USPTO Breaks New Ground with 300,000 Patents Issued This Fiscal Year

PatentsPerYear

 

Fiscal Year 2014 has just ended for the Federal Government and – as expected – we have a new record number of US patent grants. For the first time, the USPTO has issued more than 300,000 utility patents in one fiscal year. Don’t worry, there remain more than 1,000,000 applications pending in the pipeline and more than 25,000 appeals remain pending before the Patent Trial and Appeal Board. During the fiscal year, the 8,300 patent examiners ‘disposed of’ more than 600,000 cases which in some circles will be calculated as an allowance rate of about 50%.*

Although I reported a rumored pull-back of allowed applications following the Alice Corp. decision in June 2014. However, the numbers do not reflect any dramatic reduction in the number of patents granted during this time period.

An important aspect of this new set of patents is that most corporate-owned U.S. patents are actually owned by foreign corporations stemming from inventions first created outside of the U.S.  I believe that shift in who is directly benefiting from patent rights is an important element of the current US political-economy of patent law. Namely, while only US-operators are being sued for patent infringement, patent ownership is often vested in non-US operators.

* The USPTO identifies a case as being disposed of if it (1) issues as a patent (or when allowed), (2) is abandoned, or (3) is the subject of a request for continued examination (RCE). Because I see RCE filings as simply a part of the prosecution process, I do not think it should be used in calculating allowance rate.  Result being that the allowance rate is effectively increased to about 70%.

 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

74 thoughts on “USPTO Breaks New Ground with 300,000 Patents Issued This Fiscal Year

  1. 300,000 patents?! I wonder how many of these actually make it to market or make money… The graph is really interesting to me. It’s hard to believe that patent filing has been growing at such an enormous rate. This is probably due to all the new software and technology.

  2. 70%….

    Sort of like the long term historical average (except for the Just Say No era).

    What type of “trend” is that?

    1. I wonder if the data can be analyzed in finer detail.

      What is the range of filing dates for this record batch?

      How many of this batch are from the era of “Just Say No?”

      How much Patent Term Adjustment (both overall and per the filing date range) has been given up by the Office? How does that look per art unit?

      Which art units reflect greater efforts towards innovation? Which art units are stagnating?

  3. The unsustainable and alarming trend here is a historically unprecedented doubling in the number of patents being granted every 6-8 years. Absent some major changes in the broken system, we’re looking at roughly a million patents granted annually around 2023 or thereabouts, and ten million patents granted annually sometime around 2045 at which point there will be between 50 and 100 million patents in force. What a wonderful, wonderful world it will be for the wealthy conglomerates of patent attorney NPEs who will own huge portion of them!

    Unless, of course, a few more people begin to wake up and start smelling the nutsanity.

    Remember when some commenter around here used to proclaim that “every patent creates a job”? Pretty funny stuff.

    1. To the extent that more and more of these patents are based on foreign filings, this is a good thing for America, especially if the patents are so narrowly construed that they do not get in the way of any American inventors or companies. Why? Because each one represents monies that at some point must flow in from abroad into the pockets of American citizen lawyers (that’s usually the case) and into the coffers of our Patent Office. Just think of the impact all this activity must be having on our balance of trade problems. (And let’s hope China resolves to lead the world in US patent filings.) So before you condemn this trend, just think of all the families it supports: examiners, patent prosecutors, patent secretaries, etc.

      Of course, the key here is that these patents be narrowly drafted, narrowly interpreted, and not get in the way of American innovation.

      1. At some point — maybe around the 1 million patents/yr mark — the PTO might have to think about expanding its operations.

        If the trend keeps up beyond that, examining foreign entity patents and helping foreign entities assert them here might represent some of the more common jobs in the country. That can only be a good thing. Or not? It would be dangerous to speculate.

        1. I am pretty sure that “more of the same” that basically everyone likes to complain about is a really bad idea.

          How about we look instead to re-engineering the business process here?

      2. I agree it is a good sign for the US economy, that so many USPTO filers are from outside the USA. It demonstrates a commitment by them, to invest in the USA. Compare with Japan. Who bothers to file in Japan? What’s the point of doing that?

        I disagree on the “narrow” argument. What matters is that filers get issued with claims commensurate in scope with whatever inventive contribution to the art they have genuinely enabled in their filing. As technical fields get mature, each succeeding contribution to the art naturally gets smaller and smaller. That much is self-governing.

    2. TO the extent that more and more of the Quid Pro Quo has been realized, more patents is all the time is better.

      There can be no question to this.

      1. The question of “better” arises when most of the “innovations” disclosed or claimed in the published patents are never read by others, but are instead independently discovered/”innovated” by people who did far more work towards making a practically useful product/service than the patent applicant ever did or was capable of doing.

        1. That is a different problem, now isn’t it?

          I have given a suggestion for changing this. Have you?

          (and weakening patent rights with independent creation is NOT a viable answer – the answer is in the other direction: make patent rights stronger)

    3. A graph of the number of published scientific/engineering articles per year would be an interesting comparison.

  4. Why does the US Patent Office fiscal year end 3:00 pm October 1, 2014 (e.g., patent examiner can submit work up to 3:00 pm EST October 1, 2014 to get credit for the prior fiscal year) when the rest of the US Federal Government’s fiscal year ends September 30, 2014?

    1. The fiscal year did end for the pto on the 30th, we simply have until the next day to ensure all work is submitted in complete form.

  5. What is the national origin of most of the inventions? Do you have a list of the most prolific countries?

    I’m referring to your statement, “the most corporate-owned U.S. patents are actually owned by foreign corporations stemming from inventions first created outside of the U.S.” ?

  6. As someone is fond of pointing out, less than 2% of these are likely to be the subject of a lawsuit. That’s 6,000 patents. Assuming 2 or 3 targets per patent, and further assuming some joinder, we can thus look forward to 10,000+ lawsuits for the class of 2014 patents, alone. Maybe it’s time to brush up on my litigation skills.

  7. a. Certificates with all claims confirmed (44) ……………………………………….12%
    b. Certificates with all claims canceled (or disclaimed) (169) …………………45%
    c. Certificates with claims changes (160) ……………………………………………43%

    link to patentspostgrant.com

    Why doesn’t the PTO see this as their own failure? Why is this blamed on bad attorneys and not bad examination (or death squad patent judges)?

    (Related to post as surely the validity of what is issued should be a metric with the number that are issued.)

    1. So what is the validity rate of those issues. The numbers above would suggest that the validity rate is probably lower than 1 %.

      And fixing this is not giving super powers to judges but a ground game of getting of improving examination through TSM and better search methods and moving the PTO so employees have a living wage.

      (Just think with TSM examiners could package a problem and then send it out for super experts in searching to find a TSM.)

      But instead we have a Google shadow Director Lee telling the world we don’t need patents, and anyway my $10 million that is coming to me for burning down the system is more important than your patents. (I may want babies and they need that money.)

      1. Given the availability of “hoteling,” is the impact of the cost of living in the D.C. area still a major factor in their ability to recruit?

        1. Yes, this is still a factor because most new hires are still trained in Alexandria, and thus they need to live in the DC area for at least 2 years before they are eligible to hotel.

        2. Most new hires don’t give a darn about cost of living. They want to live in a cool city for young people to live in.

          By the time they care about home prices, they are eligible to hotel and can move somewhere cheaper to live. So yes, hoteling should negate the “move the PTO argument”. It is much easier to recruit a 22 year old to DC than to recruit them to Cincinnati, Detroit, etc.

          1. Well maybe. But, what about the fact that hoteling separates the people geographically? That must make it much harder.

      2. Reexamination statistics are not fully indicative of overall patent validity, since no one bothers to request reexamination on patents that are clearly valid. Only those patents where some interested party actually believes and has evidence of such invalidity are worth the expense of a reexamination proceeding; hence the high cancellation rate in the statistics. (Likewise, the relatively high reversal rates in football and baseball challenges of referee/umpire rulings on the field doesn’t mean that the officials get the calls wrong most of the time.)

        1. Mark, you don’t understand what’s going on.

          BRI

          A lower standard of proof.

          Serial reexaminations.

          A substantive amendment voids past damages!

          Examinations are expensive to a patent owner, and while in reexamination, his patent is effectively non enforceable.

        2. Mark, on the contrary. Only the patents that are asserted are the ones that are going through re-examination. Before a patent is asserted it is almost always vetted and believed to be valid.

          So, my guess is that validity according to the death squads is less than 1 % (and now the DC judges who now may merely look at claim and write 4 pages about their various beliefs, and then invalidate all the claims.)

    2. I would keep in mind that the patents that undergo post-grant proceedings are selected by the petitioners based on their potential invalidity and thus they are not likely representative of all issued patents. Those patents that are likely valid are unlikely to undergo post-grant proceedings. While the ones that _do_ undergo post-grant proceedings may often be found invalid, this doesn’t imply that the ones that _don’t_ are also invalid.

    3. Why doesn’t the PTO see this as their own failure? Why is this blamed on bad attorneys and not bad examination (or death squad patent judges)?

      Why does an office that makes money off of allowance and maintenence fees, who only hears complaints when a claim ISN’T allowed, and who awards its examining corp more for allowances than abandonments not upset at invalid claims being allowed? That seems like a pretty simple issue doesn’t it. You have a win-win-win situation. Until those rights are actually used, that is.

      I will tell you, as I’ve told you before, that the problem is that the office has no mechanism by which an Examiner can dismiss a poor application, and consequently its a question of how many RCEs will you pay for before your get your application. You want to take the harder approach and apply a standard which the supreme court has outright said is too stringent in an effort to…cut down on invalid claims? That’s backwards.

    4. death squad patent judges

      Death squads?

      From Wikipedia: A death squad is an armed squad that conducts extrajudicial killings, and forced disappearances of persons for the purposes of political repression, genocide

      Remember, folks: NWPA is one of those folks who gets really, really upset when you compare his rhetoric to a certain wing of the Republican party.

      Guess it’s one of those “one way street” deals.

            1. Most definitely.

              One cannot have a conversation with someone who refuses to understand past points made.

              And it is more than obvious that this is just gamesmanship, as it has been a common motif for what, eight years now?

  8. Dennis, do you have a similar chart for design patents? By and large these are not even examined in any meaningful sense, and their economic utility to the nation is certainly open to discussion. (Our fashion designers seem not to have any problem innovating new designs, even though as a rule they don’t patent a thing.)

    1. Plateau the last few years (these are calendar year, not PTO fiscal year)…

      Year-Number
      2013-23468
      2012-21951
      2011-21356
      2010-22799
      2009-23116
      2008-25565
      2007-24062
      2006-20965
      2005-12951
      2004-15695
      2003-16574
      2002-15451
      2001-16871
      2000-17413
      1999-14732
      1998-14764

  9. I wonder how many of these patents are not from divisional applications and how the trend changes if you don’t count these patents. I regularly see filings split into two or three applications.

    1. Why wouldn’t you count divisionals? They are separate inventions. They are separately examined… Why wouldn’t you count them?

      1. My experience is that what the PTO considers separate inventions has changed over the years. I occasionally come across patents with 50+ claims that were issued in the mid 90’s. I don’t see that nowadays. I am not convinced that it is caused entirely by a change of fees for excess claims.

        One reason for the restriction requirements could be that the classification system becomes more granular with time, but I also suspect that examiner have a strong incentive for examining a short list of claims.

        1. I would echo that division practice of the last few years has been one of those ‘patentably distinct’ ways of padding count numbers.

          As with other examination games, the application of (gasp) sound management theory (yes, using sound scientific principles much like any engineering field out there) would do wonders in helping fix “the broken patent system.”

          Or we can take philosophical pot shots at the greatest source of innovation in the modern world…

          I know where I would rather spend the time and energy for greater payback, and it is not in the 18th century.

          1. Or we can take philosophical pot shots at the greatest source of innovation in the modern world…

            The PTO is not a source of innovation in any sense of the phrase.

            1. You are not understanding that no one ever said that the USPTO (as a government institution itself) is a source of innovation.

              I certainly hope that you are NOT trying to make the argument that the granting of patents is not tied to innovation…

              (Perhaps you can help organize the search party for all those that have gone out looking for one modern advanced society that has seen the light and NOT had a patent system – and the Amish, obviously do not count).

              1. search party for all those that have gone out looking for one modern advanced society that has seen the light and NOT had a patent system

                Search party? Why? Is somebody missing?

              2. (Perhaps you can help organize the search party for all those that have gone out looking for one modern advanced society that has seen the light and NOT had a patent system – and the Amish, obviously do not count).

                I could give you a ton of states that nominally protect IP (as it’s necessary to join the WTO) but in practice don’t really have IP rights. China, most populous country on the planet, is one.

                Do you have a computer connected to the internet? Does that allow you to see the exact same patent disclosures anyone else does? Sounds like your problem isn’t so much that you couldn’t have the innovation, it’s that you couldn’t take the much harder step of forming a country.

                I assure you that the Free Republic of Anon could have exactly the same disclosure knowledge of the United States of America. And if we didn’t have the functional claiming BS that we currently have, I bet you could even use those disclosures to build things.

                1. I certainly hope that you are NOT trying to make the argument that the granting of patents is not tied to innovation…

                  As I’ve said elsewhere, and I alluded to above, the USPTO could grant zero patents, and ten years from now the US would neither be behind any competitor nations, nor would we as a species be any less technologically advanced.

                2. That’s a pretty naive comment RandomGuy.

                  What’s “naive” about it? I think it’s a reasonably accurate prediction.

                  Shutting the US patent system down for ten years wouldn’t cause the US economy to collapse, nor would it stop innovation from proceeding.

                  That said, it’s not going to happen.

                  A better question is to ask what would happen if the USPTO turned up the spigots even higher, lowered the fees for obtaining a patent to fifty dollars or thereabouts (using taxes to underwrite the costs of examination), and started granting, say, 10 million patents per year.

                  Would that help the economy? Is it “naive” to think that the existence of 50 to 100 million patents in force might negatively impact the ability of people to “innovate”?

                  Cuz that’s where the trend seems to be heading.

                3. The clear takeaway appears to be offensive to sensitive people.

                  When one advocates in the manner that the patent office should be gone for ten years with no ill effects, the implicit reading is very Duell.

  10. During the fiscal year, the 8,300 patent examiners ‘disposed of’ more than 600,000 cases which in some circles will be calculated as an allowance rate of about 50%.

    And by some, Dennis means one, and the only reason that one exists is because if the true allowance rate were reported everyone would be up in arms.

    Result being that the allowance rate is effectively increased to about 70%.

    That number is incorrect (too low) for software patents by a significant margin. I would imagine this is the kind of data you could get from the office’s data response guy. In fact the statistics exist.

    Imagine how inventive we’ve gotten, that out of about 380k specifications examined, 300k of them happened to have filed subject matter of such a scope that it was a) non-obvious over all art from previous years despite the lack of a pre-filing search, b) was commercially valuable to take a patent on it and c) didn’t randomly conflict with someone else’s filing from the same year period. If only your average action hero could have the blindfolded accuracy of the entirety of the common inventor/patent bar. I know who is going to be on my pin-the-tail-on-the-donkey team.

    Surely these nearly 600-800 non-obvious innovations daily have improved our society such that the we can scarce remember the dark ages of a mere four years ago. Could the man of 2010 have imagined the life of tomorrow these one million innovations have wrought? Nay. We have a veritable Galt’s Gulch/Rapture going on here – scientific renaissance unlike one ever seen before.

    That or the office is not policing invalid functional language or even strict obviousness correctly yet, which has been my argument going on more than a year on this board. Ce la vie. The courts have somewhat gotten the message, perhaps not so much that prosecution attorneys will self-regulate (indeed, when and why would an attorney self regulate on a practical level?) but enough that anyone wishing to put up a fight on worthless claims will actually get the right outcome with a relative minimum of time and expensive.

    Namely, while only US-operators are being sued for patent infringement, patent ownership is often vested in non-US operators.

    While I don’t condone the conclusion because I do, in fact, value patents, this is a fact – There are entire tech centers where the United States could give no patent protection for anyone and the state of technological knowledge in the United States would not suffer one iota, either in the future absolute or the relative sense. My understanding is that could be accomplished without harming treaty obligations.

    Patents do not limit knowledge to one country, they limit exclusionary power to one country. Its pretty obvious that most sectors would benefit from the game theory prisoner actually taking the deal.

    1. “Namely, while only US-operators are being sued for patent infringement, patent ownership is often vested in non-US operators”

      I had not noticed this.

      “Only US-operators are being sued” may be an overstatement.

      This likely depends on interpretation, but many foreign entities manufacture and sell goods in the US and also have interest/ownership in “US” based subsidiaries. I wonder what the statistics are when one takes into account the foreign interests in the targets of suits filed.

      1. To my mind (and from what I’ve seen) corporations are like nations now. Plus it is rare that a big corporation will not have a lot of R&D and plants in the U.S. if they sell here.

        Some corps that isn’t true. Maybe like Japanese ones that have strong nationalism, but I think the dynamics are that all corporations eventually end up being agnostic to nationality and become by, for, and of the corporation.

        1. “think the dynamics are that all corporations eventually end up being agnostic to nationality and become by, for, and of the corporation.”

          They should be from their inception so long as the interests of the shareholders involve such.

          1. 6, you don’t understand much do you? And you probably think it is good that the SCOTUS has proclaimed (and fabricated a historical view of corporations that is ludicrous) that corporations are people.

            (By the way, the evidence is overwhelming that the founders found corporations to be inherently dangerous and that these “trusts” as they were called should never be allowed to be very big.)

      2. Thanks Anon2. I had attempted to make this distinction by using “U.S. operators” rather then “U.S. entities.” The rule is that you only infringe a U.S. patent for actions relating to the U.S. Under Section 271 an infringer of a U.S. patent is defined as “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States.” Certainly a foreign corporations can (and do) infringe U.S. patents, but only if they operate within the U.S.

        1. Sorry, I forgot to ask.

          What is a “non-US operator”?

          Doers it mean any foreign entity which has no operations within the US? Is this population large, economically significant, and do they have many patents?

          1. What is a “non-US operator”?

            Someone who isn’t operating in the US.

            Is this population large, economically significant, and do they have many patents?

            Depends on what you mean by “large,” “significant” and “many.”

  11. Perhaps we should consider going to a first to invent system, recognizing only US invention, to incentivize R&D in the US.

    (To avoid a treaty violation, we could recognize prior invention in countries that recognize the prior invention rights of US inventors for their own national applications.)

  12. “Because I see RCE filings as simply a part of the prosecution process, I do not think it should be used in calculating allowance rate.” I agree.

  13. Dennis raised a very important point:
    “I believe that shift in who is directly benefiting from patent rights is an important element of the current US political-economy of patent law. ”

    There is a very good argument (you wont hear often) that the sole purpose of the U.S. government is the protection of individual rights of U.S. citizens.

    By what principle then are foreigners entitled to “U.S. based” rights…. in fact if patent rights originate with the constitution … how does that Constitution extend to individual non-US citizens abroad?

    1. There is a very good argument (you wont hear often) that the sole purpose of the U.S. government is the protection of individual rights of U.S. citizens.

      That’s not an argument.

      1. Thanks MM for pointing out there is a typo.

        It should have read:

        “There is a very good argument (you wont hear often) -for the proposition- that…”

        1. “There is a very good argument (you wont hear often) -for the proposition- that…”

          Why don’t you share that argument with everyone since you brought it up?

  14. If I were cynical I would view the comment about foreign ownership as an implicit statement that to be anti-patent would be patriotic.

    Of course I do not believe so, as the Quid Pro Quo means that the US is a winner for every (do I really need to say valid) patent granted – no matter who owns the limited time personal property that a patent is.

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