Coexisting with the Patent Office

At the annual National Association of Patent Practitioners (NAPP) meeting, a number of speakers addressed various aspects of the "broken" U.S. patent system. Not only were the statistics depressing to the practitioner/attendees, but they also brought home all too clearly the negative impact on clients. As Bill Smith of Woodcock Washburn in Atlanta, a former Administrative Patent Judge at the U.S. Patent and Trademark Office, so drolly expressed it, "Patent Office inefficiencies cost real people real money real quick."

Those of you with patents pending are likely experiencing at least some of the challenges facing applicants: lengthy pendency, unprecedented rejection rates, inconsistent rulings from Examiners, and changing definitions of what is "patentable subject matter" and what is "obvious" over prior references. Future articles will tackle the latter two issues; this article discusses the state of the Patent Office.

Sad Realities at the Patent Office

Just filed a patent application? The average time to receive an examination report from the Patent Office is now 25.6 months. Total time to issuance averages 32.2 months. If you have a business method invention, the news is even bleaker: The average time to first examination report is 31.6 months, with an average 46.1 months to issuance.

What is your chance of getting a patent? Smaller than it used to be. The percentage of patent applications allowed has dropped from a high of 72% in 1999 down to 43% this fiscal year.

So, what seems to be the problem? The composition of the examining corps certainly bears some of the blame. Being a Patent Examiner is demanding, difficult work that is insufficiently compensated, causing Examiners to leave for better-paying, less grueling jobs. Over 50% of the Examining Corps have less than 3 years experience. Consequently, they lack in-depth knowledge of the technology in which they are working, and of the law and Patent Office procedures. In addition, many supervisors have elected to work from home, leaving the newer Examiners largely unguided, and without the benefit of consistent mentoring from more knowledgeable peers. There have also been reports of Examiners taking cases out of order to meet their quotas, which is against the Office’s "first-in-first-out" policy.

Another problem is a policy instituted putatively to increase the quality of issued patents. The so-called "second pair of eyes review" demands that any application slated by an Examiner for allowance is reviewed by a Supervisor, who has the power to reverse the Examiner's findings of allowability. This is a black mark on the Examiner. However, there are no consequences to the Examiner for issuing a rejection, even if it's wrong, which clearly militates against allowance.

Patent applications that are under "final rejection" (which typically occurs at the second review by the Examiner) often face the unhappy choice of re-filing the case with a Request for Continued Examination (RCE) and paying another filing fee, or filing an appeal. While an RCE used to be a viable option, especially if prosecution seemed to be making headway towards allowance, a new policy has now made this less attractive. Effective November 15, 2009, RCEs will no longer be placed on a shorter docket, ahead of new cases, and will thus take longer to reach an Examiner for further review.

What can an applicant and practitioner do if an application is rejected and the Examiner seems unmovable? The only alternative to an RCE is to appeal to the Board of Patent Appeals and Interferences. An unintended consequence of the decreasing allowance rate has seen an incredible 70% spike in appeals in this fiscal year, and the new RCE docketing rule is likely to inflate this number even further. Appeals are expensive to prepare and prosecute, and add at least 2 more years to prosecution time. But, if protecting the invention is important to your business goals, appealing is a viable route if you feel that your Examiner is demonstrably wrong.

Possible Ray of Hope: First Action Interview Pilot Program

In an effort to expedite the handling and examination of patent applications, the Patent Office has announced a pilot program that will permit applicants to request an interview with an Examiner prior to the issuance of a first action on the merits. An initial pilot program resulted in a six-fold increase in allowance rates when such enhanced communication was undertaken. An expanded pilot program began on October 1, 2009, and will serve select technology areas.

What’s an Inventor to Do?

How can you as an inventor formulate an effective strategy? Should you file a patent application at all? Likely the answer would be yes if this invention formed a core aspect of your business, and is likely to continue to be important at least 5 years down the road. Even a pending patent application adds value to your company and can potentially give you a limited monopoly over your competitors if a patent issues. The dangers of not filing a patent application are considerable: permanent loss of rights if not filed within one year of public disclosure, and diminution of corporate value if your company is acquired, just to name two.

If you do decide to file a patent application on your technology, how should the application be written? New ideas are springing forth from experienced practitioners and those having an "in" at the Patent Office on ways of increasing the chances that an invention can be patented and stand up to challenges. There is no question that writing and prosecuting patents has become more challenging over the past few years, but challenges also present opportunities for growth. More than ever, practitioners need to stay current on case law and policy changes at the Patent Office, and to communicate strategic ideas to their clients.