Revisiting the Presumption of Validity

Of all the proposed reforms in patent law, one of the most controversial reform measures involves the level of deference courts should give to PTO decisions. More specifically, ever since the Federal Trade Commission's 2003 report (link) on innovation recommended abolishing the presumption of validity of issued patents, a slow but steady measure of support has grown since then (e.g., see "gold plated patents") .

Most recently, Alan Devlin, writing for the Southwestern University Law Review penned "Revisiting the Presumption of Patent Validity" where he expands on previous studies, and provides additional reasoning the "clear and convincing" presumption is validity is not so great:

Who are we kidding with the presumption? Devlin correctly points out that the presumption emanates from the congressional command via 35 U.S.C. § 282 that "[a] patent shall be presumed valid." However, the level of deference to be applied has been left to judicial interpretation - while the current "clear and convincing evidence" standard is settled law, previous standards, such as "a preponderance of the evidence," "substantial evidence," and "clear and cogent showing" have been employed. Essentially, the Federal Circuit explained that the current level of deference is due to a "qualified government agency presumed to have properly done its job . . . [where examiners] are assumed to have some expertise in interpreting the references and to be familiar from their work with a level of skill in the art and whose duty it is to issue only valid patents."

Devlin argues that the ex parte nature of the prosecution process creates informational asymmetries that compromise examiners' ability to distinguish high- and low-quality patents. Additionally, the levels of PTO funding, coupled with the large number of patent applications received each year, leads to an examination process having a "strikingly terse review." The average time spent on a given application by an examiner has been subject to a number of calculations, where the assessed time lies between 16-18 hours. Devlin posits that "[i]t is difficult to understand how a sufficiently detailed examination can take place over a time frame of less than twenty hours . . . especially when one considers the extent of the prior art and the oft-encountered complexity of many claims."

How good is the presumption anyways? Devlin points out that roughly half of all litigated patents are judicially determined to be invalid despite the presumption. Other statistical studies found that 46% of patents litigated on the basis of anticipation were invalidated.

More importantly, Devlin argues that the PTO itself places little stock in its work product. Inter partes and ex partes reexaminations see the PTO revisiting its earlier assessment of an awarded patent and it proceeds without any preconceived presumption as to the validity of its earlier determinations. The same is true of reissuances. Devlin then poses the following:

[I]f the PTO considers its prior decisions to be unworthy of any presumption as to their accuracy, why should the courts? What makes the question all the more intriguing is that the extent of the current presumption is entirely judge-made. The PTO did not request it, and Congress has not required it. Combined with the preceding analysis pertaining to capacity and resource constraints, in addition to the numerous other impediments to effective PTO ex parte review, the presumption must surely be revisited.

As the presumption of validity did not arise from congressional mandate, no legislative action is required for its elimination. Either the Federal Circuit or Supreme Court should hold that one seeking to invalidate a patent face no more than a burden of proof on the balance of probabilities. Alternatively, the PTO itself should emphasize the presumption it deems appropriate given the level of scrutiny it has been able to subject applications to. Given the non-existent presumption that the PTO holds itself to in revisiting its prior decisions, it should request that the courts do likewise, at least insofar as the prosecution process continues to operate in its current form.

Devlin then throws his support behind the concept of a "gold-plated patent," where an applicant would be required to conduct a comprehensive search of prior art, and submit to a "far higher fee" to fund the necessary PTO labor. Additionally, "gold-plated" patents would be barred from any continuations.

While this concept was previously introduced by professors Lichtman and Lemley (see below), Devlin proposes some twists. For one, applicants would be required to search and report only on "analogous arts", where the determination of analogous art is made the same way as for obviousness. Consequently, under Devlin's proposal, a primary initial factor in proving invalidity should be whether "the defendant can point to an anticipatory reference in the analogous art." Furthermore, such invalidation could only take place on the basis of "analogous art that was reasonably within the inventor's potential purview." This way, holders of "gold-plated patents" would have a minimized risk of invalidation based on obscure patents or publications that may cover areas entirely unrelated to the field within which a given invention is discovered.

Devlin concludes:

The two-tier approach would significantly improve the quality of patents granted with presumed validity, would allow for cheaper capitalization and marketing of valuable products by such patentees, would largely deny trolls ownership of strong patents, and would enable the courts to more cheaply, accurately, and effectively invalidate default patents mistakenly granted by the PTO. Combined with a new law depriving obscure prior art of its preclusive force, the gains from implementing such a two-tier system would be compelling. The shortcomings associated with this system are worthy of legitimate debate, but have been shown to be largely unworthy of prohibitive concern.

Read/download Alan Devlin, "Revisiting the Presumption of Patent Validity" (link)

See also, Douglas Lichtman and Mark A. Lemley, "Rethinking Patent Law's Presumption of Validity" (link)