Although "home remedies" to address the patent system’s ailments abound from all interested quarters, we appear to have lost sight of the simple notion that you cannot hope to fix a problem until you can quantify the problem you want to fix. If we are serious about curing this disease then one of the first steps needs to be the creation of a metric to diagnose the ailment and monitor the impact of our course of treatment.
Why is the need for such a measuring stick so hard to recognize when it comes to fixing the patent system? Perhaps it is because the symptoms of poor patent quality are not as readily apparent as they are in other pursuits. It's evident that a poor-quality motor will cause your car to malfunction, a poor piece of financial advice will lead to a lighter wallet and low-quality health care can lead to immediate and devastating consequences. Yet the improper issuance of a dubious patent seems more remote. There are few who would dispute that a problem exists, but it is one that appears to lack immediate, personal consequences.
It is foolish to assume we are not affected by poor-quality patents. Left untreated, the economic prognosis for poor patent quality includes needless litigation, increased costs for producers and consumers, and barriers to new innovations. According to one report, poor patent quality costs more than $21 billion per year in the U.S., or more than 7 percent of U.S. R&D expenditures. If we consult the financial caretakers trying to cure the economy of its critical illness brought on by the sub-prime mortgage fiasco, they would undoubtedly warn us that in a global economy we are more intimately connected to all economic decisions, and even those decisions that may initially appear remote—like improvidently granted patents or mortgages—eventually take their toll on us all in very real ways.
I do not mean to suggest that the issue of patent quality has been ignored. In fact, the issue receives much attention, and many worthwhile projects and academic studies have focused on the need to improve patent quality. One such endeavor is the Peer to Patent project, led by Professor Beth Noveck of New York Law School in cooperation with the USPTO and sponsored by many companies, including my employer. The project enables members of the public with relevant technical expertise to assist patent examiners in reviewing patent applications to ensure that the best prior art is considered as part of the examination. Moreover, there are a great number of companies that offer products and services to assist in the valuation and better management of patent portfolios. For instance, Ocean Tomo, a company that manages patent auctions, utilizes sophisticated proprietary valuation algorithms to provide bidders with an indication of the likely value of a patent. These types of tools and algorithms, however, generally focus on the economic value of a patent as opposed to its intrinsic legal quality.
The legal quality of a patent—that is, how well it complies with the statutory requirements for patentability—does not necessarily translate to its economic value. It is possible to craft a patent of exceedingly high legal quality for an invention with little practical use. For example, a well-prepared and thoroughly examined patent on an improved 8-track cassette player would be a patent having high legal quality but low economic value. Unfortunately, owing to the uncertainty of patent litigation and the current inability to reliably assess the legal quality of patents, there have also been patents of dubious legal quality that have nonetheless provided significant economic returns to their owners.
Into this breach comes the Patent Quality Index (PQI) project—sponsored by my employer, IBM, and led by Professor Ron Mann of Columbia University Law School and Professor Toshiya Watanabe of the University of Tokyo. The project seeks to identify characteristics of specific elements of a patent, along with related documents, that can be correlated with high or low quality as measured by whether or not the patents have been found valid or invalid in litigation. In so doing, the project aims to create a usable metric for determining the objective legal quality of each patent and en masse with respect to the patent system.