Predicted 2009 Patent Application Filings

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via CNN in an article titled: “Recession’s latest victim: U.S. innovation.”

Dennis Crouch’s Comment: Patent filings are clearly down, but I don’t know that I agree with the reporter’s conclusion that therefore “U.S. innovation took a step backward for the first time in 13 years.”

There is almost certainly a link between patenting and innovation. However, a single-year drop in patenting does not necessarily correlate with a drop in innovation — especially since there is often a lag of 6-12 months from the invention date to the utility patent filing date.

Further, I tend to attribute huge rise in patenting activity over the past two decades more to a perceived strengthening of the patent right and less to an actual increase in innovations. In recent years, court decisions and threatened action from congress may have reduced the perceived potential value of the patent right — thus lowering demand. Perhaps now, applicants are filing fewer ‘junk’ patents.

Finally, the report also misses the reality that about half of US patent applications stem from a non-US entity and those filings often have a multi-year lag between the innovation and the US patent application filing. It will be interesting to see which group (US vs. Foreign entities) have seen greater reduction in their patent filing activity.

79 thoughts on “Predicted 2009 Patent Application Filings

  1. Happy holidays all!

    Didn’t mean to check this blog today, but it came up on my machine.

    Old Timer–Boss 12 said it well–yes, they are all incremental, and it may have been a poor word choice on my part. But you know what I meant.

    I find your 1984 illustration totally unconvincing. Do we look back upon the late 1800′s-early 1900′s and say that there wasn’t as much innovation because they didn’t have washing machines or televisions or motor cars or electricity or flush toilets or a vaccine for polio or whatever? Ridiculous.

    More bullcrap: your 2×4′s, concrete, stone, ceramic tile, wiring, breaker box, incad/fluorescent lighting, gypsum board, plywood, cast/machined/drawn/forged metal fabrications, worked/finished wood, float glass, spun aluminum pots, oil/latex paints, CD player, digital watch, whatever. They all existed.

    I don’t think you’re as much of an old-timer as you claim to be. Why 1984?

    None would patentable under a strict KSR analysis? Prove it.

    And finally I disagree with your conclusion about a lack of meaningful protection. The patent document is not the entirety of the situation. The protection is available, if you can afford it.

  2. OldTimer says: “So the real question to ask is: has the world become twice (or thrice) as innovative in the last 25 years? IMHO, the answer is: definitely, yes”

    I agree.

  3. yet another obfuscation between “patent eligible” and “patentable”

    if you work at the office, you need to get this right

  4. Old Timer: “ALL developments are incremental.”

    I won’t dispute that. However, I will say that some increments are larger than others.

    Surely you are not saying that a tiny incremental advance is the same as a large incremental advance, are you?

    KSR tried to draw a line between obvious increments and non-obvious increments.

    In other words, if Applicant’s invention is a large enough incremental advance to be non-obvious, then the invention is patent eligible.

    Otherwise, it’s obvious — like most of the computer software patent applications that I see everyday.

  5. To quote from this comment link to patentlyo.com

    > Someone taking the time to write up some particular idea should not preclude others from implementing those ideas in products. As an example/analogy, the first to come up with an Obama joke should not preclude others from making similar types of jokes. In all likelihood, that joke likely follows many patterns that already existed.

    > How about this: subsidize the USPTO with general taxes. Make patent applications free or inexpensive (after all, you want people to publish ideas), then have the government give one of various size awards to those that are given a patent. Sure, maybe others already knew of the idea and are implementing it, but the one that files simply gets a shot at prize/grant money. This to me sounds sensible and actually possibly helps promote the progress of science and useful arts without even infringing much at all on the liberties of everyone else.

    > The funny thing about this idea just mentioned is that people already are giving to the public all sorts of great ideas! And in numerous cases, they aren’t just giving many ideas, but a full working software product [usable by anyone for $0 and under very liberal copyright terms!!] The latter is called open source development. And the government frequently doesn’t give any money or much recognition for any of these contributions to society. Don’t ever say the government doesn’t make mistakes.

  6. >> There is almost certainly a link between patenting and innovation.

    It’s a travesty to give a monopoly to the first person to file a general description of a new combination of various things.

    Imagine if you took a course at a college or university and were given each week a difficult take-home exam consisting of a single “nonobvious” question, but only the first person to turn in a generalized description of the answer would get a score of 100% and everyone else would get 0 points.

    And, further, imagine if you couldn’t leverage any of those problems/solutions for which you weren’t the first to file for as long as you took classes in that school (ie, up to 20 years).

    Imagine if you didn’t find out until years later if you had gotten a 100 or a 0, and, if you got a 0, everything you had invested while taking the test and afterwards (that was related) could be used by those that got 100 but you couldn’t use it yourself.

    It should also be noted that each semester the questions were somewhat repeated but with as twist so as to represent a “novel” problem/solution in some way.

    Would you go to a school like that? Would such a model help society in any way over not following that model and instead letting people use and share what they create as much as they want?

    Patents don’t promote innovation except in a small number of winners (whom we can call antisocial leeches). By definition, they suppress competition from the rest of the world as the worst case scenario [the winner, upon whom everyone must depend exclusively, gets fat and lazy while everyone else must scream to themselves in frustration unable to participate legally], and, as the best case scenario, the applications cost the authors money and take time away from implementing the inventions and improving upon them.

    Sure, when the law of the land is determined by the biggest machine gun, of course everyone has to try and get one or more guns. But that is a horrible backwards society. This leads to a low standard of living (including personal freedoms).

    With software, there is such a low cost to participation that a very large number of potential inventors and users must bear the negative consequences of monopoly prohibitions and/or taxes. Not surprisingly, absent patent threats, software develops very rapidly. After all, you are not fighting mother nature at all. You can create a ship that turns into a plane and then into a building and finally into a human. You can then instantly give a copy of that invention to anyone else to improve upon it. It’s like art and writing in many ways; the limits are the imagination and not mother nature. The computer implements the exact abstract model for which software is defined. It’s trivial to go from the abstract to the real. The invention is the thought. There is no dearth of inventors and hence of independent re-inventions. Finally, many potential inventors and users means you have many many individuals whose rights are abridged in practice by every single patent. And the slap in the face is that it doesn’t matter if you didn’t copy, if in fact you did much harder work than what was described in the patent, or if you worked on your invention for many years. You lose.

    It’s impossible to be the first person to write down (assuming you find the time and money) a general description of every possible idea and contraption which you are capable of inventing. It goes without saying, then, that many things you or your clients or audience will find useful and want you to work on (and which you will be able to create) will have been worked on and maybe patented in part by someone else first. There just are too many people out there and not enough time to immediately document all the possible fruits of your capabilities, first, before anyone else, in all cases. Now, this being the case, why would we want to prevent everyone except first to file/invent and hence prevent many many low friction independent (or not) re-implementations? How does this even approach promoting progress? Talk about a way to throw sludge into the gears of progress. Talk about inequities.

    And the generality of patent claims is a joke. The monopoly grants based on these means that vague notions about something that were written down quickly get 20 years of monopoly over more well-defined and advanced existing ideas (that for one reason or other did not form prior art).

    It’s also quite hypocritical to leverage so many unpatented ideas, to think that anyone is an island and is that indispensable to the rest of society and doesn’t leverage the ideas and work of their peers, and then go file a patent and try to enforce it on everyone else. Patent authors that exploit their unconstitutionally granted monopolies: standing on the shoulders of giants to p on them.

    The patent system rewards maximally (and hence encourages) those that watch society and jump to the front of the line, borrowing as many unpatented ideas and inspirations as possible so as to create as quickly as possible a very general description that becomes the widest possible roadblock or toll booth for everyone else.

    Two ways that would put patents on a fairer field along the lines of copyrights would be to (1) make them automatic (this would clearly show the folly in the system as society grinds to a halt and as we all find out just how much our ideas overlap and depend upon each other), and (2) allow for independent invention defense (this would add sanity). Of course, copyrights lasting for life of author + 50 is ridiculous when the intent is to promote the progress of science and useful arts.

    Alternatively, scrap the system entirely or except for very well defined cases where it was argued quite well that progress in the sciences and useful arts were promoted. Likely, the monopoly period would have to be much shorter than 20 years in order to argue this successfully.

    Finally, why even have monopolies, when there are so many other ways to help promote progress (eg, tax credits, grants, and recognition).

    The open source world has shown that plenty of motivations exist for innovating. Humans like to create new things by nature when it is within their reach (not too expensive to participate). This is especially true when you can use your fruits without charge and restrictions and can even help create huge harvests through collaboration.

    The Internet truly has been a game changer. Because of the power of cheap computing and the collaboration now possible through the Internet, there are today really high opportunity costs with virtually any software patent monopoly and even with many other types of patent monopolies.

  7. I find myself wondering: what’s a patent system “for”. Congress needs to know. Is it:

    To promote the progress, regardless, or

    To promote the national interest, by promoting the progress, or

    To promote gainful employment, by promoting the progress?

    If the last, does one nevertheless decide to favour start-ups over mature industry?

    Or is this not necessary. Is there a system (FtI in an otherwise FtF world) that treats start ups, and mature industry, equally favourably?

  8. You lost me there, Night. Why indeed does Germany “do so well”?

    Or are you being sarcastic?

    About Germany that is?

    I don’t know.

  9. >>not the special features of its patent system

    Yeah. Why does Germany do so well?

    MM: I am sure a baboon like you would rather hang around cavemen.

  10. Fatalist, I am at fault. Ididn’t read you clearly. you say you are:
    “….talking staff like computers, cell phones, communications etc”

    when it comes to your question:

    “..do you know of any high-profile patent enforcement case in Europe where a small entity or an individual inventor was able to win substantial damages from large corporate infringer ?”

    Not my field, but the only individual inventor of an electronics device I can think of, who has brought infringement proceedings against a global titan, is Andreas Pavel, in the English High Court, against Sony. It was a big case. He lost it.

    It’s not every day that an individual inventor invents a new cellphone or computer in his garage, but individuals do still create new medical devices, and engineering innovation does continue.

    If we include biotech, university start-ups and spin-offs, there’s any amount all over Europe, specially in Germany. Think Fraunhoefer Institutes. In UK, take Oxford Innovation Ltd, for example.

    On another thread, just look at how non-US Applicants are filing an ever-increasing proportion of new apps at the USPTO. Look to the future. ROW isn’t doing as badly as you like to suppose.

    The USA has a more “aggressive” attitude than Europe towards entrepreneurial activity, as I keep writing in these columns. That (and not the special features of its patent system) is what has brought the USA great riches.

  11. I like this Old Timer guy… angry little hacks like Mooney and 6 could take a lesson from him (but, no doubt, won’t) I especially like the part about how we were like cavemen. Truer words were never spoken.

    And to the Duell-esque Luddites out there, in 2029, we will no doubt come to the same conclusion on a new set of facts.

  12. >> Was America really only half as inventive a nation when its domestic patent filings were only half of their recent peak (taking lead/lag times into account)? Even in pre-Federal Circuit days a lot of very important, innovative work was going on in labs across America.

    Initially, you’re asking the wrong question. The USPTO has effectively served as the patent office to the world for the last 25 years. (A distinction we will forfeit if we don’t get our patent laws in order.) So the real question to ask is: has the world become twice (or thrice) as innovative in the last 25 years?

    IMHO, the answer is: definitely, yes. Put yourself in the world of 1984. An 8086x processor with 256k RAM cost $3000. Cell phones did not exist. What the Hell is an Ipod? Al Gore had not yet invented the Internet. AIDs was a death sentence. Cars had carburetors and ran like crap. The world was still heading toward a second Ice Age because Al Gore had not yet invented global warming. When you got cancer, you more or less went home and died. What’s a DVD? If you wanted to listen to the latest song by Kool and the Gang you got in your car, drove to the record store, bought the record, took it home and spun it on your turntable. Your television had a tube, a crappy picture, and weighed about 600 pounds. You snapped crappy, out-of-focus pictures with your Polaroid camera.

    Walk around your house and look at the array of gizmos and gadgets of modern life. In my house, with the exception of my oven and fridge, none of this stuff existed in 1984. Relatively speaking, we were flippin’ cavemen.

  13. >> I would point out to Old Timer that a temporary monopoly system may not be critical, or even important, to supporting and encouraging disclosure of incremental developments.

    I think you missed the point. ALL developments are incremental. They always have been, and they always will be. That’s the way science and technology work. Incremental advances, baby steps if you will, that build on the work of others. And that’s where our current law, primarily KSR, has gone hopelessly out of synch with reality.

    Pick any technological advance you would consider a breakthrough, then research its history. You’ll find it was not so much a breakthrough as a minor but critical advance in the science or technology advanced by predecessors in the field.

    Examples:
    Penicillin: it was known for centuries that blue bread mold facilitated healing wounds. The Knights Templar used this technique, packing wounds with a moldy bread poultice.

    Wireless: Marconi’s wireless work built directl on the work of Tesla and Lodge.

    Aviation: Wright brothers built upon the work of numerous others in the aviation field, including Samuel Langley and Clement Ader.

    Electric lighting: Edison’s light bulb advances built on the work of others, including Woodward, Evans, and Swan.

    None of these inventions would be patentable under a strict analysis of KSR.

    Nothing has changed in R&D in science and technology. Science and technology continue to advance in baby steps which follow the lead of predecessors in the field. But patent law has changed in a way that it can no longer provide meaningful protection to these advances.

  14. “Ron Hickman’s WORKMATE, James Dyson’s vacuum cleaners and Mandy Haberman’s ANYWAYUPCUP”

    With all due respect, Max, your examples are laughable

    Mechanical contraptions ? Patent filing doctors ?
    Just give me a break

    I am talking staff like computers, cell phones, communications etc.

    basically silicon + software and all the new stuff this combination can enable

    ANYWAYUPCUP ? :-) :-) :-)

    And BTW, do you honestly think that every patent filer should also be a successfull money borrower to collect any money from his granted patent ?

  15. Fatal: my instant reaction. From England (where the difference from the USA is Ftf vs FtI) try Ron Hickman’s WORKMATE, James Dyson’s vacuum cleaners and Mandy Haberman’s ANYWAYUPCUP. The most recent is Haberman. Do you know how many millions the first two are worth, these days? What did they start with? A patent application and huge borrowings.

    Google them, do.

    Then there are those patent filing doctors. I just don’t know the names.

    The position in Germany will be just as persuasive. I just don’t know the names.

    Granted, there are too many languages in Europe, and it makes things cumbersome and expensive. But don’t despair. Before long there will be English and Spanish, and nothing else. Problem for the time being is, the little countries don’t want to relinquish their pesky languages. And why should they? What do you want – the 4th Reich?

  16. I agree with everything said by Old Timer, up until he said that europe is now a much better forum in which to seek patent protection.

    For me, the jury is still out on that one.

    I would point out to Old Timer that a temporary monopoly system may not be critical, or even important, to supporting and encouraging disclosure of incremental developments.

    It’s a chicken-and-egg question: should the patent system be altered to reflect current research realities, or should the research system be altered to reflect current patent realities?

  17. Max, dude

    do you know of any high-profile patent enforcement case in Europe where a small entity or an individual inventor was able to win substantial damages from large corporate infringer ?

    In America we had some, until recently

    In Europe – I don’t think so

    The EPO might be doing great in their patent searches, but overall the European patent system is hugely overpriced and castrated piece of junk

    But now that they have castrated the Great American Patent system small entites have nowhere to go for patent protection

    Trade Secrets rule !

    Amen.

  18. Was America really only half as inventive a nation when its domestic patent filings were only half of their recent peak (taking lead/lag times into account)? Even in pre-Federal Circuit days a lot of very important, innovative work was going on in labs across America.

    Dennis, I’d like to see some disinterested parties (i.e., not the patent bar and not the usual suspects in corporate America) take a hard look at the link between innovation and patent activity.

  19. Aptly named, that Fatalist. I guess he means that Europe doesn’t exist for American small entities. Well, so what? The USA hardly exists either, for European small entities.

    But whether patents in Europe are important for European small entities, yes, for sure. For the reasons that Old Timer gives. Mysteriously, European SME’s get better value for money out of the European patent system than do US SME’s. They file, early, then get investors on board. PCT is important. The difference between Europe and the USA is that here it is substantive content that counts, not whether the PTO got bamboozled into issuing a duff grant certificate. In Europe, rights accrue, as from the 18 month unexamined A publication.

  20. “Europe is now a much better forum in which to seek patent protection”

    You are joking, aren’t you ?

    For small entities Europe does not exist as far as patents are concerned

  21. At least in the EE/CS/Semiconductor arts part of the drop in filings can be explained by the impacts of KSR, Bilsky, eBay, and other anti-patent decisions on the way patents are used in these industries.

    In these industries with fast-moving technology development and short product cycles patents are ineffective at preventing someone else from using your invention. By the time the patent issues the technology has moved on. Resolution of patent infringement is therefore addressed by post-hoc licensing, if at all. This requires certainty in patent rights and damages law.

    The cloud cast on the validity and enforceability of patent rights by these decisions has rendered patents far less desirable. My clients, at least all the large tech companies, now uniformly view the patent system as being pretty useless. Sadly, I think they are correct.

    And contrary to what some people argue, there is a direct link between innovation and patents, and that link is capital funding. Anybody who has worked with startup companies understands the role that patents play in the funding process. Changes in U.S. patent law are having a negative effect in start-up funding for capital-intensive technology companies.

    The body of U.S. patent law is now hopelessly disconnected from the real world of research and development. Science and technology advance in small increments, building on the work done by predecessors. The standards for patentability set forth in KSR are wholly incompatible with this reality–small increments which build on the work done by predecessors are no longer patentable. I’m unaware of a single invention throughout history that could survive a strict analysis for obviousness under the standards set forth in KSR. Bilsky is going to knock out an entire swath of patents on subject matter.

    The rise of the US patent system which started with the advent of the Federal Circuit in the 1980s is over. Europe is now a much better forum in which to seek patent protection, to access public capital markets, and has better corporate tax structures. Does anyone seriously believe this is not detrimental to technology development in the U.S.? The mind boggles . . .

  22. “BTW, is there a similar graph for all patents issued? This one is limited to US resident inventors.”

    Anon. The link takes you to a two page presentation. Flip to the second page to see non US resident inventors.

    I don’t have a version with both of them combined.

    (and thanks for the compliment)

  23. Subsequent to the burst of the Internet bubble in Mar/Apr, 2000, over a couple of years there was a demise, at least by name, of a number of IP botique law firms – several of them rather large. One might reasonably assume the same will occur again.

  24. Nice per-capita graph — thanks, Mark.

    I never realized how many patents we had between 1867 and 1930.

    BTW, is there a similar graph for all patents issued? This one is limited to US resident inventors.

  25. Here’s another one: if a doofus repeatedly makes the same tired argument, but under a different name, is he still a doofus? Yes, yes he is.

  26. If Mooney makes a blog post in the forest that he thinks is witty and no one is around, is the post still ignored?

    Yes, it is.

  27. If you look at the numbers on a per capita basis, they are somewhat more revealing. Here is a link to an open google docs presentation showing historical per capita patent rate for US residents and non US residents link to bit.ly

    If someone could explain how, I’d be happy to drop the pictures in here.

  28. “The unusual situation with this patent is that it was filed in 1983 and did not issue until 1994. Is this unusual for patents in this technology?”

    Ken,

    Not at all, especially when you get into the details. This invention is in the field of bio-tech, which relies heavily on long chains of continuations and CIPs to adequately protect ongoing innovations after the discovery of an initially promising area. This particular patent is the fifth in a chain of 8 continuations and CIPs. It was the original parent that was filed in 1983, not this application itself.

    I’ve seen chains of over 30 CIPs. The need for bio-tech to use long chains of CIPs was one of the big motivators for GSK and others to oppose the continuation rules.

  29. I suspect the decrease in filings also has something to do with KSR. From a timing standpoint, it would seem the drop is due to a reluctance to file a continuation or divisional application stemming from a parent filed before or around the time of KSR.

  30. Ok I admit that this is totally off topic; however, it has to do with the food that each and everyone of us eats. Yes, I am talking about a Monsanto patent. It is patent number5,352,605 and several farmers are being sued/have been sued. The unusual situation with this patent is that it was filed in 1983 and did not issue until until 1994. Is this usual for patents in this technology? I mean that is a really, really long time.

  31. Anastasia is on to something. Every patent attorney is, in effect, a salesman talking up the value of his product — patents. And as one would expect in any field, the greater the number of salesmen on the road or on the web trying to gin up interest, the greater the aggregate demand. Up to a point. Eventually, people figure out what the product is really worth, and sales shift accordingly. I suspect that this recession has proven to be a good time for those who pay the bills in corporate America to rethink what this medicine is really worth to their bottom lines. (Speaking of which, how accurate are the numbers in the salary/income/cost to get a patent surveys the AIPLA releases every year? Their patent price levels seem suspiciously high. Or is it that my clients are especially parsimonious?)

  32. “Further, I tend to attribute huge rise in patenting activity over the past two decades more to a perceived strengthening of the patent right and less to an actual increase in innovations.”

    Personally, I attribute the huge rise in patenting activity (at least in part) to what I believe is a huge rise in attorneys taking the patent bar. It used to be that becoming a patent attorney was a second career, after some time spent working as an actual scientist/engineer. Today, there are tons of youngsters going directly from engineering school to law school, the engineering degree being no more than a ticket to sit for the patent bar, and coming out of law school without any “real world” experience, their first real job ever being in a law firm. Bottom line is there is a huge oversupply of patent attorneys for the demand right now. I’d personally like to see the number of people taking the patent bar annually overlayed on the chart above. I’d also like to see some data on number of patent attorneys per capita for the US versus other countries. Dennis, can you work up a chart for that? Thanks.

  33. It’s always funny when people revere Nixon. And don’t conservatives play up Reagan because he spent so much on Star Wars that the Soviets couldn’t keep up with the spending and collapsed?

    By the way, word on the streets at the PTO is that reviews of allowances are down and are being shifted to increased in-process reviews (one assumes to catch crappy rejections).

  34. Though some complain because the drop in filings has cut into their profits, perhaps it’s a positive turn of events, in some ways. As you say, maybe fewer junk patents will tie up the filing system. And, quite likely, in these past years we’ve been experiencing a patent “bubble” that finally burst. Maybe this phase of “leveling off” will also lead to some much-needed patent law reform efforts. In any case, I agree that innovation and patent filings, though related, are not synonymous. So, in short, I suspect that the rumors of the death of innovation have been greatly exaggerated.

  35. I know that my clients have cut way back on their filings and abandoned many applications and patents. (All of which is causing me severe financial problems.)

  36. I share the suspicion that the number of new applications filed fell more dramatically than the RCE+new total. I also suspect that, given the degree of time-ramp to get an application filed and the fact that the PTO’s fiscal year ends 9/30, the 2010 numbers may also be pretty grim.

  37. Roger,

    It would be intersting to cross reference the data you indicate (patent commericalization rate < 5%) over time compared to both the “offical” application rate as well as the RCE-adjusted application rate (as TheRoaringNineties indicates).

    The USPTO website indicates that upwards of 30% of 2009 filings have been RCEs. I suspect that the RCE rate over time has moved in step with the enforced “quality” mantra of reject-reject-reject that drove the allowance rate down well below the normal deviations of historic trend lines.

  38. Innovation took a serious step backwards when Bush 43 came to Office. Since the Cold War started in the fall of 1943 the top minds, typically the top 5%, were monopolized by the U.S. government. I shall not go into how the U.S. national laboratories were modelled after one of our WWII opponent’s research centers. However, I will state that it is more than coincidence that technological innovation exploded after Bush 41 substantially reduced the military expenditures in the late 1980s. All those great minds were released from their contractual obligations to the U.S. government and allowed to innovate for the civilian sector. Even some of the modern squirt guns were desiged by aerospace engineers that once worked for the defense industry. When Bush 43 ramped-up the military-industrial complex most of those great minds and many new ones returned to the black projects. Also there is no small coincidence that we are spending nearly 700 billion dollars annually on our defense budget and civilian companies are hurtings, as is the rest of the civilian economy.
    However, Obama does not want to become the next Nixon. Obama made a promise to get elected that he would not hurt the profits of the military-industiral complex. That is why he sold to the American people that he would wind-down the Iraq war. However, he failed to mention that he would increase military activities in Afghanistan.
    The long and short of it is thus:
    Had we elected a president with greater intestinal fortitude like Nixon or Reagan, the military-industrial complex would not be draining the U.S. economy as it does now. Instead, however, we have someone with less gravitas. He talks the talk, but he simply doesn’t walk the walk. Still he was a much better choice than McCain.

  39. Considering that as of a few years ago less than 5% of U. S. patents were ever commercialized, there was and maybe still is a lot of head room for additional cut backs in filings.

  40. I work mainly in the electrical and mechanical arts, with a bit of software work thrown in.
    Over the course of the last few years, I’ve seen some of the more patent-savvy of my clients conclude that the balance between what patents cost to get versus what they are worth once gotten has shifted against their getting them. Not in all cases of course, but clearly a lot of things that would have gotten the green light ten years ago do not make it out of patent committees today. I suspect that once one has correctly factored in RCEs (by discounting them), the number of filings is off by a lot more than this data indicates, especially by domestic inventors. That’s bad news for the patent bar, but I cannot conclude that it is bad news for America.

    Almost all the invention that I saw and still see in the marketplace is driven by competitive pressures and has nothing whatsoever to do with the opportunity to get a patent. My clients (and yours) innovate because they have to, and not because innovation is something that they have to do if they want to get a patent. They understand that if they don’t innovate, they risk getting swept aside by those of their competitors (Asia and Europe) who do. Patents are mostly an afterthought for them, an expense that they increasingly conclude they can live without. Again, that’s bad news for me and probably for thee, but it’s simply not the same as heralding a decline in Yankee ingenuity.

  41. Dennis, from good comments above, it sounds like it might be informative to check for a [signicant?] decline in new applications assigned to the “business methods” art unit lately, and also to check for a reduction in maintenance fees paid?

  42. From personal experience, it is a fact that large corporations have patent budgets and trim their cloth to match those budgets. It’s also a fact that a significant proportion of the corporations that I work with have slashed their budgets in the last twelve months, resulting in abandonment of already-pending cases and a reduction in the filing of new applications. They’re just being more selective about what they spend their money on. For many of them, new filings are largely just a “numbers game” and there’s plenty of scope for not filing apps on inventions of limited commercial or technical value. Reductions in new filings do not necessarily correlate with a reduction in innovation, and at this level of reduction I suspect there’s no real connection at all. I doubt that many are foregoing patent protection for innovations that they perceive as having genuine value.

  43. It may be that companies are getting rid of weak applications and patents, which would not be that horrible.

    However, if they have significantly decreased r&d investments then that would be a cause for worry.

  44. Opinion:
    I believe there is a point within this downturn of patent applications; that patents are in fact less important when markets in the short term future, talking about those markets that define the value of patents in and out of the Courts, will have any value to add to patents being value above the cost to obtain them. If one is not willing to pay to obtain a patent, what value does such a patent have, what value would it have had without the downturn ?. I hope the SCOTUS has knowledge of this, I believe it will shine a clear light that patents and their owners view of them, rest upon a value call only… with nothing to do with “innovation”.

  45. “Rumor has it that it will be a 15% raise in fees across the board. Take it with a grain of salt tho, I expect RCEs to take a bigger fee increase.”

    Maybe RCE’s should be filed as new continuation applications then (with Prel. Amendments)?

  46. There is almost certainly a link between patenting and innovation. Yes, more innovation creates more patent applications. But are you saying that patenting increases innovation? If so, based on what evidence?

  47. Deriving a causal link between patent filing and US innovation is a bit like estimating the health of Americans by the combined American and Japanese total annual expenditures on sports/energy drinks. I presume persons and business entities pursue their IP strategies based in part on funds available and near-term projections. So, one might speculate a drop in IP filings – but not necessarily innovation – might be correlated and even caused in part by the US economy. (The “filings” table at the top of page 27 of the USPTO annual report shows preliminary data reflecting a 2.3% drop in patent filings while the trademark filings fell 12.3% from last year: link to uspto.gov .) Second stage renewals fell from 73.7% in FY2008 to 63.6% in FY2009. As the Patent Office divines a way to cost-effectively examine the growing multi-year backlog, clearly, the time bomb on the patent side is the 32.3% built-in dependence on maintenance fees that include pre-KSR and/or pre-Bilski patents. (Compare the patent side revenue with the trademark side that received 8.7% of its revenue from renewal fees, and note the trademark renewal rates being largely unchanged from last year).

  48. How exactly do _you_ tell when software innovation increases or decreases?

    Wow, talk about missing the point.

  49. Rumor has it that it will be a 15% raise in fees across the board. Take it with a grain of salt tho, I expect RCEs to take a bigger fee increase.

  50. Malcolm, you seem to fancy yourself an expert on this topic (among many others). How exactly do _you_ tell when software innovation increases or decreases?

  51. If PTO fees are going to be raised they should be raised the same percentage (e.g., 10%) across the board instead of trying to tinker with them.

  52. The PTO like other governmental bodies and governments, e.g, California, should save money when times are good so they have it when times are bad, like they are now.

  53. If the anti-software-patent vocalizers are correct (they aren’t), any reduction in patent filings should indicate an increase in innovation.

    I don’t know about you, but I haven’t noticed a decrease in software innovation.

    Has anybody noticed a decrease in software innovation?

    *crickets chirping*

  54. “Before any changes are made to the patent laws we should wait until the dust settles in view of new PTO management and the SupCt decisions of the past few years and of the upcoming year.”

  55. I already broke this story awhile back when the fy was about to end. Filings were down and fees were way down, mostly like curious said, because of people not wanting to pay fees.

  56. The high cost of patent litigation is not due to quirks in the patent laws, but rather to all of the silly attorney discovery battles/games.

  57. My guess is that the reduction in fees received by the PTO is due more to patent holders pruning their patent portfolios and abandoning patents by not paying the very expensive maintenance fees than it is to a reduction in patent application fees.

    (But that is just a guess)

  58. “I tend to attribute huge rise in patenting activity over the past two decades more to a perceived strengthening of the patent right and less to an actual increase in innovations.”

    In the U.S. maybe, but not in the BRIC countries.

  59. HOPB,

    …of course, the final conclusion to the extent of THAT logic is to simply shut the patent office doors, disband the notion of patents and just usher in a new golden age of innovation (right before we embrace communism).

    I believe that’s the same coin, but the other side of the Charles Durell anti-patent Coin.

  60. I wonder if parsing the data by tech center, or even classification, would show any significant drop off due to Bilski or other factors? I would guess a result showing that there is no discernible difference would support the conclusion that economic factors are the cause.

    Or, we could all just scream “Sample Size!” like the Sabermatricians due.

  61. If the anti-software-patent vocalizers are correct (they aren’t), any reduction in patent filings should indicate an increase in innovation.

  62. Companies have cut way back on r&d spending due to the Great Recession.

    There have been a number of articles in the MSM reporting this.

  63. I think that the decrease in patent filings does correlate to some degree with decrease in R&D. I’ve personally witnessed companies with strong R&D programs reduce those expenditures, close US labs, and lay off large numbers of R&D personnel. I also think it correlates to some degree to perceived decrease in the power of the patent right due to unfavorable court decisions.

  64. I imagine that part of the cause for this decrease is a decreased activity by academic/research centers.

  65. It would be interesting to know whether the downturn could be due to the late 2008 Bilski decision, and whether, if you subtract business method patent filings for 2008 and 2009, the net result is still a downturn or not. Not sure how one would go about doing that.

    I agree that the number of patent filings is not indicative of innovation. In some measure, in a deep recession like we have had in 2009, you would expect that some innovators would choose to keep inventions as a trade secret and not spend the thousands of dollars to obtain patent protection. It would be interesting to hear an economist’s perspective on this.

  66. a single-year drop in patenting does not necessarily correlate with a drop in innovation — especially since there is often a lag of 6-12 months from the invention date to the utility patent filing date.

    Did something happen about 12 months ago that might have affected one’s decision as to whether or not the filing of a patent application was “worth it”?

    It’s really difficult to remember that far back. I think we had a vice president named Dick.

  67. Dennis Crouch’s Comment: Patent filings are clearly down, but I don’t know that I agree with the reporter’s conclusion that therefore “U.S. innovation took a step backward for the first time in 13 years.”

    Thanks for pointing out the vapidity of this reporter’s “analysis.” The last thing we need is another “watchdog” on roids howling that we are entering a new stone age because there are fewer patents.

  68. Is anybody aware of PTO historical data concerning the percentage of total applications filed by small entities?

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