Cost of the Patent Backlog and the Proposed Solution

The UK Patent Office has released a commissioned study examining the “economic impact of delays in processing patents.” The report (prepared by the consulting company London Economics) suggests that the delays (1) reduce the incentive to innovate; (2) increase the likelihood of filing applications on non-patentable inventions (for the benefit of patent pending status); and (3) the monopoly power held by the owners of non-patentable applications. The estimate of these costs on the world economy is $11.5 billion dollars per year. [Link][Link] The article has a number of major problems, but its bottom line does not seem clearly wrong.

The political motivation behind the study is to push toward greater cooperation between the patent offices in examining co-pending applications. 

The bulk of the calculated “costs” are associated with applicants who need a fast-patent-grant.  That problem could be largely solved better structuring elective accelerated and deferred examination.  In that system, applicants who value a rapid grant would have access to that avenue (for a fee) while others willing to wait could do so.

42 thoughts on “Cost of the Patent Backlog and the Proposed Solution

  1. >>Well I for one say it wasn’t Dudas.

    I don’t know about that. The article points out that when Dudas’s proposed rules were published for comment that some 6,000 comments were received and that almost all were negative. The article says Dudas ignored the negative comments (meaning he did not even bother to address the concerns) and went forward with the new rules.

    It is pretty hard to image that Dudas did not or does not have a lot to do with the current problems. The article also discusses other Dudas acts that created problems with the PTO.

  2. Why not just address one of the major contributing factors to the backlog: the PTO’s overly aggressive use of restriction practice? In my short time doing this type of practice, I am constantly frustrated by the PTO’s misapplication of 35 USC 121 to multiply the number of applications that need to be pending. Do we really need to separate proteins from nucleic acids encoding the proteins? Does it really ease “search burden” by requiring 100 different applications directed to the same core sequence? Why is it so difficult to examine a method of using a product at the same time that the product is examined?

  3. Well I for one say it wasn’t Dudas. He saw a Train. He had a Ticket. So he waited for the one that was going the other way. And he got on it and belted out in song. I have a ticket to Ride. I have a ticket to ride ride ride. I have a ticket to ride and I don’t care.

  4. “The article infers that a lot of the troubles with the PTO were caused by Dudas and his inexperience with patents or trademarks.”

    I thought that was common knowledge.

  5. The March ABA Journal has a good article on Kappos. The article puts into perspective the backlog. Worth a read if you have access to the ABA Journal. The article infers that a lot of the troubles with the PTO were caused by Dudas and his inexperience with patents or trademarks.

  6. first among equals,

    Didn’t you get the memo from Still cranky?

    You already have what you are asking for – so why the attitude?

    There’s more to life and patents than money,

    Sure there is – just give me the money first.

  7. “If a company is filing applications for defensive reasons with no desire to sue for infringement, why would that company need a patent right now?”

    The applicant wouldn’t need a patent, but the public needs one to determine whether their new product would infringe and/or to work on a design-around solution.

  8. “The impending patent rights of the guy without venture capital funding are exectly the same impending patent rights of the guy with (or trying to get) venture capital funding, no?”

    Why would they be the same? If a company is filing applications for defensive reasons with no desire to sue for infringement, why would that company need a patent right now? Why wouldnt deferred examination be adequate for this company?

    Different companies have different reasons for filing applications. Some are start-ups that need a few ‘crown jewel’ patents to protect their company against the big guys. Other companies are the big guys who file thousands upon thousands of applications a year with no intention or desire to bring infringement suit to enforce many of their applications.

    Yet under the system we currently have, the run of the mill applications that are filed by the thousands are treated the same as the few applications that are needed immediately by a company.

    The backlog is largely a result of charging a flat rate for all applications, when some applications are more valuable than others. If the pto were to charge more to allow the more valuable applications to jump to the head of the line, the backlog would not be a problem for them. For the remaining less valuable applications, the backlog already isnt a problem for them, so they can wait.

  9. Implement a “friendlier” training and mentoring program for new examiners, purchase new computer equipment, update the classification system, and increase the size of the board.

    Raise all PTO fees 10% across the board to pay for it.

    The backlog will decrease.

  10. Yeah, like what Still cranky said – it’s called do it yourself – See especially MPEP 708.02(a)(H)((1-3) and (I)(I)(3).

    Nothing like getting the customer to do the bulk of the prosecution in order to expedite prosecution.

  11. Can the pto expedite prosecution for the applications that need it without expediting prosecution for half a million applications?

    Um, yes. They call this the “Accelerated Examination” program. You can read all about it at MPEP 708.02(a).

  12. first among equals,

    I think that you provide your own answer when you indicate that every company that didnt get expedited prosecution would complain about being treated unfairly by the pto.

    I would think that venture capital funding is not the only, nor perhaps the primary, reason why people should be elevated out of turn for examination.

    The call of “money” first may upset those who will say that Due Process should not cater to crass commercialism.

    The impending patent rights of the guy without venture capital funding are exectly the same impending patent rights of the guy with (or trying to get) venture capital funding, no?

  13. “The real harm from the application backlog is when it is interfering with getting timely venture capital funding, and/or patent protection for products with short product life cycles.”

    The solution therefore is to expedite prosecution of these applications without expediting prosecution of the rest of the applications. A significant number of applications are filed for products that don’t need venture funding, so they can wait two or three years to be examined. The backlog isn’t really a problem for many applications, yet the pto has to treat every application as if it were equal to every other application.

    The pto probably has the resources to quickly examine the applications that need to be examined quickly. However, if the pto did do this, every company that didnt get expedited prosecution would complain about being treated unfairly by the pto.

    Can the pto expedite prosecution for the applications that need it without expediting prosecution for half a million applications?

  14. I faxed a suggestion for better use of IT to the USPTO and recieved a letter back thanking me for my input, but saying that the Office could not use my suggestions because the fax arrived upside down and they couldn’t figure out how to read the upside file.

  15. Nothing is going to happen to patent backlog until we put the horses and buggies away and start using all of the technology tools we have available. Coronado Group is doing some interesting work on using Semantic Analysis to fully automate the categorization of patent applications into in class/subclass. Their software is now in use by the USPTO.

    That’s a good start. More here link to bit.ly

  16. I have never seen any support for the argument made in this paper that delayed issuance “increases the monopoly power held by the owners of non-patentable applications.” Nor do I find it at all logical, since no one can even sue on an un-issued application, much less derrive any “monopoly power” from it. Also, a relatively inexpensive and fast prior art search by anyone actually concerned about a pending published application is more likely to find prior art showing that the application is “non-patentable” than the very few hours of prior art searching time available to an examiner when that is finally done years later.
    The real harm from the application backlog is when it is interfering with getting timely venture capital funding, and/or patent protection for products with short product life cycles.

  17. A major advantage of publication of applications, when the issuance backlog is so great, is that pioneer inventions are thereby made available as prior art to prevent issuance of invalid claims in later-filed copending applications on the same technology that would otherwise only become retroactively invalid after the belated issuance of the pioneer patent. It has also reduced interferences.
    [As well as to "promote the progress [by faster public disclosure] of .. “useful arts”.]
    And re Ned’s point above, even a license option with ambiguity as to whether you may have to pay for it or not may be a great deal better than later facing the risk of an injunction shutting down a major product line. [But I wonder how many companies are that dilligent about reviewing mere published applications?]

  18. What this article completely and utterly ignores is the societal cost of a (r)ight vs. the cost of a (R)ight. The two are NOT the same. All I can say is that when NAL gets back from rehab, she is going to totally assail you a new one over this discrepancy.

  19. Malcolm, It might also be a good idea to reduce the time it takes to process applications too.

    Reminds me: I still need to read that article proposing a US patent registration system.

  20. ” It might also be a good idea to reduce the time it takes to process applications too.”

    I agree.

  21. Malcolm, It might also be a good idea to reduce the time it takes to process applications too.

    Oh, and, my examiner told my attorney that the his software group just “isn’t allowing patents” as a reason for yet another senseless rejection. It might help to allow at least some patents at some point even if the six or more years it takes to process a patent isn’t reduced.

  22. Because paying a small amount of money now to avoid a small chance of a huge risk later is sometimes a good business decision.

    But wait! I just thought of something. If instead of a “small chance” we make it so the chance of getting fairly broad claims is “pretty good” or even “50/50″, then the amount of money that will be paid for pending applications will increase! And that means that all those people with pending applications will make more money, and they’ll be able to hire employees to invent even better stuff and turn the economy around! It’ll be just like 2000 again!@!!!!

  23. Why not just do it and take your chances?

    Why buy insurance? Because paying a small amount of money now to avoid a small chance of a huge risk later is sometimes a good business decision.

  24. I find it pretty humorous that any of you think some company is going to negotiate a license for a published pending patent.

    Why? It’s not good business. Just wait for a law suit. Years and years will pass before it comes, if it ever comes at all.

    Why not just do it and take your chances? The odds are with you, and you can avoid all the contingencies and other problems and just make money.

  25. Businesses doing clearance searches would like for at least first Office Actions to quickly issue in applications if not the patents themselves.

    Delaying examination is not a good idea.

  26. Binding arbitration isn’t any fun, or cheap, either. My point is that contingencies that are based on something as uncertain as whether a claim covers a product are a recipe for further disputes. Make your contingencies hinge on something more objective. No matter how chummy the parties are today, there will come a day when one of them wants out of the deal. A contingency that depends on a legal conclusion of infringement is loose enough that it begs a test by the licensee. There are ways to structure the deal to achieve the immediate business objectives without setting yourself up for such a dispute.

  27. …if necessary, obtain a license — preferably contingent on a patent issuing that covers the licensed products.

    I know I’m getting off topic, but a license that is contingent on the issuance of a patent claim “that covers the licensed products” is a license that’s likely to get litigated if/when it becomes expensive. In my opinion, a contingency that depends on the determination of a question as tricky as whether a patent “covers” a product is a bad idea.

  28. However, with a published application, the competitor at least knows about the patent and can seek advice of counsel, and if necessary, obtain a license — preferably contingent on a patent issuing that covers the licensed products.

  29. In some ways, we were better off with unpublished applications, since you never had to convince skittish investors that an applicant’s claims were unrealistically broad and would never be a threat to your business.

    In other ways, unpublished applications posed an even greater threat to your business, and you couldn’t even read the spec and work around the claims you thought might issue. A barrier to entry is one thing, but a barrier to success after you’ve committed to the cost of entry is quite another.

  30. There is a strategic advantage that arises from having published applications with broad claims. Competitors cannot know whether the applicant will get lucky. So the claims hang like a sword of Damoceles over any business plans. This makes investors skittish, and functions as a low, but still troublesome, barrier to entry.

    In some ways, we were better off with unpublished applications, since you never had to convince skittish investors that an applicant’s claims were unrealistically broad and would never be a threat to your business.

  31. It wasn’t us what invented patents. We simply copied the Venetian republic. A fine mess it has got us into!

    Beware reports in the social sciences.

  32. What they didn’t tell you was that the patent system as a whole likely costs the world A GAZILLION DOLLARS.

    LOL made up numbers ftw.

  33. Scenes from “The Office” come to mind. Anyone who knows how it is in the UK realize that there are a ton of bureaucrats running around in rumpled suits and cheap shoes looking for something to do, like publish a report.

    I’m still waiting for someone to tell me, particularly with petitions to make special, why a two or three year pendency is such a bad thing. Heck, you can’t real financing much faster than that even if you had a bunch of patents, much less design and put out a workable product…

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