Patent Infringement Litigation Has Increased in Recent Years, and the Majority of Lawsuits Involved Patents Related to Computers and Computer Software

The number of federal district court filings of new patent infringement  lawsuits has generally increased between 2007 and 2015, from more  than 2,000 suits in 2007 to more than 5,000 suits in 2015 (see fig. Looking at the data in this way, we found that the number of defendants  in new patent infringement suits filed in federal district courts increased  from about 5,000 defendants in 2007 to more than 8,000 defendants in  2015, as shown in figure 2. Patent  infringement suits are increasingly being filed in the predominantly rural  Eastern District of Texas (see fig. In 2007, about 20 percent of all  patent infringement defendants were named in cases filed in the Eastern  District of Texas, and this percentage increased to almost 50 percent in  2015. As with  computer and communications technologies, some stakeholders told us  that software-related patents are easier to infringe because they also  often have overly broad claims, an indicator of low quality patents. Additional Opportunities Exist to Improve Patent Quality at USPTO

USPTO has taken actions to address patent quality—most notably  through its Enhanced Patent Quality Initiative—but there are additional  opportunities for USPTO to improve patent quality. USPTO Has Not Consistently Defined Patent Quality or Established Specific Performance Measures

USPTO does not currently have a consistent definition for patent quality,  which may limit its ability to assess the effects of its examination policies  and review processes—as well as its Enhanced Patent Quality Initiative— on patent quality. While USPTO has found it difficult to clearly define patent  quality, most of the stakeholders we spoke with told us that they would  define patent quality as patent validity—that is, a quality patent would  meet all the statutory requirements for patentability and would be upheld  if challenged in a lawsuit or PTAB proceeding. Four supervisory patent examiners we interviewed told us  that without a consistent definition of patent quality, USPTO is unable to  standardize practices to improve patent quality. Time allotments and incentives can lead to pressure for examiners to  complete their work quickly. Specifically, on the basis  of our survey, we estimate that, given a typical workload, about 70  percent of examiners have less time than needed to complete a thorough  examination. USPTO officials acknowledged that this  difference was likely due to the additional time and supervisory review  that junior examiners receive. The precise effects of the time allotted for examinations and incentives on  quality are unclear because USPTO has not fully analyzed the effects of  current time allotments or incentives on an examiner’s ability to perform a  thorough examination. According to federal standards for internal control, agencies  should provide staff with the right structure, incentives, and  responsibilities to make operational success possible. Without analyzing the time and incentives needed for  examiners to complete thorough examinations, USPTO cannot be  assured that its current time allotments and incentives support the  agency’s goal to optimize patent quality. Additionally, USPTO policies and procedures generally require clarity in  issued patents. For example, on the basis of our survey,  we estimate that nearly 90 percent of examiners always or often  encountered broadly worded claims in applications they reviewed, and  for nearly two-thirds of examiners, applications with broadly worded  claims make completing a thorough examination more difficult. Without making use of  tools to improve the clarity of patent applications, such as by having  applicants include a glossary to define the terms used in the application,  provide a claim chart, or indicate the use of functional claims through a  checkbox, the agency is at risk of issuing unclear patents that may not  comply with statutory requirements. USPTO does not have a consistent definition of patent quality that is  clearly articulated in agency guidance or fully developed measurable  goals and performance indicators to guide and evaluate work towards the  agency’s quality goals. Evaluate the effects of compact prosecution and other agency  application and examination policies on patent quality. In its written comments, which are reproduced in appendix III,  USPTO generally agreed with our findings, concurred with our  recommendations, and provided information on steps officials plan to take  to implement the recommendations. We  also conducted 11 semi-structured interviews with stakeholders from  technology companies, venture capital investors, and others  knowledgeable about recent patent infringement litigation. To examine what additional opportunities exist, if any, to improve patent  quality, we reviewed relevant laws and USPTO documents and  interviewed USPTO officials and representatives of the examiners’  union—the Patent Office Professional Association. 1)

Appendix II: Patent Examination Process at the  U.S. Patent and Trademark Office (USPTO)  (Corresponds to Fig.
Why GAO Did This Study

Resolving disputes over patent infringement and validity in court often costs millions of dollars. Legal scholars and economists have raised concerns about an increase in the numbers of low quality patents—such as those that are unclear and overly broad—which may lead to an increase in patent infringement suits and can hinder innovation by blocking new ideas from entering the marketplace.
GAO was asked to review issues related to patent quality. GAO examined (1) recent trends in patent infringement litigation and (2) what additional opportunities exist, if any, to improve patent quality. GAO reviewed relevant laws and agency documents; analyzed patent infringement litigation data from 2007 through 2015; conducted a survey of a generalizable sample of USPTO examiners; and interviewed officials from USPTO and knowledgeable stakeholders, including legal scholars, technology companies, and patent attorneys, among others.

What GAO Found

GAO found that district court filings of new patent infringement lawsuits increased from about 2,000 in 2007 to more than 5,000 in 2015, while the number of defendants named in these lawsuits increased from 5,000 to 8,000 over the same period. In 2007, about 20 percent of all defendants named in new patent infringement lawsuits were sued in the Eastern District of Texas, and by 2015 this had risen to almost 50 percent. According to stakeholders, patent infringement suits are increasingly being tried in the predominantly rural Eastern District of Texas, likely due to recent practices in that district that are favorable to the patent owners who bring these infringement suits. GAO also found that most patent suits involve software-related patents and computer and communications technologies. Several stakeholders told GAO that it is easy to unintentionally infringe on patents associated with these technologies because the patents can be unclear and overly broad, which several stakeholders believe is a characteristic of low patent quality.
The U.S. Patent and Trademark Office (USPTO) has taken actions to address patent quality, most notably through its Enhanced Patent Quality Initiative, but there are additional opportunities for the agency to improve patent quality. For example, USPTO does not currently have a consistent definition for patent quality articulated in agency documents and guidance, which would be in line with federal internal-control standards and best practices for organizational performance. Most stakeholders GAO interviewed said they would define a quality patent as one that would meet the statutory requirements for novelty and clarity, among others, and would be upheld if challenged in a lawsuit or other proceeding. Without a consistent definition, USPTO is unable to fully measure progress toward meeting its patent quality goals. Additionally, USPTO has not fully assessed the effects of the time allotted for application examinations or monetary incentives for examiners on patent quality. Specifically, most stakeholders GAO interviewed said that time pressures on examiners are a central challenge for patent quality. Based on GAO's survey of patent examiners, GAO estimates that 70 percent of the population of examiners say they do not have enough time to complete a thorough examination given a typical workload. According to federal standards for internal control, agencies should provide staff with the right structure, incentives, and responsibilities to make operational success possible. Without assessing the effects of current incentives for examiners or the time allotted for examination, USPTO cannot be assured that its time allotments and incentives support the agency's patent quality goals. Finally, USPTO does not currently require applicants to define key terms or make use of additional tools to ensure patent clarity. Federal statutes require that patent applications use clear, concise, and exact terms. Based on a survey of patent examiners, GAO estimates that nearly 90 percent of examiners always or often encountered broadly worded patent applications, and nearly two-thirds of examiners said that this made it difficult to complete a thorough examination. Without making use of additional tools, such as a glossary of key terms, to improve the clarity of patent applications, USPTO is at risk of issuing patents that do not meet statutory requirements.

What GAO Recommends

GAO makes seven recommendations, including that USPTO more consistently define patent quality and articulate that definition in agency documents and guidance, reassess the time allotted for examination, analyze the effects of incentives on patent quality, and consider requiring applicants to use additional clarity tools. USPTO generally agreed with GAO's findings, concurred with the recommendations, and provided information on steps officials plan to take to implement the recommendations.