Solving the Patent Crisis and PTO Budget

I am extremely encouraged by the fact that the US Patent Office seems to be increasingly coming under the direction of those who have a sincere desire to see the system succeed and be better.  I think Acting Commissioner Peggy Focarino is making real progress with important initiatives, I think it is a step in the right direction for President Obama to appoint a Patent Attorney to run the Patent Office, which as odd as it sounds is a revolutionary concept.  I think bringing people like Nick Godici back is a great step, and like I have said on numerous times in my writing we need to leverage the collective experience of the many talented folks who have left the USPTO or been forced out for political reasons.  Having said all this, good people who understand the system are only the first step to regaining control of the destiny of the Patent Office.  Given the chaos that has lead to unbelievable and counter-productive delays in getting a patent application examined and issued, there needs to be creative outside-the-box thinking in order to get the PTO back on track and innovation flowing to the point where we can dig ourselves out of this horrible recession.  Toward that end, I submit the follow recommendations.

Deferred examination is an enormously bad idea.  We already have deferred examination as a result of the many failures within the Patent Office.  It is routine to wait 3, 4, 5 or more years for an examiner to act on a case in many technological areas, and in class 705 it is routine to wait 8 years or more for a substantive action.  This my friends is deferred examination on steroids!  How deferred examination could be pitched as a positive seems odd, and a uniquely government view of the world.  We have deferred action on applications for so long the solution is to further defer action.  Who would think that makes sense?  What we need is not deferred examination, but rather a new work-flow process that enable quicker resolution and defers decision making.

Right now if you file a provisional patent application you have 12 months within which to file a nonprovisional patent application.  Done appropriately this makes all the sense in the world and there is nothing but benefit to be had by first filing a provisional patent application.  Nevertheless, we all know what 95% of provisional patent applications are — a waste of time and money.  Provisional patent applications have become synonymous with filing whatever disjointed information you have together with the modest fee and a provisional patent application cover sheet.  We also know that many of the scams and those who are openly engaging in the practice of law without a license use provisional patent applications and let individuals think they have received “a provisional patent.”  This practice is abused, ripe with fraud and only in rare instances used appropriately.

What we need is a revision in the laws and rules relative to provisional patent applications.  A provisional patent application should not be a “file whatever you want and get a patent pending,” but rather it should be a complete patent application minus the claims.  It should be the first US patent application filed (assuming you did not follow the PCT path) and it should be what is what we call a parent application today.  It must be required to be a real patent application minus claims.  This will instantly end the fraud perpetrated on individual inventors and entrepreneurs, and it would deal largely with those engaged in the unauthorized practice of law, which is something the USPTO seems unwilling to do despite specifically changing practice rules for this purpose in September 2008.

A provisional patent application should not become abandoned 12 months after filing, but rather should remain pending until the time the Patent Office is ready to begin substantive examination of the application.  Alternatively, a provisional patent application should remain pending for 24 months.

No claims should be required to be filed until at least 18 months after the priority date of the underlying patent application.  This is due to the fact that prior art that exists for any application cannot be considered a closed universe in any real or logical way until 18 months after the priority filing date.  As those in the industry know, this is because a patent application remains secret until it publishes, which as a general rule will happen at or before 18 months after filing.  At this point in time a true and meaningful search can be done, and claims can be written so as to overcome the prior art that actually will apply to the invention.  Before this time we are only writing claims based on what the state of the prior art was 18 months before, full well knowing that there will be many additional patents the examiner can use against us.  This is a ridiculous waste of time and energy by the attorneys, and forces examiners to examine claims that could not have possibly been drafted considering the latest and likely most relevant prior art, particularly in fields having great patent activity.

Once the universe of prior art is known to the patent examiner and to the applicant or applicant’s attorney, an initial interview should be had between examiner and applicant/attorney.  The most relevant prior art should be identified and discussed, the invention explained and why the claims are believed to be patentable over the now closed universe of prior art.  In order to be a meaningful exchange of useful and relevant information, this interview must be off the record.  To facilitate speedy action by the USPTO more, better and fair information needs to be conveyed, but given the Federal Circuit’s unwillingness to acknowledge the PTO definition of the duty of candor, and their inability to define a bright line test for inequitable conduct that both adheres to precedent and is followed by all panels, in order to get such necessary, proper and truly useful information it needs to come with the promise of confidentiality, which will eliminate the fear that this candid discussion can be used to demonstrate inequitable conduct, which is the 800 pound gorilla in the room that no one, save Senator Orrin Hatch (see second paragraph), seems concerned about.

A process like this will do far more than deferred examination ever could.  Having said that, I know deferred examination is all but certain to happen and rational proposals like this one have little chance of success because it would require at least some Congressional action.  Thus, if we are going to have deferred examination why not just announce that anyone with an application pending for more than 3 years can move to the front of the line by payment of a $1,000, $1,500 or $2,000 “rapid examination fee.”  You could even charge this much for small entities and double it for those who do not qualify for small entity status.

I have multiple applications pending and I know I would pay a fee to get an examination and a patent, and I hear many others say the same thing.  So those large companies that are just filing to get numbers would go to the back of the line and innovators and small businesses, which are the engine that drives the US economy, would pay a fee to move to the front of the line so they can get the assets they so desperately need to be competitive and attract investors and funding.  This would also solve the budget crisis, allow for examiners to get overtime again and the Office potentially to hire more examiners to dig into the backlog.  It would also get innovations out of the logjam that are valuable enough to generate this additional level of expenditure, which should mean commercially relevant and viable innovations would get patented ahead of those that are not commercially relevant and viable.  That certainly seems to be in line with the Constitutional mandate to foster innovation.


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Join the Discussion

11 comments so far.

  • [Avatar for Anon Moose]
    Anon Moose
    July 18, 2009 02:55 pm

    If the USPTO is ever to be fixed they must start with the OCIO shop. The IG should be investigating where money has been spent, current hiring practices and some pretty blatent disregard of contractural rules. The regime needs to rid themselves of all Dudas/Freeland era hires such as John Owens and Chris Niedermayer. How could Owens been charged with running the OCIO with no executive level experience and a degree from the University of Phoenix. He has ussured in an era of hiring ONLY AOL employees to key management positions, along with his buddy Dave Conley. AOL has a lot in common with USPTO, both companies are train wrecks heading downward. For those reasons I guess it makes sense? With all the shenanigans going on within the OCIO, why the heck have no investigations been launched by the IG and why are these people still holding down the fort within USPTO? I’d like to see some interviews and articles done by this blog on the above subject.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 13, 2009 05:12 pm

    IP Watcher-

    Take a look at this post regarding the drop in allowance rates:

    With respect to China, they historically did not protect IP, but they are offering more and more IP protections, and as a result more and more major US and international companies have started doing ever more business there. A convincing argument can be made that China’s economic growth started to grow at great rates once they started respecting IP, and patents in particular. So I strongly disagree that there are other facts influencing economic growth rates. The figures are really quite telling, and really only tell one story.

    What patents do is give investors with high risk tolerance the ability to believe that if they invest the company they invest in will grow and have at least some insulation from competition for a time. This incentive is incredibly important. If you have a great product and a great company and no patents you will not get much, if any, investment. Investors look for competitive advantage and I know of companies and inventors who have great stuff, a lot of interest and when the time it takes to get a patent drags on investors go elsewhere. This is an enormous problem for small business, which is the engine that drives the US economy.


  • [Avatar for IP watcher]
    IP watcher
    July 13, 2009 03:59 pm


    I like the blog. Keep up the good work.

    One point of contention I have though, is about the allowance rate. How do we know if the allowance rate is too low or too high? Is there research available on this topic? Even if the allowance rate is too high/low, is that really a large problem for the general economy?

    As someone who is not a patent lawyer or patent examiner, I think all of you patent guys (lawyers and examiners) have a slightly overly inflated value of patents. Sure, patents do promote innovation, but only to a degree. For example, developing economies such as China have little to no intellectual property protection. Yet this has not inhibited their economic growth of late. Meanwhile, countries with strong IP laws have languishing economies (U.S., Europe, and Japan). This suggests that there are other fundamental economic factors, which are much more important then patents, are influencing economic growth rates.

    Finally, on the global theme, the USPTO is not the only patent office in the world with a declining allowance rate. If you open the following link:

    You will see in the worksheet entitled “Procedures” that a declining allowance or grant rate is also affecting the European Patent Office and the Japan Patent Office. Is it coincidence that the grant (allowance) rates display convergence?

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 10, 2009 05:51 pm

    Dale –

    You say: “Additional formalist requirements for provisional patent applications will only serve to discourage small inventors from using the patent system.”

    Not having any formal requirements leads to unsophisticated inventors being taken advantage of and thinking they are getting rights when they are not doing anything other than wasting money. Filing a useless provisional, which is what is allowed to happen under the current rules, is extraordinarily common and the USPTO should not enable such fraud, particularly with it being rampant.

    If an independent inventor cannot afford to pay for a meaningful provisional patent application, which can be prepared and filed for $1,500 to $2,500, then they should not waste their time and energy in the patent system. Obtaining a patent is the easy part, and even with all the costs it is the cheap part of the innovation to market sequence.

    Selling false hopes serves no one other than those who wish to take advantage of a market the PTO refuses to regulate.


  • [Avatar for Dale B. Halling]
    Dale B. Halling
    July 10, 2009 05:05 pm

    My recent experiences with the PTO are that the process is starting to be less confrontational. I agree that it is nice to have people running the PTO who believe in the patent process. It has been a disaster to have a director who was not a patent attorney and was openly hostile towards patents.

    As you point out delayed prosecution makes no sense. However, I disagree that we should add more formalism to provisional patent applications. The patent system has become overly formalist already. Additional formalist requirements for provisional patent applications will only serve to discourage small inventors from using the patent system. The goal of the patent system should be to reduce formalism, reduce pendency times and reduce the costs associated with obtaining a patent.

    Along that line, my three suggestions for reducing pendency can be found at How do you think the PTO can reduce pendency times?

  • [Avatar for TT]
    July 9, 2009 12:16 pm

    “we all know what 95% of provisional patent applications are — a waste of time and money”

    For phramaceuticals the rule of thumb is one patent in a thousand will cover a marketed drug. Thus, the percentage should be 99.9% wheel-spinning.

  • [Avatar for Lightning50]
    July 9, 2009 10:53 am

    How about this suggestion:

    Make the search fee and examination fee due when the search and examination actually start, as opposed to when the application is filed. This would provide an incentive for applicants to expressly abandon an application when they become aware of prior art that makes the valuable claims unpatentable.

  • [Avatar for Alan McDonald]
    Alan McDonald
    July 9, 2009 07:43 am

    Examiners are shown “working models” and “test results” in interviews that, if they are forced to disclose in discovery, could allow the defense a chance to show that the examiner was given bad information in making the decision to allow.

    While the interview record may not show the data, at least it will show that a model or results were shown and a discovery request can be made. If we go to off the record interviews it would not even be known that this happened.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 8, 2009 10:44 pm


    Why do we care what is said? I have never understood this, although I do well know that is the law. 112 requires the claims to be specific and particularly define the invention. A patent itself and patent claims should stand on their own merit without need to know everything. We do not accept parole evidence in the interpretation of contracts, and why we allow parole evidence in a patent is beyond me.

    We ought to be encouraging more disclosure and a self sufficient patent. If parole evidence is required then why doesn’t that mean that there is a lack of enablement and/or an insufficient written description?


  • [Avatar for Noise above Law]
    Noise above Law
    July 8, 2009 03:55 pm


    We don’t often agree – but we do on your statement: “Remember, the goal is not to get patents allowed, it is to get valid patents allowed.”


  • [Avatar for Alan McDonald]
    Alan McDonald
    July 8, 2009 02:00 pm

    I’ll agree with everything you said except interviews off the record.

    I’ve been in enough cases to know that what was said to an examiner prior to allowance is a big deal. It is hard enough to understand what actually transpired with the record as it is today. Off the record interviews will only lead me further toward my position that patents should not be presumed valid.

    Remember, the goal is not to get patents allowed, it is to get valid patents allowed.