privatize examination, make bad patenters pay

[PILCH Hartmut <phm@a2e.de>]

I'd be interested to hear what you think about the following part of the
proposed Call for Action:

    We are worried because

        1. The patent granting process remains slow, expensive and 
inefficient; a
           rapidly growing stream of broad monopoly claims with falsely 
presumed
           validity is burdening innovation worldwide;

    We call on Europe's legislators to ensure that

        2. The European patent system be organized as unbureaucratically as
           possible; this could be achieved by [9]privatizing examination and
           making polluters pay;

    --------------

    [9] 
        Privatize Examination, Make Bad Patenters Pay
        http://a2e.de/ffii/epla/cpedu/exam


       Privatize Examination, Make Polluters Pay

       The system of obligatory patent examination should be replaced by a 
system
       where patents are registered free of charge on the Internet, and 
examination
       is performed by private parties who, when they find an invalid patent 
claim,
       are entitled to charge an examination fee from the patentee

    Transition Path

         * step 1a: The winner of a nullity (= patent invalidity) lawsuit is
           reimbursed not only for his lawyer fees but also for his 
examination
           efforts. A standard for examination fee calculation is adopted.

         * step 1b: A procedure for online registration (including 
modification) of
           patent claims and nullity claims is defined and operated alongside 
with
           traditional registration.

         * step 1c: Patent offices outsource their prior art search work, the
           respective departments become independent enterprises.

         * step 2: The invalidator is entitled to payment of an examination 
fee.
           This means that the invalidator can charge the fee from the 
patentee by
           a simple invoice, without necessarily going to court.

         * step 3: Patent examination is no longer performed by patent 
offices. The
           only remaining function of national patent offices (and a possible 
EU
           patent office) is that of maintaining the online registry system. 
By
           consequence, the EPO is dissolved.

    Resulting Procedure in Detail

       The contestant C has found a patent claim of patentee P to be invalid. 
C
       must be accredited as a qualified examiner with an account at the 
patent
       registry. C publishes an examination report with a new set of claims 
and an
       request for payment of examination fees at the patent registry. The new
       claims immediately replace the old ones as the new reference point for
       examination, aned C takes over the full liability for the validity of 
these
       patent claims. The court in charge also is determined as a result of 
the
       registration.

       P can either accept C's new patent claims or decide to register his own
       counter-report, including a new set of claims and possibly, if C's 
claimset
       was unjustified, an invoice to C. If P has not registered a 
counter-report
       within 1 month, C's claims enter into force.

       The patent registry transfers the amounts to be paid between the 
accounts of
       the parties automatically, based on the registerd invoices. Unjustified
       invoices lead to additional requests for damages.

       If the parties can not settle among themselves, they call on the court.

       The court's judges the case solely on the basis of the registered 
materials
       (examination reports with claimsets and invoices), without an oral 
hearing.

       The loser pays the court fees.

       If in a 2nd instance oral hearings and lawyers are involved, the 
related
       costs are also paid by the loser.

       The sum in litigation depends on what the parties dispute. If it is 
about
       validity of patent claims, the sum is much higher than if it is only 
about
       the height of the examination fees to be paid.

       The examination fees can be higher than in the current system, because
       patentees are encouraged to escape the payment by formulating narrow 
claims
       in the first place. Amounts of 10000 EUR, as typically found on the old
       BountyQuest website, might be appropriate.

       However, even if the fees are set to the current level, they can be 
assumed
       to provide a sufficient incentive to for professional examiners to 
check
       suspicious patents.

       The same rules can apply to utility models, which are currently without
       examination.

    Organisational change, personal and functional continuity

       The current patent procedure has two phases:
         * search (completed by publication of [23]document A) and
         * examination (completed by publication of [24]document B).

       At the beginning in the EPO they were strictly separated. Search was 
done by
       the Hague, examination by Munich. Since the mid 90s, they are brought
       together in sense that two phases are conducted by the same team 
("BEST:
       Bring Examination and Search Together"). One half of the applications 
is
       processed in The Hague, the other in Munich. But two distinct processes
       remain in place.

       The proposed court is the same as examination division in the EPC. The
       difference is that everybody can be a search division and the search
       division is paid when brings good arguments for rejection.

       Our proposed court of the second instance is similar to the 
[25]opposition
       procedure in the EPC, because it is an oral hearing of two parties. 
Only the
       flow of money is different.

       In other words, what we are proposing is only a reform of the existing 
EPO.
       We are introducing financial incentives for rejections, and demanding
       separation of power. In practical terms reform would mean that a 
market for
       patent searches is created and that existing divisions of patents 
offices
       compete with outsiders on this market. Currently this market is 
closed. Only
       patent offices are inside, and they enjoy territorial monopoly. 
Because we
       need real renewal, the examination institutions should be built from
       scratch, although their natural basis of recruitment are people 
employed at
       the patent offices. For this job, a mixture of legal and technical
       qualifications is needed.

       Already now, in many jurisdiction, everybody can be a search division. 
Many
       patent offices accept opinions of outsiders at any stage. But they do 
now
       pay the informants. Here too, our reform constitutes an incremental
       improvement.

    Questions and Answers

    Why will this succeed, when BountyQuest failed?

       Q: I would like to understand the difference between the "examination 
fee"
       and the [26]old BountyQuest project.

       A:
       In BountyQuest the examination fee was not paid by the polluter but by
       volunteering victims. It requires that one victim stands up and pays 
up on
       behalf of the public. All the other victims benefit as free-riders.

       Q: What was the reason BountyQuest failed?
        1. I don't know exactly, but the above should have something to do 
with it.
        2. Why would an "examination fee" not fail?

       A:
        1. Because there is someone who pays the bounty sum.
        2. Because that someone is also responsible for the patent 
application and
           thus free and motivated to prevent the problem from arising.

    Why not just ask patent offices to improve their examination work?

       The question is who should pay for it. Or better, how does one make 
sure the
       cost is put in he right place.

       T. S. (head of patent department of a big company) calculates it is 
cheaper
       to not do the homework for every application, i.e. waiting for 
opposition is
       cheaper than (proper) examination.

       If the examination cost is reimbursed in an opposition, the loser 
cannot run
       away from it.

    Isn't the much-praised European system of opposition up to the task?

       Economists say that opposition only works in certain industries. 
Professor
       Harhof investigated the hair dye industry, where it works OK. The 
problem is
       that a patent affects all players in a certain industry. Logically the
       competitors of a patent owner don't cooperate - they compete with each 
other
       as well. So one must do the work. And the other benefit as well. Which 
makes
       it unattractive to file an opposition. Also, by filing an opposition
       competitors may learn more about an opponent than he desires.

       Yes, the Americans always envy our European opposition system. but it 
shoud
       not be idealised. It may be helpful to review the patent reform changes
       under way in the US (frankly I know little alse than that they exist).

       https://a2e.de/ffii/epla/cpedu/exam
       © 2006-10-19 phm

    Links

      17. http://a2e.de/ffii/06/11/25
      18. http://a2e.de/ffii/06/11/02
      19. http://wiki.ffii.org/PatexamReformEn
      20. 
http://www.wired.com/news/technology/0,1282,68186,00.html?tw=wn_tophead_8
      21. http://www.eurolinux.org/news/cpat01B#inval
      22. http://swpat.ffii.org/letters/patg2C/
      23. http://www.european-patent-office.org/legal/epc/e/ar92.html
      24. http://www.european-patent-office.org/legal/epc/e/ar96.html
      25. http://www.european-patent-office.org/legal/epc/e/ar101.html
      26. http://www.out-law.com/page-1095


I thought this might be in line with what you advocate on your news service.


--
 Hartmut Pilch                            http://a2e.de/phm
 Vice president of the FFII               http://a2e.de/ffii
 Protecting the Knowledge Economy from Legal Over-Regulation