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How to make patent examination fast, efficient and robust
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Today’s hybrid (administrative + judicial) patent examination system should be replaced by a purely judicial system where patents are registered and enter into force quickly and free of charge on the Internet, and validity is secured by self-responsibility, enforced by liability rules which reward private invalidation efforts at the expense of the patentee, thus encouraging him to file narrow claims around real inventions.

Concept

In a Nutshell

In our new system, the amdinistrative-judicial conglomerates which we call patent offices no longer exist. Instead the functions of patent offices are taken over by the following organisations and players:

  1. central patent registry, similar to Internet domain registry, used through competing global frontends that strive to provide the most convenient one-stop shop to users
  2. search divisions are privatised and compete on a free market, providing services to registrants and attorneys
  3. examining divisions continue to exist as lightweight validity courts of 1st instance, staffed by technical experts, operating through Internet only
  4. it becomes possible to file patents without claims for an initial grace period or even for the whole 20 years. As long as there are no claims, copyright-like rules are applied to the described object, and no translation is required.

More details

  • Patents are registered immediately, without substantive examination, like today in most EU countries. When somebody finds proofs of invalidity of the patent, he is entitled to charge an examination fee from the patentee.
  • The patent application procedure is analogous to today’s procedure of registering internet domains: a registry authority at the core with competing private registration service providers at the periphery.
  • The invalidation procedure is analogous to today’s procedure of cease-and-desist letters, which is used especially widely in German competition law.
  • Already today, successful invalidators receive reimbursement of court and lawyer fees. This is true for invalidation procedings and in some countries (e.g. PL) also for opposition.

Effects

  • Private parties are given an incentive to examine patents.
  • Financing of patent examination is assured.
  • Patentees are rewarded for publishing narrow patent claims around true inventions, and punished for doing the opposite.
  • Self-responsibility is strengthened: those patent owners who craft strong and narrow patent claims do no longer have to wait years for examination. They can immediately utilise their right. They no longer have to cross-subsidise the polluters.
  • A new free market for patent examination services is created: examination becomes a kind of legal insurance activity which is provided to those who demand it, at fees determined by market forces, based on the real cost risk generated by the patent in question.
  • Patent offices are separated into several mutually independent online services, which do not need any physical office facilities.
  • SMEs can enjoy the advantage of fast, cheap and narrow rights, sometimes called “soft IP”, known from copyright, if they so wish, without having to subsidise those companies that burden the public with broad claims.
  • The patent and copyright system are brought a few steps forward toward integration.
  • The aims of the campaigns for a novelty grace period achieved, while the harm, which the novelty grace period would cause to the current system, is avoided.
  • Internationalisation, especially in the direction of the EU Community Patent, becomes much easier.

Rationale

  • The publication of a broad, non-novel or otherwise invalid claim unduly restricts competition, denies freedom rights, pollutes the market environment. The person who detects this pollution deserves a reward. Anyone is legitimated to claim this reward, because patents constitute a restriction on the freedom of the general public (which is why currently anyone is entitled to file nullity/invalidity lawsuits).
  • The (private) power of examination is separated from the (public) power of granting. The money which the Patent Office earns thereby becomes a legitimate revenue. The patent office is no longer monetarily rewarded for granting invalid patents. Quality control becomes an economic necessity, rather than a political slogan to which one has to pay lipservice.

Transition Path

  • step 0: Patent offices pull out of the business of patent consulting, patent evangelism and patent lobbying, leave those to private players
  • step 1a: The winner of a patent invalidation proceding is reimbursed not only for his lawyer fees but also for his examination efforts. A standard for examination fee calculation is adopted.
  • step 1b: A procedure for online registration (including modification) of patent claims and nullity claims is defined and operated. After a transition period, it completely replaces the traditional procedure.
  • step 1c: Patent offices outsource their prior art search work, the respective departments become independent enterprises.
  • step 1d: Grace period: patent descriptions can be filed without claims and kept secret for 18 months. Thereafter, claims are published and opposition can begin. Later this grace period is somewhat shortened, e.g. to 1 year.
  • step 2: The invalidator is *entitled* to payment of an examination fee. This means that the invalidator can charge the fee from the patentee by a simple invoice, without necessarily going to court.
  • step 3: The EPO’s boards of appeal are dissolved, the opposition divisions are forked out and integrated with those of the national patent offices to become a decentralised Internet-based system of cheap validation courts of 1st instance, available throughout the lifetime of a patent.

Patent Claim Takedown Procedure in more Detail

The contestant C has found a patent claim of patentee P to be invalid. C must be accredited as a qualified examiner with an account at the patent registry. C publishes an examination report with a request for narrowing of claims and a request for payment of examination fees at the patent registry.

P can then has one month to decide to either uphold his claimset or to narrow down his claims in accordance with C’s request. In the latter case he is obliged to pay the bill of C, in the former he can demand a (smaller) fee from C as a compensation for an abusive request.

If the parties can not settle among themselves, they call on the validity court of first instance.

The court judges the case solely on the basis of the registered materials (examination reports, invoices), without an oral hearing.

The loser pays the court fees in addition to the fees due under the takedown procedure.

If in a 2nd instance oral hearings and lawyers are involved, the related costs are also paid by the loser.

The sum in litigation depends on what the parties dispute. If it is about validity of patent claims, the sum is much higher than if it is only about who owes whom which fees.

The examination fees can be higher than the current examination fees, because patentees are encouraged to escape the payment by formulating narrow claims in the first place. Amounts of 10000 EUR, as typically found on the old BountyQuest website, might be appropriate. The fees should probably be lower if the objections are not based on newly found prior art.

The same rules can apply to utility models, which are currently without examination.

Implications of the Grace Period in Detail

Details

  • The registered document needs to contain nothing more than a detailed description of one or more implementations. It can even be a scientific article which contains such a description.
  • The priority date is the day of filing/registry (first to-file principle).
  • Claims, as well as further implementation examples, can be filed any time later during a Grace period of maximally 18 months.
  • Claims can have separate priority dates: when a claim can only be justified in view of later-filed implementation examples, its priority date is that of the later filing and it must be marked as such.
  • During the grace period, the descriptions are uploaded to the registry but not published.
  • During the grace period, the patentee can exclude others from direct copying of any of the submitted implementations. Here the rules of copyright apply: the patentee can forbid lazy copies and derived works, but not independent inventions
  • The applicant can chose to terminate the grace period any time within its maximal duration.
  • Initial secrecy is not obligatory: the applicant can chose to publish his description any time between registration and publication of claims.
  • As soon as the grace period ends, the patentee enjoys the broader rights as specified in his claims, but also bears the full responsibility for these claims and the cost risks that come with it.
  • If the registrant fails to publish a set of claims before the end of the grace period, his text is published without any claims, and the described objects only enjoy the scope of protection that is granted by the rules of copyright.

Other grace periods

  • When the claims are published, they are not immediately presumed to be valid, unless the registrant (or his examination insurance service provider) voluntarily raises the examination bounty to a very high level. However, after a certain time has elapsed, validity can be presumed, since nobody has successfully attempted to challenge the claims, they can be expected to be strong enough.
  • The registration facility is also used for copyright of immaterial goods, i.e. the “normal” copyright. Copyrighted works must be registered within 5 years, otherwise they expires.

Effects

  • Patent rights are acquired with almost no initial cost, like copyright. The broadening of the right, which is at the origin of the greater burden that patents impose on their owners as well as on the public, is deferred to a later date.
  • Scientists can conveniently publish their findings and file patents in one. Scientific publication and patent publication converge.
  • The first-to-file system is reconciled with the Novelty Grace Period system, aspects of the US and EU systems that currently are being fit together in a foul compromise really work together harmoniously.
  • The integration of patents and copyright into one system under the spirit of “fast, cheap, narrow” is further promoted, both sides are improved, the transition is seamless.

Organisational change, personal and functional continuity

The current patent procedure has two phases:

  • search (completed by publication of document A) and
  • examination (completed by publication of document B).

At the beginning in the EPO they were strictly separated. Search was done by the Hague, examination by Munich. Since the mid 90s, they are brought together in sense that two phases are conducted by the same team (“BEST: Bring Examination and Search Together”). One half of the applications is processed in The Hague, the other in Munich. But two distinct processes remain in place.

The proposed court is the same as examination division in the EPC. The difference is that everybody can be a search division and the search division is paid when brings good arguments for rejection.

Our proposed court of the second instance is similar to the opposition procedure in the EPC, because it is an oral hearing of two parties. Only the flow of money is different.

In other words, what we are proposing is only a reform of the existing EPO. We are introducing financial incentives for rejections, and demanding separation of power. In practical terms reform would mean that a market for patent searches is created and that existing divisions of patents offices compete with outsiders on this market. Currently this market is closed. Only patent offices are inside, and they enjoy territorial monopoly. Because we need real renewal, the examination institutions should be built from scratch, although their natural basis of recruitment are people employed at the patent offices. For this job, a mixture of legal and technical qualifications is needed.

Already now, in many jurisdictions, everybody can be a search division. Many patent offices accept opinions of outsiders at any stage. But they do now pay the informants. Here too, our reform constitutes an incremental improvement.

Questions and Answers

Why will this succeed, when BountyQuest failed?

Q: I would like to understand the difference between the “examination fee” and the old BountyQuest project.

A: In BountyQuest the examination fee was not paid by the polluter but by volunteering victims. It requires that one victim stands up and pays up on behalf of the public. All the other victims benefit as free-riders.

Q: What was the reason BountyQuest failed?

A: I don’t know exactly, but the above should have something to do with it.

Q: Why would an “examination fee” not fail?

A:

  1. Because there is someone who pays the bounty sum.
  2. Because that someone is also responsible for the patent application and thus free and motivated to prevent the problem from arising.

Why not just ask patent offices to improve their examination work?

The question is who should pay for it. Or better, how does one make sure the cost is put in he right place.

Well-known experts such as T.S. (head of patent department of a big company) calculate that it is cheaper to not do the homework for every application, i.e. waiting for opposition is cheaper than conducting (proper) examination.

If the examination cost is reimbursed in an opposition, the loser cannot run away from it.

Isn’t the much-praised European system of opposition up to the task?

Not really. Many Americans envy our European opposition system, but it should not be idealised. Oppositions can only be filed during the first nine months after patent grant, and, while the court fees are low, the procedure tends to take years and hundreds of lawyer hours (typically costing 300 eur each, which the opponent has to pay, regardless of the outcome). Economists say that opposition only works in certain industries. Professor Harhoff investigated the hair dye industry, where it seemed to work fine. In other fields, expecially industries with complex products and many patents, hardly any oppositions are filed.

While each patent affects all players of a certain industry, opposition is filed individually. Normally the competitors of a patent owner do not cooperate. Rather, they like keep a low profile and concentrate on their work. By filing an opposition, an opponent steps out into the open and does burdensome voluntary work on behalf of his competitors.

All this makes it relatively unattractive fo people to file an opposition.

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