The 24-Month Provisional: A Better Way for Inventors to Test the Market

Congress should let provisional applications be renewable for an extra year, and then publish them if a nonprovisional is not filed. Filing a nonprovisional is a big deal for small businesses. In some cases the expense pays off because it lets inventors recover from infringers, while in others it does not pay off because the market never develops. Under today’s law, the decision is mostly all or nothing—spend large amounts of money on attorney and United States Patent and Trademark Office (USPTO) fees, or compete in the market without protection.

What a 12-Month Provisional Actually Buys

The primary solution to allow inventors to defer patent costs is the provisional patent application. This application does not require formal claims like a nonprovisional application, but it does need a written description and drawings that can support future claims. If it can perform this function, the provisional provides a mechanism to allow an inventor to test the market without overspending and without starting the clock on patent term.

Small entity filing fees for a provisional patent application are currently $130, and while thin provisionals can certainly be dangerous, patent attorneys often spend far less time ensuring support for future claims in a provisional application than a nonprovisional application. However, the primary purpose of provisional applications was never to allow inventors to gauge risk in a cost-effective manner, and so they are not complete solutions.

Why 12 Months is Not a Market Test

In 1994, the United States changed the term of patents from 17 years after grant to 20 years from the filing date. At the same time, foreign inventors filing in the United States already enjoyed a 12-month Paris convention year, which did not start the 20-year clock. This meant U.S. inventors would end up with shorter patents than foreign inventors. As a result, Congress created the provisional application as a cheap priority filing that would lock in a date, require no claims, and not start the term of a patent—so that Americans could have the same extra year which foreigners already had. The opportunity to gauge the market and avoid future unnecessary costs that today’s inventors are familiar with were built into the design of provisional patent applications, but they were not the primary purpose for it—they were only side effects.

Provisionals are thus only a partial way for inventors to test the market without spending unnecessary sums of money. When it comes to launching inventions into the market, one year is often not enough time—some inventions take more time to really catch on. However, because of the constraints of today’s system, inventors have to take a chance with a nonprovisional, otherwise they will be completely unprotected in the market and never be able to recover in the event that their inventions do end up becoming popular.

Small businesses often file provisional applications and then immediately begin disclosing their technologies to the public, knowing that the provisional will provide an anchor to procure future patent protection. However, one year after the provisional is filed, these businesses are faced with a very difficult, and often uninformed decision—file a nonprovisional application or face the public disclosure as prior art against any future patent filings.

Renew for a Surcharge, and Then Publish if a Nonprovisional is Not Filed

One way to address the problem is to make provisionals renewable for an extra year in exchange for a surcharge and an automatic publication if a nonprovisional is not filed during the renewal period. An illustrative surcharge might be four times the initial provisional filing fee (e.g., $520 for small entities). This would deter meritless filings and prevent USPTO clutter. In terms of publication, automatically surrendering the provisional disclosure into the prior art as of its publication date would be a steep cost for inventors. However, it would ensure that any trade-secret value in the provisional would not remain secret indefinitely. Thus, both the surcharge and the risk of automatic publication would be part of the bargain, meaning the opportunity to test the market would not be a side effect of the design. For inventors, the tradeoffs would be direct consideration for an additional year of provisional pendency without starting the Section 154 clock, and a way to preserve large amounts of capital until the market actually speaks.

Schwall and Wagner’s 2023 study in World Patent Information collected renewal data on 2.5 million U.S. utility patents issued from 1992 to 2009, and found that about half of all patents were kept in force through the third maintenance fee. Additionally, in Are Rising Maintenance Fees Shortening the Effective Patent Term?, Dennis Crouch reported that USPTO maintenance records show roughly 60% of patentees abandon before full term, with the share that pay all three maintenance fees having fallen to about 40%.

This means that a large share of U.S. utility patents have little value to their owners relative to the cost of keeping them in force. While this is not evidence that a 24-month provisional would cut low-value issued patents, it is evidence that patent owners often decide later that the patent is no longer worth the cost, and that the current 12-month deadline forces an expensive decision before the market has spoken. Giving inventors the option to renew their provisional applications for an additional year would allow patent owners to delay the decision to file a nonprovisional, and as a result make it less likely that they would file before receiving an accurate signal from the market.

For instance, if a small business were to procure an investment 1-2 years after disclosing their invention, they could promptly file a Track One nonprovisional application with that capital, and in a straightforward case procure an issued patent in less than a year. Given that investment is a sign that competition will likely copy the underlying invention, the inventors will have procured a patent at a moment when infringement is most likely to happen. The extra year of U.S. pendency would not be a new international priority year, but it would allow inventors to re-purpose patent dollars into product development and marketing, thereby functioning as a domestic insurance policy if the market should provide a signal of viability.

The 24-Month Provisional Requires Congress

The USPTO does not have the power to make these changes on its own—Congress must get involved, for example by amending 35 U.S.C. § 111(b)(5) to recite, inter alia, “the provisional application shall be regarded as abandoned 12 months after the filing date of such application unless a renewal surcharge has been received by the USPTO, in which case the pendency of the provisional application will be renewed for 12 months, during which time a nonprovisional claiming the § 119(e) benefit may be filed, and at the end of which the Office shall publish the provisional if a nonprovisional is not filed.”

Companion statutes would also require amendment. 35 U.S.C. § 119(e) would have to give the benefit through 24 months. 35 U.S.C. § 122 would have to authorize publishing a provisional that would otherwise die in secret, but only if no nonprovisional were to be filed in the renewal year—if a nonprovisional were filed, the provisional would not publish and the nonprovisional would publish in due course. 35 U.S.C. § 102 would have to treat the provisional text as prior art on the publication date. For inventors, reconciling these statutes would allow money to be spent based on what the market is actually saying—not prematurely with insufficient information.

Image Source: Deposit Photos
Image ID: 23375360
Image Author: iqoncept