An Early Present for Patent Professionals: PTO Guidance on Patentability!

The Patent Office has released the much anticipated proposals for new rules applying the Supreme Court’s Alice decision. The new proposals expand considerably upon the initial guidance the Patent Office provided and attempt to grapple with the ironically abstract question of what kind of patent claims constitute an “abstract idea” or one of the other related exceptions to patentability the courts have carved out.

While the devil is always in the details of the application of rules—not to mention the public comment process and any amendments made before formal adoption—the Patent Office should be commended for trying to create some measure of predictability to the patentable subject matter determination. Plenty of grey areas remain, but at least entrepreneurs, inventors, and patent attorneys now have something more specific than the extraordinarily broad sweep of the Supreme Court’s decisions to consider in developing their patent strategies.

Of course, the Supreme Court ultimately can have the final say as to whether the Patent Office correctly draws the boundary between patentable subject matter and non-patentable abstract ideas, laws of nature, and natural phenomena. That is a topic for another day and the Supreme Court taking another patent case, though. For the moment, we have some new rule proposals to parse.

Reasons for Rising Patent Application Filings

After the Supreme Court ruled confusingly in a pair of patent cases, the Wall Street Journal’s technology blog noted the increasing number of patent application filings and posited five reasonable explanations for the increases. From the point of view of a patent attorney, there is at least one quibble and a couple of additions to the Journal’s list.

First, the Journal explains that “people value patents more,” and notes that valuation is reflected in the lively secondary market that has developed for patents. 

Second, the Journal notes the development — likely old news to anyone reading this — of “patent trolls” that may be indirectly increasing the number of patent filings by, for example, increasing the value of patents on the secondary market. 

Third, the Journal says that “America has changed” by moving R&D spending away from manufacturing industries and into other areas, so that now patents are as integral to business investment as “plants or distribution used to be.” 

Fourth, the Journal observes that there are “more patents per R&D dollar” than ever, explaining that “[t]he amount of money being spent on research and development isn’t rising as fast as the number of patents filed.” 

Fifth on the Journal’s list is “computer technology,” as “[c]omputer and electronic patents have been responsible for much of the growth in patents, accounting for 54% of the grants in 2012, double what it was in 1992.”

The quibble, at least in the pedantic eyes of one patent attorney, is the faux pas of conflating issued patents with filed patent applications in a number of those points. A relationship exists between the number of patents that issue and the number of patent applications that were filed in the past, but a surge in applications filed may not necessarily lead to a corresponding surge in issued patents. For example, should the Supreme Court rule in the next week that software cannot be patented, a large amount of the currently pending application backlog may never issue as patents at all.

There are two additions to the the Journal’s list that may only be apparent to those of us who file and prosecute patent applications.

To begin with, substantive patent law, the rules of the Patent Office, and the practice of examiners within the Patent Office all increasingly encourage more applications to be filed instead of fewer. Under our newish first-to-file system, a delay to sweep a range of related ideas into a single overarching patent application may now lead to a loss of patent rights altogether if someone else files their application first. If you do file an application that even arguably seeks to cover more than one invention, the first substantive communication you receive from the Patent Office will likely require you to pick one of the inventions for that application and requiring you to file a second (or sometimes a third and a fourth) application to cover the other inventions if you want to protect those too.

In addition to the law encouraging more patent application filings, filing a U.S. patent application has become logistically easier and easier. Notwithstanding the Great eFiling Outage of ’14, and not ignoring the difficulty of using the Patent Office electronic filing system even when it is functioning, those of us who practiced in the Old Days of All Paper Filings can attest that the current, somewhat antiquated, system makes filing an application far easier than the prior, extremely antiquated system. Meanwhile, technology is not the only factor making patent application filing easier — the increasing harmonization of patent laws around the globe and the development of common practices and expertise of attorneys in navigating the processes established by those harmonized laws also makes filing a patent application in the U.S. easier for the rest of the world than ever before.

None of these factors seem likely to lessen soon, so, barring an unexpected decision from the Supreme Court, the rate of patent application filings should be expected to continue to climb. If increasingly every competitor has filed patent applications, the key may become filing the right patent applications.

Time to re-think patent strategy

As virtually everyone interested in patents already knows, the Supreme Court recently agreed to hear [pdf] a second patent case during its current term. This latest case involves the shockingly unresolved issue of the patentability of software [pdf]. As with the last instance of the Supreme Court taking a patent case, predicting the Court’s ruling is better left to others, but the recent history of the Court’s patent jurisprudence makes unlikely a decision expanding the scope of what can be patented.

Reasonable minds can differ as to the ideal standards for patentability and the strength of patent protection as a matter of public policy. On the other hand, a reasonable person would struggle to deny that patents have become harder to obtain and enforce over the past few years. The Supreme Court’s recent interest in patent law has mostly had the effect of making allowances of applications more difficult and invalidation of issued patents easier. Congress passed major changes to the Patent Act that moved the US to a ‘first-to-file’ patent system and created new procedures to challenge patents. Meanwhile, any gathering of patent attorneys (or, as we would call it, “a grouping of at least two patent attorneys”) will quickly become a discussion of the increasingly aggressive examination our patent applications are receiving, with bragging rights going to whoever has received the obviousness rejection combining the most references. All in all, few US patent attorneys have experience with patents being this hard to obtain and enforce. 

If ever there were a time to commence re-thinking a business’s patent strategy, this is that time. The re-thinking may not be able to be completed until the Supreme Court has its say next year, of course, and any strategy will still have to be adjusted as the law evolves in light of legislation, other court decisions, and Patent Office practices. Still, a patent strategy formulated in 2010 already needs to be updated to account for changes to the law, as does a patent strategy formulated in 2009 or 2006. A perfectly reasonable, or even utterly brilliant, patent strategy from 2000 could be unproductive and ill-advised under today’s law, never mind whatever the law may be by next summer.