
Evidence of regulatory capture of patent examiners - Gimpei
http://papers.nber.org/papers/W24638
======
natosaichek
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.

~~~
tripletao
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.

~~~
forapurpose
Unless I misunderstand, the parent's hypothesis doesn't try to explain the
data, which apparently shows 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.

The parent seems to be an argument that they would expect the data to be
otherwise, but it's not. Do I misunderstand?

~~~
tripletao
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.

~~~
forapurpose
> 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?

~~~
tripletao
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.

------
tcbawo
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.

~~~
cameldrv
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.

~~~
tcbawo
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.

~~~
patentatt
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.

------
jedberg
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.

~~~
fern12
_> 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._

With regard to the moonlighting patent examiners, I'm fairly certain this is
illegal. See MPEP 309 and MPEP 1702.

[https://www.uspto.gov/web/offices/pac/mpep/s309.html#d0e1919...](https://www.uspto.gov/web/offices/pac/mpep/s309.html#d0e19194)
[https://www.uspto.gov/web/offices/pac/mpep/s1702.html](https://www.uspto.gov/web/offices/pac/mpep/s1702.html)

~~~
Cthulhu_
It's not a crime if nobody finds out.

~~~
fern12
True. But occasionally, it does happen.

[https://www.ipethicslaw.com/pto-suspends-ptab-atty-who-
filed...](https://www.ipethicslaw.com/pto-suspends-ptab-atty-who-filed-
multiple-tm-apps-for-cannabis-client/)

------
patentatt
I’m pretty skeptical:

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.

~~~
forapurpose
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?

~~~
patentatt
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.

~~~
tripletao
The paper is also at
[https://faculty.chicagobooth.edu/thomas.wollmann/docs/Revolv...](https://faculty.chicagobooth.edu/thomas.wollmann/docs/Revolving_Doors_Tabakovic_Wollmann.pdf)

I proposed an alternative mechanism for the effect elsewhere on this page at
[https://news.ycombinator.com/item?id=17175983](https://news.ycombinator.com/item?id=17175983)

------
stcredzero
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.

~~~
patentatt
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.

------
custos
Are there any decent plausible solutions to the problem of regulatory capture?

Are there any laws restricting companies from "lobbying" regulators or
engaging in quid pro quo?

~~~
alex_anglin
On the upside - competitive pay and benefits with industry. Probably a tough
sell for many.

On the downside - restrict employment opportunities for X years after being in
a specific position.

Clearly both have issues, but regulatory capture is a problem worth solving.

~~~
patentatt
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.

~~~
pwg
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.

~~~
patentatt
Good point, I think it’s really on the honor system with the threat of
invalidating a patent in some later litigation.

