Measuring Patent Office Quality: "
Paul Burke and Markus Reitzig have devised a clever way to measure the quality of patent office examination: they measure whether the European Patent Office (EPO) applies patentability standards consistently between patent examination and patent opposition procedures.
Patent Assessment Quality - Analyzing the consistency of the EPO’s ruling on novelty and inventive step in emerging industries
by Paul F. Burke (University of Technology, Sidney) and Markus Reitzig (Copenhagen Business School)
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Summary by Stefan Wagner
Introduction
Fuelled by an increasing number of spectacular patent litigation cases, a broad discussion about ‘patent quality’ is currently going on in academia as well as among practitioners and policy makers. In particular, it is argued that patents might be prone to ‘low quality’ when patent offices are confronted with emerging technologies like biotechnology, software or business methods. In these situations, marked by increasing numbers of patent applications in previously unknown fields, patent examination is likely to be characterized by a shortage of qualified examiners in the respective field (the recruiting and the training of new examiners usually takes several years), a lack of appropriate databases for prior art searches as well as uncertainty with regard to the interpretation of patentability criteria which potentially harms ‘patent quality’.
It should be noted, however, that the term ‘patent quality’ is theoretically hard to define due to its multiple legal and economic dimensions and it is even more difficult to measure the different aspects of the quality of a patent in large-scale empirical studies.
In this paper, Burke and Reitzig use the advantages of data on patent examinations processed by the European Patent Office (EPO) in order to tackle a part of the problem by examining whether the EPO assesses the patentability criteria consistently over time. They analyze this dimension of ‘examination quality’ in biotechnology patents during the period 1977 – 1986, a historical example of an emerging technological field.
Research Design and Data
The EPO not only examines patents, but also allows for post-grant validity challenges within its opposition system: Once a patent has been granted, third parties can challenge the validity of the patent by filing an opposition within nine months after grant. In the opposition proceeding, either the opposition is rejected or the patent is amended or even completely revoked.
Burke and Reitzig take advantage of this institution and measure one dimension of ‘patent quality’ by relating grant and opposition outcomes as postulated by legal scholars (e.g. Merges, 1996, Thomas, 2002). Since the criteria of patentability applied in the opposition proceedings are ideally the same as those used during patent examination phase, a successful opposition can only occur if: (A) the patent office inconsistently applies the patentability requirements during the examination and opposition phase or (B) new information becomes available to the patent office after the grant of the patent, or both. Burke and Reitzig explore these two explanations to estimate the consistency (quality) of patent office decisions.
Their crucial assumption is that the amount of information available to the patent office can be tracked over time indirectly by relying on established patent indicators. Among others, they assume that the number of citations a patent receives from subsequent patents (a number that can be observed) is correlated with the amount of knowledge available to the patent office at a given point of time (which cannot be observed). Moreover, they argue that the difference between the number of citations received before the patent grant and the total number of citations received until the end of the opposition proceedings is a good proxy for the new information that becomes available to the patent office during the opposition phase. In order to focus their analysis to an emerging technological field, they restrict their sample to patent applications filed within the field of biotechnology in the period 1978 - 1986 (4,726 applications leading to 2,969 grants and 318 oppositions).
Methodology and Results
Relying on advanced econometric models, the authors analyze the first and the last stage of a (slightly simplified) 3-stage decision sequence of the EPO proceedings: 1. Grant {Yes/ No} 2. Oppose {Yes/ No}, and, 3. Revoke of the patent {Yes/ No}. The authors test whether assessment inconsistencies (grant in the first stage, revocation in the third stage) are driven by new information revealed during the opposition procedure or by inconsistent assessment of patentability related information available from the day of grant. In addition to forward citations, Burke and Reitzig also include other patent characteristics including references to previous patents and non-patent literature, family size, number of inventors, and request for accelerated examination. These latter measures do not vary over time, whereas incremental forward citations capture informational changes over time.
Burke and Reitzig find that EPO patent assessment differs between the grant of a patent application and the outcome of the opposition procedure. Interestingly, they also find that inconsistent decisions are not driven by new information made available after the examination phase. In conjunction, the authors take these findings as a clear indication that the EPO applies the patentability requirements differently during the patent grant and the opposition proceeding.
As the authors clearly state, the interpretation of their second result is subject to a major caveat: although successful oppositions may be caused by inconsistent application of patentability criteria, forward citations may simply be an imprecise measure of the knowledge available to the patent office at a given point of time. If so, the role of new information is unclear.
References
Merges, R. (1996). ‘As many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform’, Berkeley Tech. L. J. 14: 577-615.
Thomas, J. (2002). ‘The Responsibility of the Rulemaker: Comparative Approaches to Patent Administration Reform,’ Berkeley Tech. L.J. 17: 728-761.
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