Thursday 23 August 2012

Financial importance of a prior art search

IP Finance is pleased to host this little piece by Daniel Porter, a case researcher and writer for ("a social network for researcher, business, and innovation"). He writes as follows:
"The United States patent system is overburdened, and the results are becoming increasingly detrimental. Prior art, intended as the scepter of inventorship justice, has become a double-edged sword that cuts deep. Effectively searching for relevant prior art is among the most fundamental problems in intellectual property law today.

The basic rule is simple enough: an individual is not entitled to a patent if a record of that individual’s invention is publicly available prior to the patent application date. Ostensibly, this first-to-invent system offers protection to inventors who have publicly disclosed their invention but have not yet patented it: if the original inventor doesn’t patent the invention, nobody can. In practice, the waters are slightly more murky. Problems arise because the pool of potential prior art is nearly limitless. The system gives examiners the impossible task of wading through all previously published documents (everywhere) for prior art which could lead to patent invalidation. Invariably, already-pressed examiners miss relevant prior art. The result: swathes of patents which should not have been issued in the first place. The costs: excessive, if difficult to pin down.

The prior art is always a matter of impression, and one man's
murky pool is another man's priceless innovation ...
or Monet-making idea!
The best indicators of cost may be the results of an extensive annual survey published by the American Intellectual Property Law Association. In 2011, they found patent infringement litigation cost an average of $350,000 pre-trial, and $600,000 or more through discovery. These cases most often hinge on an effective prior art search.
When faced with an infringement lawsuit, the easiest and most common defense is to invalidate the patent claimed by the plaintiff. If a patent should not have been issued in the first place because unknown prior art existed but was not discovered, all a defendant need do is find this previously undiscovered prior art. Voilà! Patent; invalidated. Lavish legal expenses: wasted.

An increasingly litigious technology environment means that this problem will likely persist, but could have been avoided if a proper search was conducted before the patent was issued. A more comprehensive initial search by either the patent examiner or the filing inventor would ensure that the USPTO issues fewer, stronger patents. In turn this would mean that inventors, business, and courts alike could all focus on protecting legitimate intellectual property rights.
It would be good to test the hypothesis that there is any correlation between (i) the quality of pre-issue search,  (ii) the quality of granted patents and (iii) the incidence of post-grant invalidity litigation.  This blogger's contention is that the degree to which these three items are interrelated may be a good deal smaller than many people believe. This is because the validity of patents is not contested because they are inherently of poor quality but -- regardless of their quality -- because they are coming between the party contesting them and the aim which that party wishes to achieve, be it a licence on favourable terms, a clear path to bringing out a new product or indeed anything else. If that is so, then spending more cash up-front on patent search may not just one of a number of patent-seeking strategies rather than something which is always to be taken as best practice.

As usual, readers' views are welcomed.

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