Thursday, the Senate Judiciary Committee marks up the PATENT Act, an important bipartisan measure to curb abusive behavior in the patent system. In the debate over this bill, opponents hoping to dial back patent reform have called the US Patent and Trademark Office a patent “death squad.” They cite the high “kill rates” from its new patent-review process that threaten to wipe out the majority of patents.

And to back it up, they cite a very scary number from the USPTO itself: that under current patent law, approximately 84 percent of reviewed patents have their claims thrown out.

The idea of that many patents being overturned has, understandably, terrified the biotech and high-tech industries that rely heavily on strong patents. American businesses depend on patents that stand up to challenges, and these industries have campaigned against the USPTO’s reviews, hoping to get Congress to apply tougher standards to reviewing already issued patents.

The thing is, that figure is wrong – or at least, so far out of context it might as well be. And the more attention it attracts, the more it fuels an overreaction to a reform that’s actually working.

How did we get here?

The new review system has its roots in the 2000s, when many critics believed the US Patent and Trademark Office was granting too many questionable patents, and the system needed a more efficient way to challenge them. The result, written into the Leahy-Smith America Invents Act (AIA) and signed by Obama in 2011, was a new streamlined pathway to challenge existing patents. Normally, patent challenges are subject to excruciating and drawn-out processes in court involving juries; the AIA created an alternative process involving trained patent judges held to strict timelines.

Four years after this new system was created by the AIA, patent challenge filings are up, way up– suggesting that companies are, indeed, finding it easier to challenge nuisance patents.

From my perspective as a patent-law specialist, the reviews are working as intended: they’re helping remove the threats that mistakenly granted patents can cause, threats that can shadow a whole industry with liability risks. In one recent case, the USPTO substantially knocked out a patent over podcasting that threatened to force many independent producers out of business. Two patents over the idea of check imaging were also just invalidated at the Patent Office – unfortunately not before banks had been “held hostage,” to their claims, giving up a whopping $350M in settlements over many years. If the new review processes had been available earlier, the money could have spent in myriad other ways than to license these now-defunct patents.

So what’s the problem? When opponents talk about the rate of patents being overturned, they tend to seize on some very high numbers from the USPTO’s own statistics. Recently, the Patent Trial and Appeals Board of the USPTO reported that 84 percent of patent challenges that go through the full review process have at least one claim rendered unpatentable.

As a talking point, it’s easy to make that sound like 84 percent of patents get thrown out by the new process – but keep in mind that it actually applies only to a very small subset of patent claims, those that the public chooses to challenge, that the USPTO chooses to review, and that the parties don’t work out on their own. The reality is the PTO chooses to review only 65 percent of the claims provided to them – those where there was a “reasonable likelihood,” or “it was more likely than not” that the patent was invalid. And then, half of those are settled or dropped by the parties before any ruling comes down at all.

Rejecting a claim doesn't mean that the overall patent is unenforceable: each individual patent could have dozens, or hundreds of claims. If you follow the numbers carefully, you realize that a more accurate way to think about it is that the USPTO has ended up invalidating about 25 percent of the claims submitted to it for review. That’s a long way from 84 percent.

As Congress considers how to change the patent law, it should keep in mind the actual practice, rather than the prevailing perception, of the new review process. Far from representing a problem to be solved, the numbers reflect the reality to be experienced that the reviews Congress created are largely working. The process could surely be made more fair to patentholders, and more accessible to small entities; reviews now close to half a million dollars to complete. But while they certainly can be improved, in the interest of American business, they should not be gutted.

Colleen Chien is Associate Professor of Law at Santa Clara University School of Law, and former White House Senior Adviser, Intellectual Property and Innovation, at the Office of Science and Technology Policy. She can be reached at [email protected] and @colleen_chien.

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