.
It has to be stated here that improving capacity at the IPO might not, in itself, solve the patent quality problem. As Polk Wagner had argued, the rise of the patent portfolios has led large corporations that have the wherewithal to maintain a large portfolio to focus on volume over quality as they derive value from holding on to patent portfolios, which have a large number of granted patents that are closely related yet distinct. This is also related to the concern surrounding patent thickets, their prelevance in India and how they can impede access and innovation. In a different paper, he concludes that focus on Patent Office reforms in itself might not be sufficient because of the fact that the existing patent system incentivises private players to focus on volume over quality.
Thus, changes in IPO policies on patent quality in themselves are not enough to fully address issues of patent quality, but they can indeed be a place to start modest reforms.
I wish to thank Swaraj, Praharsh and Gayathri for their inputs!