Patent Registration System: Panacea or Problem?
A review of the (scant) evidence surrounding patent registration systems, and how AI can fix examination better than eliminating it
The last two months have been relatively chaotic for USPTO. Its leadership has been completely changed out, with a new Acting Director, the nomination of John Squires as Director, and others. In any case, we can expect patent policy to be unusually important in the Trump Administration—Lutnick relied on patents to help revive Cantor Fitzgerald in his now-storied turnaround. It is now well-known in the industry that Lutnick believes the patent office has become inefficient, with a particular interest in pendency times. One shocking rumor is Secretary Lutnick’s supposed interest in changing the patent office to a registration system. IP Watchdog’s Gene Quinn said there is “zero sunlight on matters” between Squires and Commerce Secretary Howard Lutnick; if so, we should really pay attention to this particular rumor.
The idea of a registration system gets to a surprisingly longstanding debate as to the right balance between ex-post and ex-ante patent evaluation. Some scholars, like Mark Lemley, have long argued for “rational ignorance” in the patent office and a “soft review” of patents, though his famous article stops short of arguing for a true registration system. Some have argued that, with the complex mix of ex-post review, that the US is already nearly a de facto registration system anyways.
What is missing from this debate is evidence. What do we know about examination today and its costs and benefits? And are there other ways the patent office could be more efficient?
Registration pending?
What is a registration system? In a patent registration system, patent applications are reviewed primarily for meeting the procedural requirements for registration—typically formalities—with other issues like validity handled ex-post in the court system. In other words, imagine a patent system where getting a patent hardly required an attorney and where you didn’t know whether the patents even protected your IP rights until they were litigated.
Generally, the arguments for registration systems tend to focus on arguments of efficiency. Overall, the main argument for a registration system is that the current examination system takes too long process patents and is too expensive, especially since one review by ex-judges found that valid claims were more likely to be rejected than invalid claims allowed. There are also arguments that registration systems promote equity, particularly because registration systems are cheaper for pro se applicants to access, both because attorneys can be expensive and because attorney quality has a measurable impact on the likelihood of affecting the likelihood of a patent getting granted (to say nothing of the scope of the claims). There are also some more exotic arguments about efficiency. One article from 2003 argued that a registration system would theoretically incentivize patentees to better pursue claims by reducing administrative costs and shifting the burden to opinion of counsel, similar to self-certification in building permits.
Patent registration systems are quite rare, which makes them hard to study—when I first heard of registration systems without examination I felt like a fish who had just heard about water and some strange place without it. The few countries with registration systems tend to be ones that have low volume, like Nigeria, which saw fewer patent applications in 2020 than 2012, or South Africa, which is actually now introducing an examination system. One other surprising example is the United States itself, which started its patent system as a registration system before abandoning it in 1836. The United States originally1 adopted a British-style patent registration system for several reasons—patents were viewed as a property right and there was an express goal of making patents cheaply available to even those with humble means—but the “disastrous experience,” as Berkeley’s Robert Merges described it, of excessive litigation of the resulting low-quality patents caused Congress to eventually abandon registration. When Senator John Ruggles created the patent office in 1836, he also effectively invented the patent examiner, and for a while it was a popular job—some were even celebrities!2
Given the paucity of registration systems, there aren’t any studies comparing examination and registration systems. That doesn’t mean that we are flying completely blind with respect to evidence, however. The data doesn’t look good for registration systems. The only serious quantitative treatment I could find was a study from Duke Law School by Michael Frakes and Melissa Wasserman in 2019 found that the cost of ex-post litigation was higher than the cost of increased examination and that, according to their model, more examination would more than pay back a lack of litigation costs. If we think of registration as a system with zero examination costs, then this study implies that we would be going in the wrong direction with registration. The Lemley argument for rational ignorance relied on the simple observation that most patents do not appear to be used, but the Frakes and Wasserman study accounts for the difference in costs to come to a more complete view.
Whether or not adopting a registration system is a good idea, it is probably not something that the Administration could pursue on its own without Congressional action. 35 U.S.C. § 131 says that “The Director shall cause an examination to be made of the application and the alleged new invention.” The law, in other words, is clear that some level of examination is required. While USPTO can waive its own rules, change the MPEP, and loosen its examination standards, it must still comply with the statutory requirements, which seem to require some level of examination for the non-procedural elements of a patent.
In other words, a registration system probably wouldn’t help make the patent office more efficient and probably can’t get done.
So what can? In the past, companies like Cloudflare have started new initiatives like prior art bounty programs. Some have proposed the use of new technologies like blockchains to make patent data more open and therefore easier to register relevant prior art. In general, those who want to reform the patent system should not dispair. New reforms can take hold—ex-parte review was only introduced in 1980 and the post-grant review aspects of the PTAB were introduced in 2012 by the AIA.
When it comes to technology, one idea that has been floated around is the use of AI-assisted substantive prior art search and examination. While some have mocked this idea, it is actually the single most compelling thing examiners can do to enhance their efficiency. Although the previous administration banned the use of generative AI by patent and trademark examiners, we may see a rescition of that memo (at least for specialized, USPTO-approved tools).
Examiners are overworked, but an analysis of the how they spend their time shows that a majority of their efforts are spent on generating the first office action. According to a USPTO study, nearly 50% of all examiner time on a case are spent on just conducting prior art searches and drafting the initial rejection letter, about 25% each. These are both tasks that AI excels at. It is very feasible for AI to conduct an initial, comprehensive search based on the claims to find, rank prior art, and provide an initial mapping against the claim elements much faster than a human can. While examiners will need make the final determination on their own and may conduct additional searches, this can get the easy stuff out of the way and allow the overal caseload to get cleared faster. AI could also provide a first cut at other types of analysis, like identifying lack of antecedent basis and recognizing new matter in claim amendments. AI also excels at drafting, accessing boilerplate, and querying a corpus of guidance, like the MPEP and the law. This means that once they have their arguments, examiners can spend less time drafting and have AI turn their arguments into clear, well-formated, standardized rejection (or allowance!) letters, with AI pulling in the appropriate citations to prior art or the MPEP. As AI gets more advanced, it can even help junior examiners take advantage of strategies more commonly used by senior patent examiners, like examiner amendments, by suggesting when they may be appropriate.
The need for a more efficient search and examination process clear, but a registration system will hurt more than it helps. But for those at the Trump Administration who read Nonobvious, it is time to take the idea of AI-assisted examination seriously, especially at the front end of the process.
Prior Art
Several weeks ago, we covered USPTO’s overarching AI strategy, observing that it wasn’t much of a strategy at all. Since then, others have echoed this opinion, including Dennis Crouch at PatentlyO, who referenced Nonobvious in a post. Last week, Acting Director Coke Morgan officially rescinded the short-lived AI strategy. With a new incoming director and an Administration that has many staff who care deeply about patents, there is a strong opportunity to bring a real AI strategy to USPTO. As I argued in this week’s main piece, search and substantive examination would be a great start.
Weekly Novelties
Two different George Church startups have run into issues over IP conflicts. This is a fascinating story of conflicts of interest, unclear IP overlap, and what happens when you have one particularly prolific inventor at the center of too many startups (Fierce Biotech)
In no surprise, an appeals court held in Thaler v. Perlmutter that DABUS could not autonomously receive copyright protection. More important for practitioners, Thaler’s later-asserted human input was waived because it was not asserted in the original filing with the Copyright Office (Professor Edward Lee’s writeup)
White and Case joined the defense team for ROSS in its AI copyright lawsuit against Thompson Reuters, and asked the judge to certify copyrightability and fair use for an interlocutory appeal (Law.com)
Secretary Lutnick fired all members of the USPTO Patent and Trademark Advisory Committees (PPAC and TPAC). Although both committees serve at the pleasure of the Secretary, and the committees are supposed to regularly rotate, it is unusual to clear out everyone at once (PatentlyO)
Oral arguments were heard this week in Google’s appeal against EcoFactor, arguing that expert testimony was improperly permitted. The oral arguments were not favorable for EcoFactor, though it was not immediately clear how the court would rule or how narrow the ruling would be (Larkin Hoffman)
As the pharma patent cliff continues, pharma braces for the consequences. Novartis announced layoffs of 427 employees as its patent for Entresto (North Jersey)
Why has the Biosimilars Act of 2010 not had the same impact on biosimilars that Hatch Waxman had on generics? One intriguing argument—biomanufacturing patents that may cover the manufacturing of many biosimilars (Nature Biotechnology)
Okay, okay, originally originally it was an examination system where the examiner was Thomas Jefferson, who rejected about 2/3 of all applicants. They would typically meet with Jefferson personally and be required to present a working model. Needless to say, this was quite time consuming for the Secretary of State, which was one additional reason the United States moved to a registration system for a while.
Patent examination was a prestigious job in the 19th century, in part, because before the rise of industrial science, it was not easy for someone scientifically trained to get a steady income using their scientific knowledge. This changed with the advent of the industrial lab, which was pioneered by Thomas Edison.
