The plan causes a massive uptick in patent filings that overwhelms the USPTO

Michael L P. Ellenberger—JD, Northwestern Pritzker School of Law; patent attorney, researched with National Institutes of Health. McNeill Baur, “The Waiting is the Hardest Part: Does Longer Patent Pendency Mean More Valuable Patents? “, . 2019.

The United States Patent and Trademark Office (USPTO) is one of the busiest patent offices in the world, fielding approximately 500,000 newly filed utility applications annually, and receiving more certified mail per day than any other single entity.1 At such a volume, the time from application filing to issuance is long. Owing to a myriad of factors, the average pendency period in the United States is 25.3 months and can be as long as twenty-eight months for “Networks, Multiplexing, Cable, and Security,” a burgeoning and crowded art space.2 Patent pendency is frustrating for the impatient but potentially lethal for the startup.3 A recent report from the UK Intellectual Property Office estimated that the “combined losses from each year of backlog in the U.S. Patent and Trademark Office, Japan Patent Office, and the European Patent Office [combined] costs the global economy over $10 billion a year.”4 While the pendency brings the costs of lost revenue, it does not necessarily impact the quality of the applications across four classifications: market value, signal, impact, and reputational considerations. Compared with the bifurcated search and examination stages before the European Patent Office (EPO), the USPTO consolidates the two steps into one, increasing complexity and stress on examiners in their limited time and incorporating additional sources of error.5 Research suggests that the time allotted to each examiner per patent, absent the already inherent intellectual rigor of the position, induces examiners to grant invalid patents already “on the margin.”6 Coupled with a backlog of a half million patents still awaiting examination, the incentives for an examiner to rush through an application and render a quick, rather than quality, decision is all too high.7 Moreover, the view that disclosure-for-monopoly rights is the driving force for patent law in the United States is a faulty “simple view” of intellectual property rights, and one wherein “inventors should be loath to disclose any more information than necessary to obtain patent protection.”8 Mere patent protection provides insufficient incentive for a complete disclosure: such an arrangement is too weak to drive the engine of patent law. There must be more. Undoubtedly, if patents are considered to have “quality” only if they are both (a) valid and (b) litigation-proof, then the USPTO is failing. Patents are continually challenged, overruled, or invalidated before district courts, the Patent Trials and Appeal Board (PTAB), the Federal Circuit, and the Supreme Court. If instead the consideration is broadened as to what it means for a patent to be “high quality”—if the introduction of patent signaling, reputation, or minor, readily implementable tweaks to the Patent Office are allowed to hold worth— then the situation looks far from disastrous. Part I of this note will look at the Patent Office’s function and the factors that feed into pendency: application backlog, examiner incentives, and rate of application. Part II will investigate the value-quality-worth dynamics of patents, and how pendency, while depriving applicants of raw financial gain, may not inhibit a patent’s value. In doing so, Part II will further develop a new multifaceted model for patent value. Finally, Part III will consider potential improvements to the patent system in the United States, improvements that will decrease patent pendency without harming patent value when considering the new paradigm proposed in Part II. I. PATENT OFFICE FUNCTION A. Pendency. The lack of expedited service at the USPTO is largely due to the substantial number of patents previously filed but not yet examined, a backlog further exacerbated by the uptick in filings in the 21st century.9 The USPTO handled 629,647 applications in 2015—including utility (589,410), design (39,097), and plant (1,140) patent applications.10 325,979 patents were granted.11 According to the Patent Office’s 2016 Performance and Accountability Report (PAR), patent applications on average received a first action within 16.2 months of filing and remained in the Patent Office 25.3 months.12 While the total pendency measure is within the USPTO fiscal year 2016 target, the time to first action—the period it takes an examiner to determine faults or deficiencies in the filed application—is slower than the USPTO’s published target of 14.8 months.13 That’s not to say change hasn’t come. At the start of the Obama Administration in 2009, the USPTO backlog of unexamined patent applications was about 750,000.14 Driven by USPTO protocol and an increased awareness of such slog, backlog was cut by over 200,000 in the 2016 fiscal year, a 28% decrease in spite of an annual increase in filings of almost 4%.15 Along with shortening the backlog, the USPTO has continually chipped away at pendency, cutting the figure from 25.9 months in January 2009 to 16.2 months in September 2016.16 All of this, says the USPTO, “means that deserving patented technology can reach consumers at home and around the world sooner than they would have in the past, further driving innovation and economic growth.” 17