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Inside the Recent USPTO Reforms: Heightened Requirements for Patentability, but Good News for Small Businesses

Posted on Jul 1, 2021 in Articles

Changes are coming for the United States Patent and Trademark Office (USPTO).  Within one week, the Supreme Court issued a holding redefining the importance of administrative patent judges (APJs) at the Patent Trial and Appeal Board (PTAB), and the Senate Subcommittee on Intellectual Property held a hearing to discuss proposed changes to the USPTO’s patent system.  The result?  USPTO reforms, safeguards for small businesses accused of infringement, and heightened standards for written description, enablement, and claim definiteness for patent applicants.

On June 21, 2021, the Supreme Court held in United States v. Anthrex, Inc. that APJs held too much discretionary authority under the Constitution’s Appointments Clause. [1]  APJs make up the PTAB, which reviews examiner decisions on patentability. [2]  Prior to this holding, the Secretary of Commerce appointed APJs, but neither the Secretary nor USPTO Director could review their decisions or remove them at will, as would be the case with most inferior officers. [3]  The Constitution’s Appointments Clause requires inferior officers to be subject to supervision from either the President and/or executive officers; APJs were not receiving this supervision, giving them responsibilities akin to executive officers. [4]  As APJs are not currently approved with the advice and consent of the Senate, however, the Court found APJs could not have such unreviewable authority when deciding proceedings such as Inter-Partes Review. [5]  To remedy this inconsistency within the USPTO, the Supreme Court held APJ decisions must be reviewable by the USPTO Director. [6]

While the Supreme Court’s decision already kickstarted some USPTO reforms, the next day, the Senate Subcommittee on Intellectual Property held a hearing to discuss further internal reforms. [7] The discussions opened when Chairman Leahy—co-author of the Leahy-Smith America Invents Act (AIA)—expressed concern with a growing number of poor quality patents. [8]  One notable example included hundreds of patents owned by Theranos, a company currently accused of fraud, based on blood-testing technology that was not scientifically validated in peer-reviewed studies. [9]  Chairman Leahy stated, “What’s more, [the Theranos patents] have been asserted against actual inventors and innovators who are working on steps that can be taken to curb-COVID-19 . . . [w]e are scrambling to respond to a devasting global pandemic, millions of lives at stake, and genuine medical technology designed to help us understand the virus’ spread was nearly blocked by patents for a fake invention.” [10]

Another witness at the hearing discussed that the Vermont Attorney General’s office received dozens of complaints from small businesses and non-profits who had been accused by forty different LLCs—all with an “alphabet soup” of letters in the entity title—of patent infringement. [11]  Again, many of the patents issued were suspected to be poor quality patents, resulting in an FTC investigation into the various entities. [12]  The witness stated, “Receiving a letter like this puts a small business in a very difficult position.  They wouldn’t know if the threat of litigation is real.  The amount of money is significant—but  probably a lot less than they would have to pay to defend a lawsuit.” [13]

The Senate Subcommittee discussed multiple proposed improvements to the USPTO to heighten quality control standards. [14]  One remedy was to eliminate fee diversions, permitting the USPTO to invest more resources into hiring more examiners and improving training. [15] Additionally, examiners would be required to be more stringent when evaluating issues related to 35 U.S.C. § 112, increasing the standards for written description and enablement requirements and more strictly evaluating the claim scope of applications in view of their specifications. [16]  One proposal even centered on the idea of a “gold plated patent.” [17]   Applicants selecting this option would undergo a more costly and extensive application examination but in return would receive a patent that would be “virtually impossible to challenge.” [18]

Thus, while the USPTO undertakes its own reform efforts, applicants would be prudent to take greater measures to ensure the minimum requirements for written description, enablement, and definiteness are not only met, but exceeded.  On the opposite end of the spectrum, businesses accused of infringement—particularly small businesses with limited budgets—should always consult a registered U.S. patent attorney to evaluate the strength of the patents asserted against them before determining whether to pay costly licensing fees or seek legal remedies. While applicants can expect greater hurdles to patent acquisition, the proposed USPTO reforms may result in increased clarity for both patentees and potential infringers.

[1] See generally United States v. Anthrex, Inc., No. 19-1434, slip op. (S. Ct. June 21, 2021), https://www.supremecourt.gov/opinions/20pdf/19-1434_ancf.pdf.

[2] Id. at 1.

[3] Id. at 6-8; see also U.S. Const. Art. 2, § 2, cl. 2.

[4] Anthrex, No. 19-1434, at 12-14.

[5] Id. at 18-19.

[6] Id. at 20.

[7]  Protecting Real Innovations by Improving Patent Quality: Hearing Before the Subcomm. on Intellectual Property, 117 Cong. (June 22, 2021) (Statement of Patrick Leahy), https://www.judiciary.senate.gov/meetings/protecting-real-innovations-by-improving-patent-quality [hereinafter Statement of Patrick Leahy].

[8] Id. (Statement of Patrick Leahy); see also Protecting Real Innovations by Improving Patent Quality: Hearing Before the Subcomm. on Intellectual Property, 117 Cong. 2-3 (June 22, 2021) (Statement of Jorge L. Contreras), https://www.judiciary.senate.gov/imo/media/doc/Contreras%20-%20Written%20Testimony%206-22-2021%20final.pdf [hereinafter Statement of Jorge L. Contreras].

[9] Statement of Jorge L. Contreras at 2-3.

[10] Statement of Patrick Leahy.

[11] Protecting Real Innovations by Improving Patent Quality: Hearing Before the Subcomm. on Intellectual Property, 117 Cong. 1 (June 22, 2021) (Statement of Bridget Assay) https://www.judiciary.senate.gov/imo/media/doc/2021%2006%2022%20Asay%20Testimony.pdf [hereinafter Statement of Bridget Asay].

[12] Id. at 1-2.

[13] Id. at 2.

[14] Statement of Patrick Leahy.

[15] Protecting Real Innovations by Improving Patent Quality: Hearing Before the Subcomm. on Intellectual Property, 117 Cong. 4-5 (June 22, 2021) (Statement of Julio A. Garceran) https://www.judiciary.senate.gov/imo/media/doc/Garceran%20Written%20Testimony%20on%20Improving%20Patent%20Quality.pdf [hereinafter Statement of Julio A. Garceran].

[16] Id. at 5; see also Protecting Real Innovations by Improving Patent Quality: Hearing Before the Subcomm. on Intellectual Property, 117 Cong. 5-6 (June 22, 2021) (Statement of Troy R. Lester) https://www.judiciary.senate.gov/imo/media/doc/Lester%20Testimony.pdf [hereinafter Statement of Troy R. Lester; see also Statement of Jorge L. Contreras at 10-11, 13-14

[17] Statement of Patrick Leahy; see generally Statement of Julio A. Garceran, Statement of Troy R. Lester, Statement of Jorge L. Contreras.

[18] Statement of Patrick Leahy.

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