I saw an argument not long ago that the revolving door ensures more rigorous review of the regulated company.
Basically, domain experts are hired out of a regulatory agency if they demonstrate their domain expertise by being a competent regulator. Would you want to hire someone who didn't do their job well? Also, the 'toughest' regulators are the ones who the companies don't want in their jobs anymore - they'd rather those people were on the other side of the fence, so they hire them.
The people who are soft (or incompetent) are useful in their role, so are left alone, not hired out.
Not sure this is actually true, but the incentive arguments seem like they run in the right direction.
This may not apply to patents as much as other regulatory agencies due to the way patents are argued (Not in court)?
Maybe they cover these arguments in the paper... I just read the abstract and didn't pay to get the whole thing.
Former British chancellor George Osborne passed a bunch of pension deregulation - then was hired by investment management company BlackRock being paid £650,000 ($859,000) a year to work 1 day a week [1].
IMHO this fits better with the "deferred compensation" model of regulatory capture than it does with the one you outlined.
If I worked for a regulator and wanted to maximize my revolving-door compensation, then I'm not sure whether I'd want to be harsh or lenient. As you say, there are forces in both directions. I'd probably aim for the middle of the pack, since I (a) don't want to make my future employer hate me, and (b) also don't want them to think I'm an idiot lackey more valuable to them in government than on their payroll.
But, I think I have a pretty straightforward incentive to create maximum procedural complexity--that is, to draft and enforce regulations that require lots of administrative effort to comply with, but in the end have little economic effect beyond the legal fees. If I'm really clever, then I might even get whoever thought regulation was needed to perceive the paperwork burden as satisfying that--so the company might not even mind the legal fees, if they get an offsetting PR benefit from the procedurally strict (but substantively meaningless) rules. This is the legal equivalent of a computer programmer's job security through poorly-documented code, just with the creation and maintenance phases split across two different employers.
A lot of what patent attorneys do sure feels like it meets that description. If the regulatory capture mentioned in the paper exists, then I'd guess it works more through that procedural complexity than through substance.
I don't think natosaichek's comment above attempts to explain the paper's observed correlations. Possibilities include that:
1. Examiners who want to get hired in private industry go easy on their future employers' applications. That would explain the linked paper's correlations.
2. Examiners who want to get hired in private industry help create a quagmire of complex procedures that they will then be uniquely qualified to help their employer follow. That also would explain the linked paper's correlations.
3. Examiners who want to get hired in private industry go hard on their future employers' applications. That would not explain the linked paper's result, though it could still be true if some confounding variable (e.g., different approval rates for different fields and types of client, as patentatt speculates) explains the correlation.
People worried about the revolving door are usually thinking (1). I suspect that it's actually (2), since that achieves the same effect in a way that superficially seems less corrupt, and that requires less trust between the revolving-door employer and employee.
> 2. Examiners who want to get hired in private industry help create a quagmire of complex procedures that they will then be uniquely qualified to help their employer follow. That also would explain the linked paper's correlations.
From my amateur point of view, that would seem to cause a decrease, not an increase in granted patents. At best the number would be unchanged and the process would take longer. So how would (2) explain the observation of an increase?
The paper studied the relative benefit to firms that hire former examiners. That relative benefit is the same regardless of whether examiners go easy on revolving-door employers, or hard on non-revolving-door employers.
An employee who knows the policy has revolving door value, even if they didn't personally create it. You'd know better than I would how much of the USPTO's policy exists as law vs. published guidance vs. internal documents vs. shared habits that never actually get written down; but it often seems as if our lawyers act based on "policy" that's on the fuzzier end of that continuum. That's what's hardest to learn without hiring/being a former examiner.
Like, where do you learn to say "a plurality of" instead of "two or more"? "A first X" and "a second X"? When to express algorithms as flow charts? Those particular examples are well-known, but I presume there's a lot more culture/style like that. That seems as important to me as the formal policy, not necessarily anything substantive but a sign that you're in the club.
“not necessarily anything substantive but a sign that you're in the club.”
That’s most of what this stuff is, you hit the nail on the head. Normal people don’t talk or write in ‘patentese.’ Some of it is just an optimal way to be extremely precise in written English, but a bunch of it is just accumulated cultural nonsense. Good point.
The problem is that a lot of people think that way, but "middle of the road" actually means average where the average is people who are middle of the road to people trying to be nice to a future employer.
The result is a ratchet effect making patent examiners more and more friendly to patent applicants over time.
That kind of ratchet can happen, but I still think the "be nice" effect is much less important than the "add procedural complexity" effect. I don't see how a study could distinguish the two without re-examining every patent, but:
1. Anecdotally over my interactions with patent examiners (using both large firms studied in the linked article and small firms), that's how it felt. I never felt the big firms were getting directly special treatment. I often felt they had an oddly perfect understanding of a mostly-arbitrary set of rules not necessarily grounded in any statute or case law that they nonetheless somehow shared with the examiners.
2. The "complexity" effect doesn't require trust. The former examiner genuinely has specialized knowledge that will benefit the new employer, so the employer has an incentive (beyond some vague hope of goodwill from examiners still in government) to keep up the bargain.
Examiners don’t set policy or create procedures, they just examine patents. There’s thousands of them, it’s not like every patent examiner has different procedures.
In the UK the patent examiner's manual - the Manual of Patent Practice - is publicly available; it explains standard precedence cases, tests used (eg to tell if an invention is software as such).
Patents aren't that complex that you can tie them up to make them only processable by the original examiner. UK examiner's have about 1-2 days total processing time per search/examination (less in some fields).
The technical aspects are set by the applicant, as is the language of the claims.
There are definitely some hacks to force through a patent, but it will be of low worth and easily defeated in court (and obviously so to a good patent attorney).
There is also a major confounding factor: many people come from industry to begin with, and want to become regulators because they think that light regulation will benefit the industry and the public.
Imagine there was a privacy regulator. Do you think all the folks on HN cringing about GPDR now, would, if they found themselves working at said regulator, act to regulate the tech industry aggressively? Or would they regulate lightly, out of the belief that big-data supported companies are beneficial to the public?
Note that Pai worked for a couple of years at VZN, as a relatively junior person just a few years after graduating law school. He then spent a decade in the public sector, before becoming a partner at a law firm.
Which raises the other issue: many regulators go work at law firms, who benefit from more regulation, not less. Those positions are generally also more lucrative than positions in the regulated companies themselves. So there is good reason to believe that the incentives are aligned toward overregulation, not underregulation.
Would I want to hire someone who didn't do their job well? Absolutely, if their incompetence was incompetence in my favor, which is something I'd want to reward. Alternately, if hiring them off freed up an opening for a friendlier regulator, I'd hire them that way too.
Kind of like how donating to the political campaigns of the longest-lasting, most honorable, and least corruptible judges in your local area will ensure they'll always recuse themselves in litigation you find yourself involved in.
To appear balanced, patent examiners must feel more than a little pressure to come down hard on the little guy.
Given the mountains of conflicting evidence with the recent financial crisis that has cost trillions and the crisis before that this argument seems to be baseless.
The linked paper itself goes into some detail to explore alternative explanations in good faith before confirming something of the opposite.
The idea that a revolving door does not have deep ethical implications with massive conflict of interest can be made in good faith only in an 'idealized' world, in which case everything is moot.
Anywhere power is consolidated is going to be targeted for corrupt purposes. Around 50 people on the Congressional budget committees are effectively in charge of trillions of dollars of spending by the federal government, making it easy to bribe and get in your pork spending. Most startups would be far better off making a few donations to some politicians and getting fat government contracts rather than making a great product.
Just look at Amazon and their billion dollar federal cloud contracts. Politicians sell themselves cheap, the ROI is fantastic, probably the best growth hack out there.
Logical conclusion is to limit the size and power of the government to limit consolidation of power and thus make corruption less worthwhile/viable. The founding fathers understood this and that's why they essentially limited the federal government to only managing national defense and left the rest to the states, if you didn't like what your state was doing you could vote with your feet.
I would be interested to see a patent/intellectual property system that was incorporated into a market for licensing. Taxes would be levied on the market value. You would pay taxes based on the royalties collected in the open market, or you could release intellectual property into the public domain.
I'd like to see something like this too, but the tax is based on bonafide offers to license the patent rather than actual licensing revenue. You don't want me to make my cool gadget that infringes on your patent? Ok, fine, but if I register an offer to you for a million dollars for a license, and you turn me down, you have to pay say, 10% as a tax. You're a small independent inventor/patent troll? Either pony up for the government keeping everyone else off your turf, or take the money and move on.
So there is the concept of the Fair, Reasonable, And Nondiscriminatory (FRAND) license that approaches some of what you’re proposing. It’s voluntary in today’s landscape, but it seems like you’re arguing for mandatory FRAND licensing for all IP? One of the reasons FRAND works is that it’s usually for IP with a large market, like industry wide standards and such. So the value is relatively easy to pin down because there is a large and active market for the IP. If it were mandated for all IP, who would set the “fair” price? Who says a million is “fair” in your example? What if you think my feature is a small part of your product/service, but I believe it’s a lynchpin type of thing? Seems ripe for abuse by the party with the deepest litigation pockets. I will say, however, that the idea of efficient infringement gets kind of close. With the bar for willfulness so high these days, a large Corp can just deliberately infringe a patent, say “come at me bro” and fight out what the damages are in court for the next decade. As long as they avoid treble damages (willfulness) then the max damages they have to pay is something basically reasonable and based on real market data. So it can be easier for an actor with a capacity to litigate to just ignore IP rights and let the cards fall where they do in court.
As I mentioned, there needs to be both components, royalties and valuation. I'm not sure what the proper mix would be, but it seems like an area where a market based solution could work. You'd probably need some form of arbitration to hammer out explicitly what is novel/being licensed. Patent trolls and large IP war-chest holding companies would probably hate this.
The thing is that patent valuation is a black art, it’s not a science. The best approach as you suggest is market based, but for a lot of IP there is no efficient market setting prices. How often do we read headlines of $X billion in damages ‘awarded’ as the result of some litigation, only to find out years later that that number was overturned on appeal and it was really much much lower in the end. It’s just an imprecise thing.
The biggest concern I would have with this is that patents exist in large part to fund very long development times, refining ideas (such as Xerox.) All in advance of production and therefore licensing or revenues from licensing. If you can interest anyone. In the case of Xerox, innumerable companies turned the invention down. A predecessor company of Xerox was willing to heavily knowing the returns would be spectacular if they were right.
To work, the market created would have to avoid collusion (which is rife now and extremely hard to detect or prosecute) and taxes could not be confiscatory (which would be extremely tempting - it's already the case that the filing fee tax is so high that poor people can't afford to patent their ideas, those ideas are given to the first company to copy the idea, swear it's theirs, and file. This may be the major source of economic inequality in the U.S. now.)
Licensing revenue would probably be taxed as corporate income. Also, maintenance fees increase as the years go by, so it only makes economic sense to keep paying fees for valuable patents.
The patent examiners don't have to wait till they leave to work for corporate. Many of them already have full time jobs and do patent examination as their side job. Their only requirement is to recuse themselves from patents filed by their company or their friends.
I'll bet it's pretty easy for two companies to make a deal to pay bonuses to each other's employees when patents are granted.
Please confirm that these people are federal employees who work for the United States Patent and Trademark Office with the title of Patent Examiner. I and some other commenters here are concerned that you may be mistaken.
I have multiple friends that are part time patent examiners and hold full time jobs otherwise. They are experts in their fields that get tapped to review patents. Usually they get the job because they have filed a bunch of patents.
Edit: For the record, I don't think any of my friends are corrupt. In fact, they're the most ethical people I know and take the job very seriously.
I'm just saying it could happen if the examiner were already inclined to corruption.
So I'm clear: You're saying that your friends work part-time for the USPTO examining patents? Like, they're paid by the USA government to read patent applications, and help determine whether each claim is allowed or rejected?
It's very common for experienced engineers to review patents for private companies (to help them judge whether they infringe, assess the commercial value of a portfolio they might buy, etc.). I've never heard of a part-time patent examiner, and I'm interested to learn more--the conflicts of interest would seem extraordinary.
Yeah, that’s not really a thing. Maybe, just maybe, the PTO may hire consultants on rare occasion to help with a very cutting edge tech, maybe. Perhaps that’s what OP may be referring to? And then I very highly doubt the consultant would be actually examining, more like just consulting on the technology. But it’s not like patent examining is a part time job, that’s just ... not how it works.
What the OP /sounds/ like they may be referring to, given this statement in their reply:
> They are experts in their fields that get tapped to review patents. Usually they get the job because they have filed a bunch of patents.
Is one of either they get selected to be expert witnesses in either a court case over an issued patent, or they get selected by lawfirms/applicants to provide "expert witness" type material for use by the applicant in rebutting the USPTO examiner's rejections of that applicant's application.
It is also possible that what the OP is referencing might be some form of 'internal review' at large corps where 'experts' in given areas provide a first review of potential patent applications from others in the corp. before the corp. goes to the trouble of actually filing a full application with the USPTO. In this case these individuals would be "reviewing patent applications" but they would not be "examining" patent applications which is the term that would be used were these folks to be truly working for the USPTO.
I think you're using the term "patent examiner" in an unconventional way. To most people directly involved with patents a patent examiner means someone who is directly employed by the USPTO. This is different than someone who drafts patents for clients or who provides legal advice on patent issues.
1) Granting a patent doesn’t necessarily mean that the examiner is more lenient or that the applicant got something good. There are good patents and bad ones, strong ones and weak ones. A high allowance rate may be an indication of very narrow patents which pad corporate quarterly numbers, but don’t have very much significance as patents.
2) This high volume, low value patent prosecution strategy is often seen in large corporate files, the same ones who hire patent attorneys.
3)Examiners deal with an attorney who is usually employed by some independent law firm. The underlying client is often not in direct contact with the patent office at all.
4) those large corporate filers are often in a technology niche. Particular pharma drugs, certain high tech niches like display tech or semiconductor fab, etc. The point is, these are small worlds, and if someone has the background to examine that kind of patent, they are probably in a very small group of people qualified to work on that technology. If they then get a law degree and go into private practice, there’s a good chance they cross paths with an entity that they examined patents of. In some of these tech areas there may be only a few dozen people in total (notionwide) who are qualified in the tech and are in the patent law field, it’s a small world.
5) All the same goes for law firms, there just aren’t that many people in this business, it’s not unlikely to cross paths.
6) bad patents aren’t good. Let me explain. If you’re a patent prosecutor worth your salt, you want a thorough examination. The last thing you want is to have a portfolio of patents which fall apart in IPR. It makes you look really really bad to your clients. hypothetically bribing an examiner is a fools errand, not just in a moral sense, but it’s literally a bad position to be in to get a bunch of bogus patents. Nobody wants that, it’s actually bad.
7) measuring patent quality in terms of citation is a red herring. First, some patents may have a different ‘lifespan’ to when they’re relevant. Some may be immediately cited a bunch, others may linger for a few years before being suddenly relevant due to some other development. But most of all, remember that patents cited on the front page of a patent are largely from the applicant themselves, cited in an IDS. So if a large portfolio starts citing a certain document, it might get cited in 10’s or 100’s of other cases that are somewhat related. And if you’re going to use it as a measure of low quality, that just bolsters my original argument that these would mostly be very narrow patents, a type of low quality but not the type that the public should care about. Shareholders, yes, as it’s a waste of corporate resources. Not anyone else.
The parent, while very informative, doesn't seem to address the actual issue:
What is an alternate hypothesis for a strong correlation between A) volume of patents granted by the examiner, and B) applicant hiring that patent examiner & applicant hiring the same year as the grant of patent?
I’d really like to read the paper to see what they’re facts are. I suppose my underlying argument is that there may be inocuous reasons for the statistics the paper cites. I’d be super interested if it is a smoking gun on a wide scale type of thing. As someone who’s been on both sides and intimately familiar with the whole patent industry, it just doesn’t jive with my experience.
Whenever I've tussled with domain experts in patents here on HN, I receive these messages from them:
1) Patents are the way they are, because it's a finely honed machine.
2) You're an ignorant rube.
Perhaps that's true. On the other hand, what patents say often seems to contradict common sense. It makes me wonder if the whole field isn't ideologically subsumed.
The whole field is about being absolutely precise with language, in writing and reading. It’s tough to do in English, the language just wasn’t built for it. So patent practitioners have sort of developed a way of being precise with a malleable langauage. Much of the really odd stuff can be understood through that lens. Note, that precise doesn’t mean “clear” or “easy to understand,” something may be precisely broad in just the way intended, while being precisely clear and narrow in other ways. That’s another inpedence mismatch between normal humans and patent people.
Regulation puts you between a rock and a hard place: regulators are either people without industry experience who don't understand the relevant dynamics (e.g. GDPR, SESTA, SOPA) or people with industry experience who have incentives or predispositions towards favoring the industry.
The best solution to that is simply to regulate as little as necessary, and leave as much up to the market as possible. A good example is infrastructure and utility deregulation in the U.S. and western Europe in the 1980s-1990s. There was a time when government regulators would set, e.g. prices for electricity. Today, electric markets are mostly deregulated, with only distribution utilities remaining as regulated monopolies.
> Are there any decent plausible solutions to the problem of regulatory capture?
It would be interesting to see research on various solutions around the world. One obvious solution is paying people market rates for their work; then they don't have an incentive to work in industry. One way government has done that is by providing job security and regular hours as a perk to compensate for lower pay.
In the U.S., the Republican Party (I'm not saying it to be partisan; it's just fact) had been trying to cut pay, cut job security, and also cut personnel, which increases the workload. It's not hard to see where that might lead.
Patent examiners top out at like $140’s pretty much. Nobody that’s GS scale makes over $160. Starting salary at big law firms is $180 + bonus. So you have a fair pint there.
Also, as far as time bars, the PTO does something like this. Former examiners are not allowed to apply for a patent for a term after they leave. Doesn’t really solve the problem, but it’s something.
The USPTO also bars former examiner's from working as an attorney on cases in the area in which they previously examined for two years after they leave the USPTO. I do not know how carefully this rule is enforced.
Not sure this is actually true, but the incentive arguments seem like they run in the right direction.
This may not apply to patents as much as other regulatory agencies due to the way patents are argued (Not in court)? Maybe they cover these arguments in the paper... I just read the abstract and didn't pay to get the whole thing.