Comparative Analysis Shows US Patent Office Scores Poorly On Patent Quality

Quality across patent systems has been understudied but a new methodology put forward by the former chief economist of the European Patent Office suggests that the EPO provides higher quality services than its United States and Japan counterparts. Efforts at collaborative work between patent offices are being made but mutual recognition might not be possible or desirable without some harmonisation in the way the different systems operate.

In the framework of the World Intellectual Property Organization (WIPO) series on “The Economics of Intellectual Property,” Bruno Van Pottelsberghe, now a consultant at Bruegel, and a professor at the Solvay School of Economics and Management at the Université Libre de Bruxelles, presented his research on “the quality factor in patent systems” at WIPO on 16 June.

Ensuring patent quality has been a preoccupation of economists in recent years, said Carsten Fink, WIPO chief economist. The rapid growth in patent applications and subsequent patent backlogs worldwide, in developed and developing countries alike, have led IP offices to try to find ways to address the problem, he said.

Patent offices are facing a steady increase in patent filings, and applications are including more claims (defining the scope of the patent), Van Pottelsberghe said. In response, some patent offices have entered into collaborative projects, such as the Patent Prosecution Highway (PPH) – agreements to share work and establish mutual recognition processes. However, there are important structural differences between countries.

In a draft paper on the subject, Van Pottelsberghe focuses on three patent offices: the US Patent and Trademark Office (USPTO), Japan Patent Office (JPO), and EPO. Each year, the USPTO processes 11 million patent claims, while the JPO processes four million claims and the EPO five million. The current backlog at the EPO is the same as the USPTO’s was in the 1990s, when the system was not yet under pressure, the paper said.

The hypothesis of a “vicious circle” of the US system has been advanced by some economists, Van Pottelsberghe said, in which low quality examination leads to more filings, which in turn would reduce further quality standards because of the work overload of examiners.

The paper proposes a two layer analytical approach to analyse the performance of patent systems: compliance with legal standards on the one hand, and how the system is constructed to achieve compliance in a transparent way on the other hand.

When applied to the three targeted IP offices, the results obtained with the methodology suggest that the EPO provides higher quality service than the USPTO, the JPO standing in the middle ground. According to the paper, USPTO is facing the most significant backlog problem.

Several factors can explain those results, Van Pottelsberghe said. First, there are differences in the patentability of subject matter, with much less restrictions on patents in the US than elsewhere in the world, leading to more patent requests. The strategy for prior art identification is also different in the three systems. In Europe, the examiner has to establish the relevant search report; in Japan, the search report is outsourced to the private sector; and in the US, it is the duty of the applicant to disclose the state of the art that is related to his invention. That could lead to an inflated list of references making the work of the examiner more difficult, or missing key technical references, according to the paper. The EPO also has three official working languages, which facilitates prior art research.

Another factor that might explain the different rating of the three offices is the incentives for examiners and their social recognition. The paper found that there is a roughly 33 percent turnover at the USPTO and the examiners had an average of three years experience, while at the EPO, “they consider that after five years a patent examiner” is effective, Van Pottelsberghe said. In Japan, according to the paper, the examiners have a “fairly high wage and social recognition.” The same is true at the EPO, where examiners have “very high wages” and a set of advantages. In the US, the wages “are not particularly” competitive and the position is often used “as a stepping stone” to higher-paid jobs in the private sector.

The fee policies can also explain the higher number of patent applications in the US, as relative patent costs are much cheaper there than in Europe, with Japan in the middle.

According to the paper, in Europe, “more restrictions on patentable subject matters, a much higher rigour in the identification of prior art, and high fees,” translate into less than twice the patent applications than at the USPTO.

PPH agreements and efforts towards mutual recognition might carry a danger of a lower common denominator for the patent system if there is no firm consensus on “what the patent system should be,” Van Pottelsberghe said, calling for a systematic approach.