Guest Post: Accelerated Examination and Prioritized Examination

By: Nicholas Witchey, Ph.D.; Robert D. Fish, Esq.; and the Fish & Associates team

Passage of the Leahy-Smith America Invents Act (AIA) includes many changes to U.S. patent law. This article focuses on one change that might be overlooked: Prioritized Examination ("PE") of patent applications. The PE program allows an applicant to pay an additional $4800 fee ($2800 for small entities) to place an application on a prioritized track where the patent office has a goal to provide final disposition of the application (i.e., final rejection or allowance) within a year on average. Interestingly, the AIA retains the Accelerated Examination ("AE") program established on August 26, 2006, as discussed in MPEP 708.02(a). While the PE program prioritizes an application for prosecution ahead of standard filings, the AE program prioritizes and accelerates the actual prosecution of the application. The prioritized examination and accelerated examination programs co-exist as of September 26, 2011.

We recently had a chance to discuss co-existence of the AE and PE programs with Robert W. Bahr, Acting Associate Commissioner for Patent Examination Policy, during a recent MarcusEvans? IP Law Summit in September, 2011. Mr. Bahr stated there are no current plans to make changes to the AE program to align it with the PE program, or vice versa. He sees both programs as viable examination routes for applicants, and that applicants are expected to make a business decision as to which program should be taken. Therefore, it is up to the applicant to work with their patent practitioners on how best to align patent filing tactics with clients' business objectives.

How do these programs compare and which makes the most sense to use? The AE program and PE program are far from identical and have many differences, which gives rise to possible benefits in aligning patent application filing tactics with a client's business strategy.

One of the major differences is that the PE process does not require a pre-examination search document ("PESD") and an accelerated examination support document ("AESD") whereas these documents are required for the AE program to illustrate how the claims of an AE application are allowable over known related art. Preparation of the PESD and AESD documentation requires significant searching and analysis on part of the practitioner. Following the PE program can save an applicant $10,000 or more over the AE program in searching and analysis costs, but that doesn't necessarily mean the total cost is less expensive over a lifetime of an application's prosecution. Within the AE program, the time spent in searching for related art and in improving/focusing the claims tends to yield stronger claim sets, which contributes to faster allowance possibly within months of being accepted into the AE program. Without such thoroughly analyzed claim sets, an applicant could spend $10,000 and many years going back and forth with the examiner to achieve allowance for an application filed within the PE program.

Other than PESD and AESD considerations, the basic requirements for putting an application on file are the same for AE and PE applications, (e.g., formal drawings, no missing part, correct margins, etc.) except that the AE process allows only 3 independent claims and 20 total claims, while the PE process allows 4 independent claims and 30 total claims subject to excess claim fees. In both cases failure to follow the filing rules will result in the petition being dismissed or denied.

There is also a significant difference in fees. The filing fees of an AE application for a large entity are $1380, which includes $130 in petition fees, $1250 in filing fees, plus any excess page size fees. Corresponding small entity filing fees are $660 plus any excess page size fees. In contrast, the filings fees of a PE application for a large entity are $6480, including $4800 in petition fees, $1250 in filing fees, a $130 processing fee, and a $300 publication fee, plus excess claim and page size fees. The corresponding total for a small entity is $3630, plus excess claims and page size fees. From purely a filing fee point of view, the AE program is less expensive. Micro entity discounts do not apply to a PE application petition fee.

Prosecution is also different. AE turnaround is one month on non-final office actions, and failure to meet that strict time requirement results in abandonment of the application. Within the PE program turnaround is the normal three months. The three month deadlines can be extended as usual, but doing so results in the application falling out of the PE program. Applications that have fallen out of the PE program are placed on an examiner's standard docket. Thus, the AE program returns faster results than the PE program, but also has more severe consequences when the response dates are missed.

There are also some inconsistencies in availability of AE and PE applications. For example, one can file a PE application for a plant, while the AE program can not be used for plant patent applications. At least initially, the PE program is also being limited to 10,000 applications per USPTO fiscal year. There doesn't seem to be a formal limit on the number of AE applications, but there have only been an average of about 800 AE applications filed per year so there is little concern with respect to the USPTO limiting AE submissions.

With the introduction of the AE program, the PE program, and other prosecution tracks, the USPTO appears to be developing a full spectrum of possible approaches for prioritizing patent applications rather than a one-size-fits-all approach. Clients can select a style of examination based on their business needs or available budgets. If a cost-effective immediate feedback is required, the PE program might be a proper path for clients wishing to get prosecution started early. If a strategic set of claims are required, the AE program would likely be the best approach for clients wishing to obtain issued claims quickly. We expect the PE program to likely fill their allocated 10,000 applications per fiscal year quickly. In fact, our office has already started filing application with PE petitions. When the allotted yearly slots are taken, the AE program will remain available.

Our office has substantial experience with the AE program, and, although we are strong advocates of the AE program, we believe that PE program also offers other benefits to clients. Clients now have a greater selection of filing options to meet their business goals or filing budgets. A detailed analysis that one would conduct for an AE application would still have merit when filing an application within the PE program. There may even be cases where an applicant might strategically decide to file an application, or a family of applications, in both programs to obtain an optimized result.

The AIA also allows for changes to other prioritized programs including petitions to make special or important technologies, and patent prosecution highways. These programs can also be leveraged to prioritized examination and offer benefits to clients as well. We encourage readers to explore all the programs currently offered or that will be offered over the next 18 months.

Electronic Filing and Automatic Decisions for Common Petitions to the Patent Office

Petitions practice before the Patent Office has long been something of a quagmire. The Office has been working on several initiatives to shed more light on the process and to ensure that decisions are released in a much more timely fashion. In this vein, the Office has created a set of automated electronic forms for submitting the most common types of petitions through its new “e-Petition system.” The selected petitions are then decided automatically and the result will be almost immediately entered into the file history.

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Inequitable Conduct Based on Petition to Make Special

Scanner Technologies Corp. v. ICOS Vision Systems (Fed. Cir. 2008)

There are many companies that value quick prosecution and issuance. Yet, few have taken the PTO’s offer of accelerated examination (AE). Potential applicants avoid the accelerated examination program for several reasons – most of which are associated with the AE requirements to (i) search for prior art; (ii) identify all claimed elements found in each relevant reference; and additionally (iii) prepare an explanation of why the claims are patentable over the references. These AE requirements are costly and potentially open the applicant to charges of inequitable conduct (as well as narrow claim scope).

In this case, Scanner saw ICOS products at a trade show and subsequently filed a petition to make special in the hopes that its patent would issue more quickly. The petition argued that the petition should be granted based on ICOS products. The petition was granted and the patent issued within the year.

After Scanner sued for infringement, the district court found the patent unenforceable due to inequitable conduct in filing the petition to make special. On appeal, the CAFC reversed – but in the process revived aspects of the inequitable conduct inquiry. The particular conduct at issue included statements in the petition that infringement was clear even though the accused product had not been fully inspected.

Broad Concept of Materiality: Although inequitable conduct issues often focus on whether the misconduct was “material to patentability.” The CAFC began by quoting its own 1994 GE v. Samick opinions holding that a false statement in a petition to make special should be considered “material” if “it succeeds in prompting expedited consideration of the application.” This broad consideration of materiality follows the Nilssen decision holding that misrepresenting an applicant’s status as a small entity (in the payment of post issuance maintenance fees) may also be considered material.

“[W]e must reject Scanner’s view that inequitable conduct cannot be shown absent a misrepresentation that bears on the patentability of the claims in the application. When the setting involves a petition to make special, as is the case here, we reaffirm that a false statement that succeeds in expediting the application is, as a matter of law, material for purposes of assessing the issue of inequitable conduct.”

Reasonable Inferences Favor Patentee: Although the CAFC agreed that the type of conduct here could be inequitable conduct, this case did not present sufficient evidence. Because materiality and intent must both be proven with clear and convincing evidence, the appellate panel requires that all reasonable inferences be given weight:

“Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference.”

Because the CAFC found potential reasonable explanations for the claims of infringement, it held that those statements could not be considered false or misleading, and thus not material.

By clearing the inequitable conduct charges, Scanner avoids paying ICOS attorney fees. However, the CAFC affirmed that all claims of the patents were invalid and not infringed.

Notes:

  • Interesting statement: “We also affirm the district court’s judgment invalidating all claims of the patents in suit given the stipulation between the parties that the case would be tried on a representative claim.”

Patently-O Bits and Bytes No. 44: Deferred Examination

  • Deferred Examination I: For the current state of PTO backlog, I am a strong believer in providing a mechanism to either (i) allowing the inventor pay to move to the front of the examination line if the patent needs to be obtained quickly or (ii) allowing the inventor to delay prosecution if it is unclear whether the invented technology will have any market value. There are some potential negative issues of allowing deferred prosecution — particularly the potential for submarining and shifting claim scope to encompass market changes. These problems would 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 deferment.
  • Deferred Examination II: In its response to congressional queries, PTO Director Jon Dudas has come-out in favor of a system that allows for deferred examination. The PTO’s tentatively proposed implementation scheme would move along a three-step process:
    • Allow a 14–month extendible period for responding to a notice to file missing parts.
    • Use a tiered payment structure that allows for delayed payment of the examination fee.
    • Empower Provisional Applications: Allow applicant to claim priority to a provisional application for up to five years.
  • Deferred Examination III: For many, including the PTO, the hope with deferred examination is that “many inventions … would be recognized as obsolete [or otherwise worthless] before expiration of the five year period and therefore would not require examination resources.”
  • Rocket Docket Examination: In the past, the AIPLA and others have argued against having a rocket-docket examination based simply on the payment of a fee. Their argument is that it is somehow inequitable and un-American to line-jump based on the availability of funds. That argument is largely hog-wash.  Many of the richest companies in the US maintain tight controls over patent prosecution costs. I suspect those companies would only rarely pay an additional $5,000 in PTO fees for rapid examination. (If a rocket docket for patent prosecution is created, the fee should be high enough to ensure that it does not simply create an additional bottleneck.)
  • Clear Channel Communications now owes $90 million to Grantley Patent Holdings. The Eastern District of Texas jury found the patent willfully infringed with damages of $66 million. Last week, the Judge awarded an additional $16 million in enhanced damages in addition to prejudgment interest and interim royalties due.

Two Hong Kong companies have been fighting over a coffee maker design patent.  Simatelex (who manufacturers for Sunbeam) has signed a consent decree admitting contributory infringement. The patentee’s case against Sunbeam is still pending in the Southern District of New York. Wing Shing v. Simatelex.

A First Look at Who Files Provisional Patent Applications

Patent.Law083As part of the 1995 patent law overhaul, the USPTO began allowing patent applicants to file provisional patent applications.  Over a decade later, these lower-cost provisional filings have taken hold.  According to PTO annual reports, over 132,000 provisional patent applications were filed in fiscal year 2007. In perspective, that number is over 30% of the number of the 439,000 non-provisional utility patents filed during the same period. This proportion has been slowly rising since 2002 when the provisional applications filing rate was about 27% of the non-provisional rate.[1] That year (2002), the PTO recorded just under 90,000 provisional applications and 332,000 non-provisional patent applications.

Interestingly, in my study of recently issued patents, only 21% reference a provisional application as a parent. (In the study, I look at approximately 15,000 utility patents issued in April and May 2008.) [2] 

Patent.Law085National Tool: Over half of the recently issued patents that listed an assignee indicated that the assignee was a foreign (non-U.S.) corporation or agency.[4]  Although foreign entities are not prohibited from filing provisional applications, the provisional tool was designed to benefit U.S. entities. Thus, it is not a surprise that only 5% of the patents assigned to international applicants were associated with a provisional application while 30% of the patents assigned to a U.S. applicant were associated with a provisional application.  Two countries – Israel and Canada – stood out as filing the highest proportion of provisional parent claims. Both of these countries are known for having patent attorneys with a high level of familiarity with U.S. laws.  Only 2% of the Japanese & Korean patents included provisional parent claims. [Updated June 03 with Corrected Figure]

The provisional application provides a potential extra year of patent eligibility at the end of the term.  Thus, it is also not surprising that new drug inventions – where a potential year at the end of the term is most valuable – have the highest rate of association with a provisional application.[5]  Likewise, patents on electrical and electronic applications had the lowest rate of provisional filing even after excluding the international applications.

The provisional filings appeared to have almost no impact on the pendency time of a patent application as measured by the number of days from filing the nonprovisional to issuance.  This makes sense as no examination takes place until the nonprovisional application is filed.

The following table also provides some interesting comparisons of patent strategy.[6]

Type of Technology

Number of Utility Patents in the Sample

Number of Patents Referencing Provisional Parent

Assignee

Mechanical

24

1

4%

Ford

25

13

52%

GM

Drugs & Medical

7

4

57%

Wyeth

8

7

88%

Genentech

11

1

9%

Boston Scientific Scimed

21

10

48%

Medtronic

Computers & Communications

15

12

80%

InterDigital

23

7

30%

Oracle

31

11

35%

QUALCOMM

44

25

57%

Broadcom

114

16

14%

Microsoft

Chemical

6

6

100%

Bristol-Myers Squibb

9

4

44%

Procter Gamble

10

3

30%

3M Innovative Properties

14

9

64%

EI du Pont de Nemours

17

0

0%

General Electric[7]

17

16

94%

Genentech

 


[1] This information comes from PTO annual reports for FY 2006 and 2007.

[2] These patents were downloaded on May 30. I excluded the few patents filed prior to the 1995 introduction of provisional patent applications.

[3] In a follow-on study, I will look at published patent applications claiming priority to provisional applications to get some sense of how often folks abandon provisional patent applications.

[4] 6823 were assigned to foreign entity while 6457 were assigned to a U.S. entity. Another 1922 had no listed assignee.

[5] My study included 677 patents having a primary U.S. Classification in a “drug” field and also assigned to a U.S. entity. Of those, 48% were associated with a provisional application.

[6] Note, my assignee ‘scrubber’ is not yet perfect. Thus, it is likely that some patents associated with listed assignees are not included in the table.

[7] Some companies, such as GE hold patents in several different categories – this table looks only at those patents in the particular identified category.