Deferred Examination: PTO to Hold Roundtable Discussion

It is clear that acting USPTO director John Doll has ideas for improving the patent system and that he is prepared to move the ball forward while he has the floor. Next on the order of business -- deferred examination. On February 12, 2009, the USPTO will hold a preliminary discussion on the potential for expanding the deferred examination system. Requests to participate should be sent to Robert Bahr (robert.bahr@uspto.gov). You may send comments to AC6comments@uspto.gov. Although attendance is open to the public, you must be pre-approved to 'participate.'

The PTO currently has an "optional deferred examination procedure" that allows deferral of examination for up to three years from the priority date after a petition and payment of a fee. According to the PTO, this procedure has been used "fewer than two hundred" times since it was created in 2000. 37 C.F.R. 1.103(d). In other countries, deferred examination is much more popular. In those countries, the applicant can delay payment of some examination fees during the deferral period. However, seems unlikely that the delay in paying fees (saving a couple hundred dollars) would explain the difference in popularity of the systems. An alternative explanation may be inertia. In Japan, for instance, the applicant must take some action to end the deferral period; while in the US, the applicant must take some action to start the deferral period. These different energy barriers might explain some of the difference in the use of deferral. The best explanation might stem from the backlog of US patent applications which prevents most cases from being examined in the first three years. Under the current system, a deferral in the US does nothing to slow the examination process if the examination backlog is already more than three years.

Deferred prosecution does have some possible negative issues. These negatives include the potential for submarining and shifting claim scope to encompass market changes. These problems could largely be limited through early publication of deferred applications as well as continued enforcement of the written description and enablement requirements. In addition, the patent term should continue to run during the deferral period.

There are two main benefits of deferred examination: (1) delaying spending fees could have a great cost savings if the delay allows companies to figure out that a significant number of applications are no longer worth pursuing; (2) non-deferred cases should move more quickly through the system.

In a 2008 letter to Congress, then PTO director Jon Dudas suggested three possible additions to the US system: (1) a 14-month extendible period for responding to a notice of missing parts; (2) a tiered payment structure that allows the "examination fee" to be paid later; and (3) allow applicants to claim priority to a provisional application for up to five years.

Notes:

45 thoughts on “Deferred Examination: PTO to Hold Roundtable Discussion

  1. You cannot trust the Me-too lameduck temporary upper management of the PTO…our best bet is to get someome who knows patent law and cares for our patent system…besides do you really want to put your money on Doll…he wasted 36 hours to get his name on that announcement…sad

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  2. I like the sound of the word “trenchant”. And it’s the ideal word to describe that last contribution. Is there any credible rebuttal? Anybody? What is blocking the way to its implementation? I don’t want to be a spoilsport but there is just one small point though. The EPO used to have deferred examination, for historical/political/getting-up-and-running issues. But the inefficiencies of it were recognised, right from the outset. Now, with the EESR, EPO search reports carry, as an annexe, the first office action. When the EPO case publishes, 18 months after priority, the public gets the search report and the first O/A, but Applicant has still not paid the fee for examination. That’s surely too arsy-versy for the USPTO. The better business for the PTO is to pull in the exam fee on day #1, then defer examination for XXX months, no?

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  3. Deferred examination deserves further exploration for sure. For one, deferred exam is the norm rather than the exception internationally, the USPTO being the only office among the BigFive where applications enter the queue for substantive examination by default. Examination requests are due after 3 years in Japan & China, 5 years in Korea, and about 2 years in the EPO. In Canada they have a 5-year deferral period, in Germany 7 – the list runs on and on, and includes virtually all of the US major trading partners. The USPTO, even under today’s backlog, routinely examines cases that are still under deferral in their foreign offices of first filing. This means more examination burden for the USPTO, and a nice benefit for examiners in deferred-examination countries. In addition, the dropout rates of cases where examination is never requested are nothing to sneeze at in these countries, ranging from more than 30% (Japan) to about 7% (EPO). The front-loaded U.S. examination system, on the other hand, has essentially no incentive for disinterested applicants to drop out. Requiring a request for examination after a deferral period could be one way to ferret out applicants who don’t really care to get a patent anymore, and save a lot of wasted examiner time. I say let’s talk about it. The concerns about trolling and patent creep and uncertainty could be addressed through safeguards like mandatory publication, third-party examination requests, and other provisions that exist in foreign patent offices. And finally on uncertainty – deferred examination has existed for decades in countries like Japan, Canada, or Germany. Are these systems really fraught with so much more uncertainty compared to the U.S.?

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  4. Dennis, your new and improved comment posting boxes are really good. Many thanks.

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  5. Medicine, I agree. The scope of protection stays open for the entire 20 year term, whether in Europe with cascading divisionals, or in the USA with cascading continuations. So, the only legal certainty the Statute can give to the public is to hold Applicants strictly to the content of their apps as filed. Then, an attorney can opine on the basis of the WO, or the EP-A or the USPTO file wrapper following opening up to public inspection at 18 months, with a fair degree of confidence about what claims might ultimately be carried through to issue. Of course, that’s why the EPO is strict on admissibility of amendments, and why it thinks that drafting of original applications is the highest expression of the skills of a patent attorney. So, Europe gives impecunious Applicants what they want and need. Athough expedited examination is available at the EPO for no fee and no reason need be given, hardly anybody wants or asks for accelerated examination. Maybe they like having indefinite time to tune their claims to the market and defer the cost of grant stage translations. Further, the European system of giving compensation for infringement, starting from the date of WO publication, might be a tasty feature for impecunious inventors too. Are there any other features of European patent law that might interest you? You know, it was thought out quite carefully, when the founding fathers wrote it, from scratch, in 1973.

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  6. If we have deferred examination, it will only work if the apps are required to be published. Right now, once an app is published the priority doc is available on Public PAIR (just like the PCT apps). So I really don’t see the problem. Deferred exam, for a small fee (perhaps the old “Processing and Retention Fee”?) could be a great way to balance some applicants’ needs for more time to commercialize, with the public’s need for disclosure.

    The problem with the current form of deferred exam is that, if you filed a provisional, it only gets you 2 years of deferral. Normal prosecution ends up being a longer deferral than that.

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  7. Mr Bloom says it so well that I can barely add anything useful. Paris works because it concerns itself with something very simple, namely, a one year period to get your foreigns on file, with effect from your first filing date. The patent law of the USA has nothing in common with that used in the rest of the world. The gulf is so great that my standard advice to clients is: whatever the solution is here, it’s likely the opposite in the USA (and vice versa, by the way). Whether you let filers complete their provisionals 6 months, 6 semesters or 6 years after the provisional filing? So what? It’s a trivial detail. If you want a patent system that Promotes the Progress and enhances investment efficiency, publish after 18 months, with first class subject matter indexing so investors and competitors can usefully monitor A publications. But your garage inventor voters won’t like that, will they?

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  8. “Does this run afoul of the ‘as long as we treat foreign filers the same’ provision? After all, they must file US applications within 12 months of their first filings, while US applicants can file US applications within 5 years of their first filings.”

    Let’s make sure you’re starting from the right point. U.S. law must treat foreign NATIONALS the same, not foreign filers. (You might have meant the same thing, but foreign filer suggests someone who filed a priority application elsewhere.) U.S. law currently permits foreign nationals to file provisional patent applications in the U.S.; the proposed deferral options would presumably apply to these provisionals for foreign nationals just as for domestic applicants. Again, Paris requires that we grant a 12-month priority claim to foreign applicants, but doesn’t say that we can’t have a longer priority period for priority claims to provisionals. In fact, by virtue of our continuation rules, we already have a quite different priority scheme than most countries. And that’s fine with respect to the Paris Convention, since we don’t administer that scheme based on nationality of the applicant.

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  9. Leo, Old European,

    My thoughts were related to the 12 month period to file national applications from the date of the first filing. I had thought that the 12 month expiration of the provisional was due to the 12 month to file corresponding foreign applications also applying to filing in the US base on a US provisional. I can see a difference there.

    I assume, then, that under the 5 year scheme you must file corresponding foreign applications within 12 months of the filing of the US provisional, but you can file a corresponding US non-provisional at any time specified by the USPTO (e.g. 5 years).

    Does this run afoul of the ‘as long as we treat foreign filers the same’ provision? After all, they must file US applications within 12 months of their first filings, while US applicants can file US applications within 5 years of their first filings.

    Dave

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  10. Leo, Old European,

    My thoughts were related to the 12 month period to file national applications from the date of the first filing. I had thought that the 12 month expiration of the provisional was due to the 12 month to file corresponding foreign applications also applying to filing in the US base on a US provisional. I can see a difference there.

    I assume, then, that under the 5 year scheme you must file corresponding foreign applications within 12 months of the filing of the US provisional, but you can file a corresponding US non-provisional at any time specified by the USPTO (e.g. 5 years).

    Does this run afoul of the ‘as long as we treat foreign filers the same’ provision? After all, they must file US applications within 12 months of their first filings, while US applicants can file US applications within 5 years of their first filings.

    Dave

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  11. “I doubt he’s ‘leaving’. If I had to guess, he’ll go back to what he was before and Peggy iirc? will go back to what she was and so on down the line.”

    Mr. Doll was the Commissioner for Patents before his current gig as Acting Director of the PTO. The commissioner position is a five year appointment from the Secretary of Commerce. When the five years are up, you have to be re-appointed, or you’re out.

    The appointment of the previous Commissioner for Patents (Mr. Godici) was not renewed. And he didn’t even have a 1.2 million application backlog or a 32 month pendency.

    Mr. Doll is not going to be appointed by President Obama to be the Director, and will go back to being Commissioner for Patents once a replacement is confirmed.

    My prediction is that when his five year appointment as Commissioner expires, he will not be renewed.

    Then he will be gone.

    I’m chilling the champagne in anticipation of that day.

    “He won’t have many job offers once he leaves”

    He will be exceedingly lucky if he gets one offer. I guess there are always those prosecution mills that love to hire and trout out their former PTO officials for their “overseas” clients that may give him a look.

    Not sure why deferred examination would be an accomplishment.

    But hey, let’s throw him a bone and assume it would be. Then yes, he would leave office with ONE accomplishment.

    Yippee.

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  12. “Gimme a break, I actually voted for Bush twice.”
    Did you learn anything from that mistake?
    Posted by: Malcolm Mooney

    Yes, I did. I’ll regret that second vote the rest of my life.

    I would like to see a massive management purge at the PTO, especially of those who blindly followed orders (or were too dimwitted to understand).

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  13. Giving applicants an incentive to delay examination is a double edged sword.

    For the clients that want to avoid infringment, delayed examination is a nightmare due to the uncertainty it creates. The backlog is already causing this problem though. But the examination history of patents that are close, but not quite, to what you want to do, is a really useful road map for finding relevant prior art. The delay in examination and issuance of patents will make it even more difficult to find relevant prior art.

    For the clients that have an agressive patent filing strategy, delaying examination is a dream come true. They often value the threat of an unexamined patent application more highly than an issued patent with narrow claims. Many file provisional and then PCT, just to cause that delay. So there are already many options to delay examination for applicants.

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  14. “Besides, maybe Doll would like to have ONE accomplishment on his resume before he leaves. He won’t have many job offers once he leaves, except for perhaps the free software foundation.”

    I doubt he’s “leaving”. If I had to guess, he’ll go back to what he was before and Peggy iirc? will go back to what she was and so on down the line.

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  15. “Gimme a break, I actually voted for Bush twice.”

    Did you learn anything from that mistake?

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  16. Examination is deferred all over the world because the only patents that matter, for most applicants, are U.S. and EPO, which is about 1/2 of the world’s economy.

    Japan doesn’t matter because Japan doesn’t issue patents to foreign concerns – if anything, they issue splinters that vaguely resemble the patents that issue in the U.S. and the EPO and that offer you no protection in the JP legal system.

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  17. it should be interesting to see how the uspto can take a rational idea, used in most other countries with excellent result…

    and totally screw it up/make it useless/pointless.

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  18. Gimme a break, I actually voted for Bush twice. Hardly a partisan. But yes, I do hold grudges, sometimes for life. As I remember, this guy was willing to push the failed continuation ending rules through knowing they would address only about 1% of the backlog.

    At one time in the past, I had decided to make the PTO a career.

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  19. provisional applications would need to be published in such case

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  20. “He is a leftover from the bad Bush days”

    I am flabbergasted by this comment. Doll is a career patent guy. What a bitter little partisan you must be JohnG. You should attend an bitter little liberal anger management class. I hear Nancy lets-keep-the-poor-from-reproducing Pelosi needs a lab partner.

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  21. “I do not believe it is wise to deal with this man. He is a leftover from the bad Bush days. Let that be known, wait and plan for talks with the new appointees.”

    But rumor has it that Doll will still be with us for another year before he is replaced. That’s still a long time to wait.

    Besides, maybe Doll would like to have ONE accomplishment on his resume before he leaves. He won’t have many job offers once he leaves, except for perhaps the free software foundation.

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  22. I do not believe it is wise to deal with this man. He is a leftover from the bad Bush days. Let that be known, wait and plan for talks with the new appointees.

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  23. “I don’t want deferred examination. I want my client and my client’s actual and potential competitors to know as soon as possible the scope of patent protection available, and my client wants to know the scope of competitors’ patent protection as soon as possible.”

    Most of my clients are similarly positioned. Also, I have some experience with spin-offs, and I’ve found that investors often don’t put much stock in a filed patent application – they actually ask for and review (or have their counsel review) the first OA to see how likely and broadly the patent might issue.

    But there are cases where deferring examination is in the client’s best interest. I’ll give you two:

    1) A sole inventor or small-entity client may be operating on a shoestring budget, and may wish to get the business up and running before taking on prosecution expenses (or, if the venture founders, may wish to walk away from it without paying unnecessary expenses.)

    2) A large nonprofit organization, such as the tech transfer office of a state university, may be under pressure to out-license as many inventions as possible – not to maximize ROI, but simply to have its employees’ inventions put into practice. The name of the game here is maximizing filings and licensing (at low rates) on a fixed patent expense budget. It may be in the office’s best interest to devote most of its budget to filing fees in order to maximize filings, and to cut bait on the apps that haven’t been licensed by the first OA. Therefore, pushing off the first OA as long as possible is preferable.

    - David Stein

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  24. David Stein | Jan 28, 2009 at 03:11 PM — I agree

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  25. I don’t want deferred examination. I want my client and my client’s actual and potential competitors to know as soon as possible the scope of patent protection available, and my client wants to know the scope of competitors’ patent protection as soon as possible.

    Also, issued patents are better indexed and accessible than published applications.

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  26. [sarcasm]Naow that we are paying them dues every year, they have a financial motive to keep us employed and in the profession. Best $100 bucks I ever spent.[/sarcasm]

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  27. “John Doll is actually doing something he should have done when he first took office. Maybe he will actually listen to the patent bar this time!”

    I’m only slightly optimistic. Seems that every time the USPTO indicates that it wants a “dialogue” with practitioners, it anticipates that our half of the dialogue will consist of “I agree,” “I understand,” and “I will comply.”

    Last October’s “Partnering in Patents” program touted the promising subtitle: “An Open Dialogue Between the USPTO and the Bar.” But there wasn’t much “dialogue” to be had… only presentations on the USPTO’s perspective and demands for compliance. The USPTO served up prepared answers to a selected set of soft-pitch questions, and it wasn’t really in the mood to listen – just to make decrees.

    - David Stein

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  28. many provisional applications are prepared and filed quickly and cheaply and do not meet 112 requirements. they are filed the day of or the day before a disclosure. a complete application is then filed within the one year period so there is no 102 bar. now if the regular application is filed later than one year, there will be all sorts of problems.

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  29. “And yet putting a limit on the number of continuation applications one can file is considered to be the worst thing ever in the history of the world.”

    I have a far larger problem with limiting the number of RCE’s.

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  30. wow, John Doll is actually doing something he should have done when he first took office. Maybe he will actually listen to the patent bar this time!

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  31. David Stein “If a pending application is an unresolved legal question, then the current system features many more questions than answers.”

    News flash: many people who use the PTO system as a revenue-generating tool consider this a feature, not a bug.

    “we’re already in an age where first OA pendency can easily outlast the entire life cycle of the product or business model to which it pertains (particularly in IT.)”

    And yet putting a limit on the number of continuation applications one can file is considered to be the worst thing ever in the history of the world.

    Go figure.

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  32. “The best explanation might stem from the backlog of US patent applications which prevents most cases from being examined in the first three years.”

    Exactly. What’s the point of affirmatively a delay if the process will give it to you anyway?

    But looking past that – I’m ambivalent about this.

    On the one hand, I like allowing inventors to choose among several options in the examination process. Applicants can have many uses and business models in mind, and the USPTO’s agreement to accommodate various interests has a nice “customer service” aspect.

    On the other hand, we’re already in an age where first OA pendency can easily outlast the entire life cycle of the product or business model to which it pertains (particularly in IT.) The growing delays in the patent system are causing it to revert to a patent registration system: the item most often used in patent-related disputes (such as licensing negotiations) is not a patent, but an unexamined patent application. If a pending application is an unresolved legal question, then the current system features many more questions than answers.

    Given this state of affairs, I’m not sure that sanctioning delays is a good idea. Only once we fix the backlog problem through hiring, improved retention, and more efficient examination, so that most applications are examined within a year of filing – only then will this option be acceptable.

    - David Stein

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  33. “Perhaps to extend beyond one year, the PPA ought to have all the parts of a full U.S. application.”

    You could allow status conversion to a utility (like they have now) for 2 to 5 years, but the provisional would at least have to have the standard utility elements. That would mitigate the cost-cutting provisional issue.

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  34. I don’t like the idea of letting applicants claim priority from provisional patent applications for up to five years. These provisional applications are not published. If that becomes the route, then the result will be delay in the availability of prior art references not only for use in examining applications, but also for applicants to determine whether it is worthwhile to go forward with conversion to regular. Also, I find that the applicants who want to file provisionals want to cut costs a lot, which means cutting corners, resulting in inferior patent disclosures. I wouldn’t mind seeing provisionals go away altogether.

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  35. These are actually really interesting ideas. I’m not too sure about extending the PPA period, because inventors are already a bit too prone to think that insufficient disclosure is in fact sufficient. Perhaps to extend beyond one year, the PPA ought to have all the parts of a full U.S. application. Hmm . . .

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  36. Dave, I can’t see why it should contravene Paris. Give us a hint. Where are you coming from, on this issue?

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  37. “Am I right?”

    No. First, it’s not clear that Paris Article 4 prohibits a longer period for claiming priority than 12 months. In any event, however, Article 4 A(1) adresses priority claims in one country to applications filed in another. It says nothing about a priority claim in a U.S. application to a U.S. provisional application.

    As long as the rules are non-discriminatory between U.S. nationals and non-U.S. nationals, I don’t think there’s any problem with Paris at all for the 5-year priority claim proposal.

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  38. Let’s just end universal examination altogether. Preserve examination resources for when a patent is asserted/threatened/licensed/etc. The USPTO probably best exists as a mere registration entity anyway.

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  39. It all sounds reasonable. In Japan, do nothing and defer for 10 years – why?? to defer payment of fees. In US pay an ADDITIONAL fee up front to defer the application for less time than the PTO defers it for free. Yep – sign me up for the deferral program.

    His suggestions sound pretty good, except the last. Not that it isn’t a good idea, but is there a problem with the Paris Convention? This is a from-the-hip question, but that thought popped into my head when I read it. Am I right?

    Dave

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  40. What if the request to examine fee were $10K in the first year, $8K in the second year, $6K in the third year, $4K in the fourth year and $2K for any year after that?

    As time passes, Applicants would be far enough past the initial drafting costs to objectively assess the marketability of their invention and decide to move forward or to not throw good money after bad.

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  41. (3) delaying spending fees could have a great cost savings if the delay allows companies to take 30 seconds on google to figure out that a significant number of applications are no longer worth pursuing.

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  42. Yes sir boss, you read that right.

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  43. What’s wrong with me today?
    These suggestions seem to benefit inventors.
    Do I read that right?

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