Patent Office Focuses on Backlog as GAO Flags Quality Issues (1)

A government audit examining tradeoffs between the quality and quantity of issued patents underscored a tension the US Patent and Trademark Office has tried to balance for decades.

The PTO is facing a growing backlog of applications—currently over 830,000—and has focused on cutting down wait times for pending patents. But its effort to clear inventory and work faster comes at the expense of quality, the Government Accountability Office said in a recent report, highlighting the same issue it noted nearly a decade ago.

The Patent Office acknowledged that balancing quality, time, and cost is a “well-documented challenge that ubiquitously faces” its workforce. Yet PTO executives and several attorneys pushed back on the GAO’s assessment of quality, arguing patent invalidations are the wrong measurement and defending the office’s focus on reducing pendency. Quality has always been difficult to define, patent attorneys said, and is much harder to track than discrete data like application inventory.

“To use patent quality as a measurement is difficult if not impossible to do,” said Erick Robinson of Brown Rudnick.

The GAO report notes quality metrics reported by the PTO, such as high compliance rates with statutory requirements for patentability, don’t align with the rate at which courts and the Patent Trial and Appeal Board invalidate patents. But court invalidation rates are a result of “selection bias,” said Paul Michel, former chief judge at the Federal Circuit.

“The cases that go to final adjudication in the courts are only the close cases—the cases that are not close end up in settlements that you never read about,” Michel said. “It’s not a representative subset of all the examination results out there.”

Pushback

The GAO study, which was based on input from 50 randomly-selected patent examiners and internal surveys between 2021 and 2024, said the office’s emphasis on quantity is baked into measurements for examiners’ output, performance evaluations, and incentive structures.

The office agreed with all eight of the GAO’s recommendations to increase focus on patent quality, including changes to its quality review process. But its response disputed specific findings.

While the GAO said the PTO would benefit from an overall quality goal, the agency said it used offer an “quality composite” but switched to measuring statutory compliance metrics when stakeholders said that overall measurement wasn’t helpful.

The PTO also disagreed that its test programs lacked “scalability” and stakeholder input, as the report argued.

The GAO maintains that “considering scalability in its planning, even on small efforts or trials, will better position the USPTO to make informed decisions,” Director Candice Wright said in an emailed statement.

Coke Stewart, acting director of the PTO, said in a statement the agency’s priorities and operations are different than at the time of the internal surveys.

“The GAO recommendations are useful as the new administration addresses necessary changes to patent examination,” Stewart said. “In particular, at this time, the USPTO is focused on reducing the inventory of patent applications, which stands at an all-time, unacceptable high.”

New Policies

The Trump administration’s PTO has introduced new policies to address its backlog.

In March, the agency temporarily suspended “non-essential training” for examiners to focus on “driving down” application inventory, according to an internal email from the assistant commissioners of patents to employees reviewed by Bloomberg Law. The email notes employees can work with their managers to receive training they agree is necessary.

The PTO also rolled out a pilot program in April offering examiners a bonus up to 2.7% of their salary per quarter for extra hours reviewing applications, according to slides from a training session shared by the PTO.

Repeated quality issues could disqualify examiners from participating in the program, but those quality reviews won’t affect performance evaluations, the PTO said in its presentation.

Those policies exacerbate the GAO’s argument that quantity has been prioritized at the expense of quality, said two employees in the patents division who requested anonymity.

When the GAO emphasized examiners’ desire for more training and highlighted the lack of incentives focused on quality, the agency instead suspended training and created bigger bonuses for processing applications, one employee in the patents division said. “It seems like the agency is doing the opposite of everything the GAO is telling you to do.”

Measuring quality

Supervisors conduct eight quality reviews annually, but the GAO report noted they don’t have clear criteria for which actions to review. One examiner told the GAO their supervisor allows them to select which actions to review.

The PTO also has a quality assurance office that audits 12,000 patent examinations—roughly 1% of the total volume—to test compliance with the statutory requirements for patentability. In fiscal year 2023, over 90% of actions were compliant with individual requirements, but 84% were compliant with all four.

There’s a mismatch between the high quality the PTO touts and other statistics, the GAO said. Roughly 40% of patents challenged in federal courts are found invalid, according to a 2014 paper in the University of Chicago Law Review and cited by the report. In 2023, the PTAB invalidated 46% of patents in cases it reviewed, according to statistics compiled by Bloomberg Law.

But using invalidation rates isn’t the best way to measure patent quality since only a fraction of all patents are challenged. The office granted over 346,000 patents in 2023; in the same year, around 1,200 or .3% were challenged at the PTAB.

The GAO report acknowledges patent invalidity rates aren’t a perfect measure of patent quality, Wright said in her emailed statement, but that there “continues to be a perception that many patents are overturned in the courts.” Wright pointed to a PTO study referenced in the report that showed patent examiners many times hadn’t seen prior art brought before the PTAB.

Litigating parties, however, have more time and money than examiners to invest in prior art searches to challenge patents.

If “you can be liable for $20 million in damages, you easily spend a few million dollars trying to put together good arguments for invalidity,” Clint Mehall of Davidson Kappel LLC said.

Still, that doesn’t mean patent invalidation rates should be ignored, said David Jones, executive director at High Tech Investors Alliance.

“If these are the best patents that are out there,” Jones said, “we should be concerned they’re being invalidated at such a high rate.”