Testimony of

Jeffrey P. Kushan

Partner

Powell, Goldstein, Frazer & Murphy, LLP

Before the

Subcommittee on Courts, the Internet and Intellectual Property

of the

House Judiciary Committee

Patents: Improving Quality and Curing Defects

Good morning.

My name is Jeff Kushan. I am a partner in the Washington office of the law firm of Powell, Goldstein, Frazer and Murphy, LLP. I am also a registered patent attorney, with specializations in the areas of biotechnology, pharmaceuticals and software-related inventions. I represent clients in the biotechnology, pharmaceutical and information technology industries, including on patent policy. I am testifying today in my personal capacity, and the views I express are my own.

Between 1987 and 1998, I had the privilege of serving in the Patent and Trademark Office, first as an examiner in the biotechnology group, and later as an attorney advisor in the Office of Legislative and International Affairs. During my time in the PTO, I was involved in a number of initiatives focused on improving patent quality and our patent system.

- In 1991 and 1992, I was a staff member to the Advisory Commission on Patent Law Reform, established by the Secretary of Commerce to conduct a comprehensive review of the U.S. patent system. The Advisory Commission studied patent quality in a number of distinct contexts, including the quality of software-related inventions and the reform of the then-existing ex parte reexamination system. Certain concepts found in the Commission’s final report were reflected in the inter partes reexamination system established in 1999 by the American Inventors Protection Act (AIPA) (Pub. L. 106-113).

- Between 1993 and 1996, I led projects in the PTO to develop examination guidelines concerning the application of the utility standard in relation to pharmaceutical and biotechnological inventions, and concerning examination of software-related inventions. Both projects were designed to provide more workable examination procedures that could be used efficiently and effectively by examiners to produce higher-quality patent grants. Both initiatives were also designed to remove uncertainty in how PTO examiners were to evaluate and apply the law.

- In 1996 and 1997, I was detailed to the Office of the U.S. Trade Representative in Geneva, Switzerland. Among other things, I worked extensively on projects aimed at improving coordination among the major patent offices in their examination practices, particularly through the use of information technology solutions.

I believe my experiences in the PTO and in the international environment have given me certain unique insights and provided me with an understanding of the practical limits of Patent Office-administered procedures, particularly those focused on improving patent quality. In my testimony today, I will provide some observations on two areas where I believe the PTO can take steps to improve patent quality, namely, changes in examination practices and reexamination reform.

Introduction

Before turning to the issues of examination practices and reexamination reform, I would like to add my voice to those who are gravely concerned over the practice of not appropriating to the PTO all of the fees it collects. I congratulate you, Chairman Coble, for your leadership in the effort to preserve PTO funding, and congratulate your colleagues, particularly the Ranking Member, Mr. Berman, and Representative Lofgren, for their efforts in this cause.

As you know, over the past decade, more than $650 million in fees have been withheld from the PTO. Unlike other fee-based agencies, the PTO’s revenue is, by statute, designed to recover 100% of costs of the PTO doing its job. Stated simply, there are no “surpluses” that exist at the PTO. Taking money away means simply that Congress is making the PTO do its job with an amount of funding that Congress itself has determined to be inadequate. And since the PTO must conduct a comprehensive examination of each patent, the options available to the PTO to deal with this artificially created financial crisis each year are very limited.

After five years of significant diversions, we can now appreciate the impact of this extremely shortsighted practice. Patent application pendency has grown steadily over the past three years, and is projected to increase significantly next year. The PTO cannot pay overtime to examiners to help reduce the growing backlogs in high-growth areas, and has to cut examiner training and educational opportunities. Automation projects in the PTO have been delayed repeatedly, and when delivered, usually fall short of needs of the patent community. More dramatic, long-term reforms that the PTO should be developing to deal with its increased workload cannot be undertaken due to the costs of implementing currently mandated reforms and the uncertainty of the availability of funds to pay for those programs. For example, the PTO has had to implement the AIPA with no supplemental funding from Congress. The capacity of the PTO to implement additional procedures or changes to its examination practices are is thus significantly constrained by the funding problem.

The financial crisis created by the annual appropriations process, which should not exist in the first place, is preventing the PTO from living other than on a year-to-year basis. Indeed, the only reason we do not have a full-blown crisis at the PTO now is that patent and trademark application filings – and the corresponding fee revenue from those filings –keep increasing at a significant rate, making funds available in the current fiscal years beyond initial projections. This practice of keeping the PTO afloat today using fee revenue that is supposed to pay for work to be performed in the future cannot last. As soon as filings level off, the PTO will find itself in a crisis that has no option but to drastically increase patent pendency. I accordingly urge you to keep up the good fight, and support your efforts to ensure that the PTO is appropriated all the funds it collects.

Turning to the subject of this hearing, I would like to address two general issues that are pertinent to the issue of patent quality, and the more significant issue of public confidence in patent quality. These two issues are:

- reforms that the PTO can undertake using its existing authority over examination that will improve the quality of patents in certain sectors, particularly reforms that will yield a clearer record of the basis of the patent grant; and

- changes to the patent law to make reexamination a viable alternative to litigation in the Federal courts where questions of patent validity are discovered.

Improvements in both areas would help build greater public confidence in the validity of patents, particularly those in the area of computer-implemented business methods and other web-related transaction processes.

Setting Reasonable and Defensible Objectives for the Patent Examination Process

The PTO currently employs more than 3,000 patent examiners who must review more than 270,000 applications filed each year. The output of the Office is presently in the range of 145,000 patent grants each year. Recent trends showing annual increases in filings suggest that this workload is not going to change dramatically in the near future. First and foremost, workload defines what the PTO must do to carry out its statutory mandate.

In addition, there are a number of public policy determinations that the Congress has made that define the limits of what PTO must do to perform its statutory function.

- First, Congress has established that all patents issued by the PTO are presumed to be valid and are entitled to rely on that presumption when being enforced in a judicial proceeding. See, 35 U.S.C. 282. The presumption of validity is based on solid public policy and is of fundamental importance in protecting the value of patents in the United States. This presumption forces those who would try to avoid the effect of the patent by invalidating the patent to carry the burden of establishing, by clear and convincing evidence, that the patent is invalid. The statutory presumption removes uncertainty as to the patent in the marketplace, making patent validity an issue only when the patent is being enforced.

- Second, Congress has mandated that all United States applications be subjected to an examination. This standard of mandatory examination for each application filed differs from most other systems where a specific demand or request for examination must be presented before the Office will commence the examination process. In each such system, the patent applicant must present the request for examination by a certain cut-off date, with the consequence that the patent application will be considered “withdrawn” if no request for examination is made. In certain systems, the cut-off date is quite extended – several years after filing –which have earned such systems the label “deferred examination” systems.

The concept of “deferred examination” was debated by the 1992 Advisory Commission. The Commission concluded that the costs of deferred examination – in the form of potential delays in pendency (i.e., the period of time it takes for the PTO to examine the application, measured from filing date to issue date) and the uncertainty associated with a lack of resolution of the question of patentability –outweighed the resource-savings that would accrue if the PTO were to be authorized to operate under a deferred examination system.

- Third, the Congress has established a procedure whereby patents can be “reexamined” if a substantial new question of patentability is discovered after the patent has been granted. Conceptually, reexamination serves as the “safety valve” that is based on a presumption that some mistakes – primarily the failure to discover and consider relevant prior art – will be made by the PTO during the original examination, regardless of the thoroughness or efficiency of the Office. Patent reexamination was designed to apply to a relatively small percentage of patents, particularly when measured against the total number of applications that are filed.

- Fourth, Congress defines how much money the PTO will have to operate, which defines, among other things, the number of examiners it can hire. In this regard, I note that Congress actually defines the amount of money that the PTO collects – by setting the fees for patent applications – and the amount that the PTO can spend. As I will note below, there has been a substantial gap between these two figures that has operated to the significant detriment of the PTO, and, consequently, to the detriment of both individual patent applicants and the public.

The variables discussed above require the PTO to balance competing priorities in establishing workable and cost-effective patent examination practices. The most significant variable – the statutory presumption of validity -- requires the PTO to conduct a sufficiently rigorous and thorough examination of each application to ensure that the presumption of validity is deserved. When the PTO is not given sufficient resources, the primary effect is not a decrease in quality, but an increase in pendency. This is a consequence of how the examination process is structured today, where a finite number of examiners are responsible for processing the total number of cases filed, but with no flexibility to make “partially correct” conclusions on patentability. Consequently, when financial shortfalls occur, the PTO prioritizes its spending to ensure compliance with the core mission of issuing valid patents at the expense of development of new examination procedures that might make examination more efficient or increasing its staff to cope with the increased workload.

The fact that there are limits to what the PTO can do during examination of applications does not suggest that the PTO is incapable of reaching the correct result on patentability in a vast majority of patents. Instead, it has been my experience that patent examiners are ordinarily correct in their patentability determinations when they have considered all the relevant information that is pertinent to questions of patentability. This is one reason why many patent applicants provide the Office with copies of all relevant prior art prior to the examination of the patent application. The fully informed opinions of an Examiner are worth far more than an opinion on an incomplete record. Similarly, in arts which are well-established – particularly those technological fields having a sufficient body of patent and non-patent literature – there should be no general concern over the ability of the PTO to issue valid patents. Even in rapidly evolving technologies, as long as all relevant information was before the Office, there should be no concern that patents issued by the Office are valid.

The challenge, then, is to ensure that all relevant prior art and patentability issues are considered by the Office prior to issuing the patent. In addition, it is critically important that the public be able to determine from the record of examination – the so-called “file wrapper” – what issues were actually considered by the examiner. In this respect, there are some options that the PTO can explore as to how it does its job.

Patent Examination Reforms

Patent quality is dependent first and foremost on patent examiners who have sufficient training, experience and support. In general, the PTO has done a commendable job recruiting examiners and designing training programs that enable examiners to properly and correctly examine applications in an efficient manner. The PTO has also been successful in developing examination resources, such as prior art collections, which examiners use in performing their work. Unfortunately, funding problems limit the ability of the Office to hire new examiners, pay competitive salaries and enhance examiner resources. Thus, there is a limit to what the PTO can do, particularly in the face of significant increases in the number of application filings. This means that in order to ensure patent quality, the time for processing applications must necessarily increase – which has been happening at a steady pace over the past decade.

The PTO’s experiences in handling surges in patent filings in biotechnology in the late 1980s, software-related inventions in the mid-1990s, and most recently “business method” inventions in the past two years illustrate that the PTO also can adapt and refine its examination procedures to deal with new challenges. For example, in the field of biotechnology, the PTO developed examination practices, followed by special rules to require deposits of samples of living organisms where the invention could not be practiced without public availability of a sample of the living organism. In the field of software, the PTO has adopted practices related to the handling of computer source code, as well as guidelines to enable examiners to review and understand inventions in this sector. The recent steps taken by the Office in relation to “business method” patents represents another example of adaptation.

As noted above, when a properly trained PTO examiner has all relevant information, he or she can make an accurate conclusion on patentability of an invention. In this respect, the PTO faces its most significant challenge in the field of “business method” inventions – to the extent that such a category can be accurately defined. The challenge for a PTO examiner handling one of these applications is to quickly identify all issues pertinent to patentability, to find all relevant prior art and to make accurate prima facie findings as to compliance with patentability.

The PTO has already commenced a fairly aggressive approach to handling “business method” patent applications. I believe some additional steps can be taken by the PTO to facilitate the task of getting to these initial determinations for “business method” and other computer-based process inventions. One common theme among these suggestions is the goal of creating a more complete public record of the issues that were actually considered in the examination of the application and stimulating claim amendments that better define the invention. The importance of creating a complete and accurate prosecution history has grown significantly in the wake of decisions like Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 234 F.3d 558, 56 U.S.P.Q.2d 1865 (Fed. Cir. 2000), and are likely to be an integral element of ongoing efforts to improve patent quality.

In addition, I believe a number of specific efforts can be made by the PTO.

First, the PTO should train and encourage examiners to conduct their initial review of application to incorporate an identification of utility of the invention and an identification of the features or attributes of the invention that are needed to deliver that utility. A record of this assessment should be included in the first office action sent to the patent applicant to ensure that the applicant is aware of the examiner’s understanding of the invention. Thus, if the invention is a new way of managing mutual funds that allows for the immediate updating of a variety of holdings, the examiner should look to the specification to identify those aspects of the invention that must be present to deliver that “practical” utility. An absence of correspondence between the invention as described and as claimed should become part of the record for the patent applicant to either accept or refute.

At a minimum, this type of initial characterization step will help the Office focus its search and examination of the application. Having this occur prior to the performance of the search and initial formulation of rejections will help the examiner conduct a complete and accurate search of the prior art and bring the most relevant issues to the attention of the applicant for resolution. At best, this practice will induce applicants to be more precise in drafting claims and setting forth descriptions of their inventions.

Second, the PTO should review the applicability of certain patent law theories to business process inventions to create a more rigorous examination environment.

- Under 35 U.S.C. 112, first paragraph, a number of cases have explored the issue of “essential elements” as an element of the “written description” requirement. See, e.g., Gentry Gallery, Inc., v. Berkline Corp., 143 F.3d 1473, 45 U.S.P.Q.2d 1498 (Fed. Cir. 1998). The issue that could be explored by the PTO is whether the “essential elements” doctrine has any role to play in the application of 112, first paragraph, for inventions that fail to claim elements that are essential to delivering the asserted utility of the invention.

- Under 35 U.S.C. 103, the examiner must present a prima facie finding of non-compliance with the requirement of non-obviousness. How the PTO applies this prima facie finding can create a better examination record and more focused claims. For example, if an invention involves implementation of a “well-known” business process in a computer environment, but the claim does not incorporate any attributes of the computer environment that are unique to the implementation, a strong case can be made that the invention is prima facie obvious. The task for the applicant is to either prove that implementation in any computer environment is non-obvious, or to incorporate claim limitations that reflect an invention that would be non-obvious. Examiners can help applicants by pointing out the types of claim limitations that would capture these specific attributes of the invention to render the invention non-obvious.

Third, the PTO can explore use of additional procedures to encourage applicants to provide more specific responses and claim amendments when responding to a rejection. For example, under existing practice, an examiner may take “official notice” of certain facts. This is roughly analogous to judicial notice that a court may take when attempting to refine an issue for adjudication. PTO examiners rarely invoke this authority because under current rules and practice, the patent applicant can negate the substance of their notice by simply challenging the examiner to provide evidence that supports the examiner’s belief. Doing so wastes the examiner’s time, and does not further any progress toward resolution of the issues of patentability. The PTO could revise this practice to require an applicant to specifically contest the basis of the examiner’s assertion, such as by way of affidavit or by relying on a presumption that the examiner’s view as expressed will control conclusions made by that examiner if not specifically contested. All of these steps would improve the quality of the PTO’s work product by creating a record reflecting the clear position of the applicant on whether the examiner’s understanding was correct or inaccurate.

Fourth, the PTO can and should continue to develop new approaches to examination that will enable it to more efficiently examine applications directed to business method inventions while at the same time creating a complete public record of the patent examination. In this respect, I note that the PTO has recently revised Rule 105 (37 CFR 1.105) to enable the examiner to request from the applicant the provision of certain information independent from the context of a rejection. We believe measures such as these, which authorize the examiner to direct well-focused inquiries at the applicant, can yield a better examination record and more precisely defined patent claims.

In sum, the PTO should continue to explore ways of creating a fuller record in the file wrapper on key issues of patentability, and to provide examiners with the authority to extract more information about the invention, on the record, from patent applicants. Doing so should yield patents that are more focused and limited, and ultimately, instill a higher confidence in the public as to their validity.

Patent Reexamination Reform

Patent reexamination is a crucially important element of our patent system that helps to ensure high public confidence in patent quality. Reexamination was not designed to be a substitute for litigation in the Federal courts, nor was it supposed to provide the possibility of challenging any issue affecting the validity or enforceability of a patent. Instead, it was created to provide a limited, expedited alternative to the courts for reviewing patent validity in instances where there is a well-formed basis for the proceeding and where the PTO is competent to review the issue affecting patentability.

Congress thus established the patent reexamination system in 1980 as an ex parte proceeding that could be initiated only on the basis of patents and printed publications. See, P.L. 96-517. Once the PTO initiated the proceeding, only the patent owner and the PTO would participate. This structure made reexamination efficient and fast, but fundamentally unattractive to third parties that wished to vigorously review patent validity. Ex parte reexamination, now found in sections 302 to 307 of title 35, United States Code, thus became usable only in the clearest situations where an obvious patentability defect exists– in essence, where the prior art cited in the proceeding could not be interpreted in a way other than to find the patent invalid.

Noting these concerns, the Advisory Commission on Patent Law Reform recommended restructuring reexamination to make it more attractive to third parties. This took the form of two general recommendations:

1. The Commission recommends that the basis for and scope of reexamination be expanded to include compliance with all aspects of 35 U.S.C. § 112, except best mode. This will ensure that all significant issues related to patent validity that are commonly raised and considered during the original prosecution may be addressed in a subsequent reexamination of the patent.

2. The Commission also recommends providing third parties with more opportunities for substantive participation during the reexamination proceeding. The objective of the Commission in this regard is to build confidence in the reexamination process so that third parties will be inclined to raise patent challenges in this forum rather than through litigation. The primary benefits of this will be reduced costs of resolution of patent validity issues, and a more rapid determination of rights. However, the Commission recommends that the increased third party participation be implemented through a balanced approach to ensure that the reexamination process fulfills its intended role.

There was an extensive amount of debate in the Commission as to the “best” type of third party reexamination system to establish, with some parties advocating full-blown inter partes proceedings while others advocated a much more restricted proceeding having very limited participation by third parties (i.e., parties other than the patent owner). In the end, the Commission favored a relatively restricted model, noting the limited ability of the PTO to effectively control parties in an unrestricted proceeding.

The balance in the Commission’s findings was also reflected in part in the inter partes reexamination implemented by Congress in 1999 through the American Inventors Protection Act (P.L. 106-113). The AIPA’s version of inter partes reexamination, however, differed in several material ways from the model envisioned by the Advisory Commission.

- First, the AIPA forecloses the ability of a third party to appeal a determination in favor of the patent owner to a court. Thus, for third parties, the proceeding starts and ends in the PTO. See, 35 U.S.C. 315(b).

- Second, the AIPA imposes a far more draconian legal estoppel than was recommended by the Advisory Commission. Under the AIPA, a party is barred from raising issues that not only were raised but could have been raised during the proceeding, and this bar applies as soon as the PTO finds a basis for initiating the proceeding. In addition, third parties are estopped from taking the positions in relation to facts considered during the proceeding that are inconsistent with those taken in the context of the reexamination proceeding. Both forms of estoppel were designed to place onerous restrictions on the ability of third parties to defend themselves from patents that proceed through an inter partes reexamination. The Advisory Commission, by contrast, recommended imposing an estoppel only to issues actually addressed in the proceeding, and did not envision severe sanctions against parties that use the proceeding.

- Third, the AIPA did not extend the scope of the reexamination authority beyond patents and printed publications. This stands in contrast to the recommendations of the Advisory Commission to permit reviews based on those issues in which the PTO has a demonstrated expertise, including issues under 112, other than best mode.

The inter partes proceeding thus established by the AIPA was a far more restrictive (and restricting) mechanism for reviewing patent validity than was envisioned by the Advisory Commission or most other parties favoring reexamination reform. As a consequence, many of us hoping for creation of a fairer and more effective procedure were disappointed by the results of the AIPA. Simply stated, to be a usable system, the estoppel provisions must be scaled back to what would ordinarily attach as res judicata in a legal proceeding, and the third party must be given the right to appeal findings from the PTO to the Federal Circuit.

In this respect, I would like to offer a number of observations on what could be done to improve the inter partes reexamination system. I believe it is possible to amend the existing authority to make it workable, and would favor legislation that starts from this basis, rather than a new authority that would exist alongside the ex parte and inter parties reexamination authorities. In addition to removal of the restrictions noted above, I believe the amended reexamination authority should incorporate or retain the following general attributes.

- The procedure should permit challenges only after the issuance of the patent. The experiences of American companies in Japan reveal that a proceeding that allows third parties to tie up patent applications in challenges seriously undermines the value of patents, is unfair to the patent applicant and is unmanageable by patent offices.

- The procedure should be available for any patent, rather than being limited to patents in specific technological fields. Restricting the procedure to certain types of patents would likely raise concerns under the non-discrimination provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO) Agreement. Moreover, any procedure that is balanced, fair and effective should be available for any patent issued by the PTO.

- The procedure should permit challenges based on the existing grounds, as well as other issues implicated by public use or sale, provided that such challenge are grounded on objective factual evidence that can evaluated by the PTO. In this respect, I note that many hold the belief that a substantial amount of “prior art” in the business method field is not captured in traditionally printed publications or patents. Allowing challenges based on evidence that clearly demonstrates that the invention was in public use or was sold before the patent was sought would help answer this issue definitively. I would note that to be viable as a procedure administered by the PTO, the third party would have to supply evidence that could be objectively evaluated as to its scope and content. Once supplied, the PTO could evaluate whether the evidence demonstrates that the invention does not meet the novelty requirements under section 102, or the requirement for nonobviousness under section 103.

- The procedure should also permit challenges to be based on non-compliance of a claim with the requirements of 35 U.S.C. 112, other than best mode. A patent claim that is invalid because it is not enabled or has no written description should be challengeable through a reexamination proceeding. Since opinions on or evidence related to compliance of a patent with 112 are likely to become more complicated with the passage of time, it would be appropriate to put a time limit on when challenges under these additional grounds could be made (e.g., 9 to 24 months after the patent is granted). In addition, like the case with non-patent, non-printed publication reexaminations, I believe it will be crucial for third parties to provide evidence to support their claims, where such evidence meets certain objectively measurable criteria. For example, the PTO might require 112-based reexaminations to be presented in a form demonstrating that prima facie case of invalidity exists for the challenged patent claim, and to require evidence supporting the prima facie assertion to be included in the request for reexamination.

- The procedure must continue to require the PTO to find that a substantial new question of patentability exists in relation to one or more patent claims. It is crucial, in my view, to retain this “initial finding” by the PTO before starting a proceeding to ensure that third parties cannot harass patent owners with groundless or weak challenges. A “no holds barred” standard for any period of time would be objectionable to many patent owners, and would unfairly prejudice the enjoyment of patent rights.

- The procedure should be available to review any patent that remains in force on the date the law takes effect. Essentially, any patent that can be challenged through litigation should be reviewable through the new procedure.

- The PTO should be given a limited authority to review and resolve conflicts over facts that are material to the issue of patentability. The PTO Board of Patent Appeals and Interferences currently can conduct hearings where both sides can question a witness on a factual issue. I believe the inter partes reexamination procedure would be significantly enhanced by reserving to the PTO the right to conduct a limited form of this type of hearing. Such an authority could only be invoked by the PTO, and would be limited to having the Board issue a finding that resolves a contested fact upon which the reexamination is based. Under no circumstances should this type of authority enable the patent owner or the third party to conduct any type of discovery in the PTO, as such an authority would undercut the basic structure of the proceeding.

- The procedure should permit reconsideration of information originally considered by the PTO where the information clearly shows that a significant question of patentability exists. Such a provision would have the effect of overruling the decision of In re Portola Packaging, 110 F.3d 786 (Fed. Cir. 1997), which held that the PTO was not permitted to initiate a reexamination on the basis of information considered during the original examination. The Portola ruling has been widely criticized for placing an unrealistic and undesirable prohibition on the use of reexamination to consider information not fully considered in the original examination. The law should be amended to permit the PTO to have this authority to conduct a reexamination where a convincing case is made that the information was not fully considered in the original examination.

- The PTO should be required to conduct reexaminations within a finite amount of time (e.g., not more than 18 to 24 months), with exceptions only in the most complicated proceedings. Imposing a time limit on the duration of the proceeding, along with strict enforcement of time limits for third party responses in the proceeding, will help prevent reexamination from becoming a way of entangling patent owners. Additional fees for expedited processing might be another way of handling the need for expedited conclusion of the procedure.

In addition to these points, I believe it is important to avoid any restructuring to our reexamination system that would result in importation of the negative aspects of the opposition systems administered by the European Patent Office and other patent offices. Most importantly, Congress should avoid any restructuring that makes challenging a patent a facile and routine event. We have found that oppositions in Europe, for example, are almost a cottage industry, where almost any patent issuing from a specific party will find itself entangled in an opposition proceeding, whether justified or not. Further, the challenging party should identify itself, not allow its identity to be shielded under cover of a straw man as in European oppositions. The requirement for a substantial new question of patentability to be found by the PTO in a non-reviewable decision should ensure that a restructured U.S. system does not become such a procedure.

I also believe that the restructured reexamination system must be designed to be a complement to an effective original examination system. Stated another way, the percentage of patents undergoing reexamination should not be so high as to overwhelm the capacity of the Office to perform reexaminations, especially in view of the limitations in funding that the PTO faces each year. I believe it would be inappropriate to design the reexamination procedure from a perspective of being a routinely invoked mechanism for “correcting the errors” of the PTO.

Conclusions

Patents are crucially important to so many U.S. industries and inventors. Inherent in this statement is the recognition that these patents must be valid and enforceable to have value to their owners and to respect the right of third parties. This is why patent quality and mechanisms for ensuring patent quality are so important.

In my remarks above, I discussed a range of ideas that can contribute to improved patent quality. I believe that reexamination reform, in particular, holds great promise for improving not only patent quality, but also increasing public confidence in patent quality. Achieving a higher degree of public confidence in certain areas, such as “business method” inventions, is the most direct and effective way of responding to concerns expressed over these types of patents. Attempting a more drastic change to our patent system, such as exclusion of business methods from eligibility, would unfairly punish those inventors that actually have developed a useful, valuable and innovative new business process. Moreover, exclusions invariably do not achieve the end sought – patent lawyers and inventors will certainly recast their inventions to fall within the redefined scope of eligibility.

In view of these points, I believe Congress can most effectively increase public confidence in our patent system by making legislative changes to our reexamination system. I believe this legislative effort should be complemented by changes to the patent examination process to yield a higher quality patent examination. The latter effort is possible under existing authority conferred on the PTO, and should not be pursued through amendments to the patent code.

Thank you for providing me the opportunity of sharing my views on the important issues of patent quality and reexamination.