Wednesday, October 28, 2009

Patent Officials: "Worst Is Yet To Come"

From today's

Gerard Torres of the United States Patent and Trademark Office (USPTO) said an analysis of patent filings at his organisation suggests there is usually a lag of about one year between a recession and its effect on patent filings.

"The current recession is typical in this manner, as monthly patent filings did not begin to display weakness until late 2008, early 2009. This may mean the worst is yet to come in terms of the decline in patent filings. Total patent filings are expected to be down by about 1% to 2%," he said.

The EPO acknowledged that a similar picture is evident in Europe where the full impact of the recession on patent filings will not be clear for some time. A spokesperson said companies follow a range of patterns when filing patents in several countries, with timescales ranging from 12 to 32 months.

"We may get the full picture of how the patenting activity was influenced by the crisis later this year, or perhaps only next year," a spokesperson said.

Read "Patents suffer as crisis hits innovation" (link)

Tuesday, October 27, 2009

USPTO Looks to Reduce "Stress" of Data Delivery, Seeks High-Volume Dissemination for Future

Currently, the USPTO is looking to unload about 2 petabytes (i.e., 2000 terabytes) of patent-related data sets to an outside vendor in an effort to segregate public data from the examiner systems, and to make "virtually all public information from the USPTO accessible on the Internet. " Importantly, the PTO wants to make this information free of charge to the public, including current pay-for-service data products (e.g., XML Grants). Also, this change appears to be part of a longer-term "data dissemination solution" for allowing high-volume dissemination.

These data sets include:

• Application documents (Specification, Claims, Amendments, etc.)
• Meta Data associated with the Applications (Application Data/Transaction History/Patent Term Adjustment/Patent Term Extension Foreign Priority/Attorney Address/Continuity Data/Published Documents)
• Assignment Data, including history of assignments
• Fee Data Associated with the Patent Application/Patent
• Application Meta Data (document or paper type/ date of the paper/ page size)

Notably, the USPTO has no current plans to scan or convert paper files into electronic form.

According to the USPTO:

One of the agency’s potential solutions is to enter into one or more no cost contract(s) where the vendor(s) will fund the development of a secure infrastructure at the USPTO that will permit unrestricted delivery (exceptions to this may be treaties with foreign countries or data considered to be sensitive if shared with certain other specific countries/entities) of the data in bulk or a common machine readable format to the vendor. The vendor will be responsible for funding the ongoing operation of the infrastructure, including the maintenance of the historical data and the periodic updates to the data. The vendor will also be required to make the data that is provided by the USPTO available to the public on a no charge basis. As part of any resulting agreement, the vendor will be allowed to maintain, repackage (add value), distribute, and sell any resulting enhanced data sets and retain any fees collected.

For more information, see "USPTO's Data Dissemination Solution" via Fed (link)

Read the PTO's Q&A document on the project here (link)

For a timeline on the project, click here (link)

For a list of interested vendors competing for this work, see here (link)

See also, "Patent office wants help reselling data" (link)

Monday, October 26, 2009

Study Concludes U.S. Would Benefit From EPO-Style Opposition

Professors Stuart J.H. Graham and Dietmar Harhoff published a paper recently that analyzed the potential effects of a post-grant review procedure (opposition) in the U.S. One particularly interesting aspect of their paper is the comparison of litigated U.S. patents versus their EU counterparts. The paper found that:

• EPO opposition rates of the twins of U.S. litigated patents are about 3 times higher than for non-litigated patents (20% versus 6%). Not surprisingly, EPO applications relating to litigated patents are broader in scope, have more claims, contain more references to earlier patents, and receive more citations from subsequent patents;

• On the opposition outcomes, between 22.6 and 24.4% of litigated patents are revoked at the EPO. This is lower compared to the 27.6-39.5% of non-litigated patents. Surprisingly, approximately 14% of oppositions are abandoned by the owner.

• EPO applications that directly relate to U.S. litigated patents have a higher grant rate (80.3%) than equivalents of non-litigated patents (67.9%); and

• The European model tends to exclude equivalents of litigated U.S. patents due to an increased likelihood of opposition, and not by virtue of lower grant rates, or less favorable opposition outcomes;

Professors Graham and Harhoff then performed certain societal "welfare calculations" to conclude that instituting a post-grant review (PGR) system in the U.S could have quite a significant impact on social welfare, provided that the cost of the PGR system is kept reasonably low (<$500k):

[O]ur analysis and welfare calculations suggest that the benefit from PGR review in terms of social welfare per year—when put in dollar terms—could be nearly $25 billion. The main parameter affecting this estimate is not savings on the cost of litigation, but the social costs of currently unlitigated patents that bestow excessive market power on some applicants. This market power either allows the patentee to extort licensing fees, or force competitors to invent around the respective patent. But even when we draw a conservative scenario, and assume a very low social cost figure of $1 million on average for these patents, our benefit-cost ratios still indicate that the benefits of such an institution compares very favorably to its costs.

For more information, read/download "Separating Patent Wheat from Chaff: Would the U.S. Benefit from Adopting a Patent Post-Grant Review? " (link)

Monday, October 19, 2009

Arti Rai Heads to USPTO; More Patent Reform News

While it has not yet been announced officially, Arti Rai appears to be on her way to becoming the USPTO's next Administrator for External Affairs. In this position Rai will oversee the Office of International Relations , the Office of Congressional Relations and Office of Enforcement. According to at least one report, Rai is expected to arrive "any day now" to take the position.

While being well respected in academic circles, Rai has been a controversial figure on the patent front (see, e.g., "Professor Arti Rai to the Patent Office? I Sure Hope Not!" (link)), particularly for her strong endorsement of the PTO's patent continuation rules; a copy of the "law professor amicus brief" - cheekily referred to as the "dirty dozen" brief - in support of the rules can be downloaded here (link). Also, contrary to the beliefs of many in the patent bar, Rai argues that the patent system would benefit from the USPTO having more control over rulemaking authority (link). Finally, Rai also supports the idea of creating a "gold-plated" patent system applicants, where the "clear and convincing" validity standard would be applied only to patents that have undergone a more rigorous (and expensive) examination process. You can here Rai discussing her views on this, and other topics, here (link)

In related news, Peter Pappas, who previously served in several capacities in the Clinton administration, has been brought on to head up the USPO's communications and public outreach operation.

On the Patent Reform front, reports are surfacing that attempts are being made to schedule debate on the Patent Reform Bill before the end of the year. According to CongressDaily:

Senate Judiciary Chairman Patrick Leahy said Thursday he wants to work with Majority Leader Harry Reid to schedule debate before the end of the year. Leahy made his comments the same day that PTO Director David Kappos told the American Intellectual Property Law Association's annual meeting that a legislative fix is needed immediately. "Not everyone is getting everything they want" in the bill, Kappos said, but it is a "major positive step" for the stakeholders involved.

At this time, at least 12 Senators have written Leahy expressing concern over the "problematic" nature of re-examination requests, arguing that "additional work" needs to be done in that regard:
These so-called post-grant review provisions, as currently crafted, are quite problematic. This language, which would permit serial challenges to patents at the U.S. Patent and Trademark Office and in the courts, threatens to diminish the value and enforceability of U.S. patent rights at a time when America's economic recovery is dependent on the strength of U.S. innovation. Ideally, we hope these issues can be fully resolved before the bill comes to the floor.

Red the letter here (link)

Friday, October 16, 2009

Kappos to Speak at ACCA Meeting in Boston

The Association of Corporate Counsel (ACC) announced this week that it will feature USPTO Director David Kappos at its 2009 Annual Meeting in Boston next week. Kappos will appear on an interactive panel discussion, “Meet the USPTO Brass”, on Tuesday, October 20 at 9 am Eastern at the Hynes Convention Center. The event is presented as part of the ACC Annual Meeting in conjunction with the ACC Intellectual Property Committee.

According to the ACCA website, high-level USPTO personnel will be on hand to "discuss current patent and trademark issues, and more importantly, listen to you — the customer." In addition to Kappos, Commissioner for Trademarks Lynne G. Beresford and POPA President Robert Budens will be on hand to participate and take questions.

For more information, click here (link)

Tuesday, October 13, 2009

Chinese Gov't to Fund Foreign Patent Filings for SMEs

The Chinese Ministry of Finance (MOF) announced today that approximately 100 million yuan ($14.65 million) will be made available to small- and medium-sized enterprises (SMEs) applying for patents abroad. According to one report,

SMEs, 95 percent of which are privately-owned, have played an increasingly important role in China's economy over the last several years. SMEs contribute to 60 percent of China's GDP, 50 percent of tax revenues, 68 percent of exports and 75 percent of new jobs every year, according to official statistics.

SMEs accounted for 66 percent of patent applications in China in 2008, but overseas is a different story.

Ma Hongya, an official from the Beijing Intellectual Property Bureau, told the Global Times that the Chinese firms applying for patents abroad are mainly large companies, and SMEs cannot afford to carry out the procedures and research an application requires.

In order to be eligible, patents must be in PCT format and must first be approved by the State Intellectual Property Office (SIPO). State-owned enterprises will not eligible for the subsidy. Additionally,
[F]oreign patent application projects must either help exert China's industrial advantage and be internationally competitive; be expected to explore the international market or expand its international market share; or have patented products with an expected large capacity in the international market and good market prospects.

Under the proposed policy, the government will provide SMEs as much as 500,000 yuan ($73,238) for each patent application abroad.

Read People's Daily Online "Central government to subsidize foreign patent applications" (link)

See also, "MOF to support overseas patents" (link)

Ranking Government Patents

Government Agencies do not patent heavily, as they account for approximately 1% of all utility patenting per year. Many government agency patenting efforts are more for defensive purposes. However, governments contribute significantly to patenting innovations through funding and grants to both private and public sectors.

Tammy D'Amato of Patent Board has released rankings for the top 10 government agencies having the greatest "technology strength" in their patent portfolios. The rankings, and the 2009 patent grant rate, follow:

(1) Electronics & Telecommincations Research Institute (KR) (286 patents)
(2) United States Navy (236 patents)
(3) United States Department of Energy (194 patents)
(4) United States Army (137 patents)
(5) NASA (85 patents)
(6) Japan MEXT (Ministry of Education, Culture, Sports, Science & Technology) (190 patents)
(7) US Dept. of Health and Human Services (123 patents)
(8) Agency for Science Technology and Research (Singapore) (39 patents)
(9) Japan METI (Ministry of Economic Trade & Industry) (82 patents)
(10) CNRS (Centre Nationale de la Recherche Scientifique) (France) (96 patents)

See the complete statistics here (link)

Read "U.S. Slips to Second in Patents" (link)

Monday, October 12, 2009

Examining Patent Examination

Continuing their earlier work on patent examination and prosecution, professors Mark Lemley and Bhaven Sampat released a draft copy of their paper title "Examining Patent Examinations," which statistically analyzes patent applications filed in the month of January 2001 - the year PAIR was introduced - through April 2006. Here are some of the things they found:

• 85% of the PTO's first office actions are non-final rejections; only 13.5% of granted patents issued on the first office action without any argument or negotiation.

• Almost three-fourths of the applications that do issue (73.1%) do so without ever receiving a "final" rejection. More than half of those applications that received a final rejection had ultimately resulted in a patent

• Amendments are key to obtaining a patent: over 94% of issued and pending applications had some form of amendment during prosecution. After a final rejection, 66.1% of amended applications are patented (versus 29% pf those that were not amended)

• Despite the fact that Examiner amendments are allowed as of right only after a non-final rejection, 77.2% of interviews come after the final rejection. While 50.91% of applications with a final rejection but no interview are eventually patented, 62.6% of those with an interview after final are patented.

• 14.4% of all applications have children (continuations, CIPs, divisionals); 15.9% of all applications have RCEs. Of the continuation types, 30.16% are continuations, 20.96% are CIPs and 38.19% are divisionals.

The technology areas with the greatest percentage of continuations:

(1) AU1600 Biotechnology and Organic Chemistry -- 27%
(2) AU1700 Chemical and Materials Engineering -- 20%
(3) AU3700 Mechanical Engineering, Manufacturing, and Products -- 17%
(4) AU2800 Semiconductors, Electrical and Optical Systems and Components -- 15%
(5) AU2600 Communications -- 11%
(6) AU2100 Computer Architecture, Software, & Information Security -- 10%
(7) AU3600 Transportation, Construction, Electronic Commerce -- 10%

The paper concludes:

The evidence illuminates the patent prosecution process as a continuing negotiation between examiner and applicant. That negotiation does not end with an initial or even a final rejection. Interviews and amendments after final play an extremely significant role in generating patents, and in limiting the scope of those claims as well. Nor is that the end of the process. Continuation applications are flourishing. They have broken into two roughly equal groups, with different uses. Many applicants are using RCEs to keep fighting for claims that the examiner wasn’t willing to give them. The second group is filing continuation applications rather than RCEs. They have opted for a slower process, either because they want delay so that they can modify their application to track developments in the marketplace or because they want multiple patents to build an effective fence around a single invention.

Read/download a draft copy of the paper here (link)

Thursday, October 08, 2009

USPTO Continuation Rules *DEAD* (More-or-Less)

Today the USPTO announced that it has filed a joint motion with Plaintiff GlaxoSmithKline to dismiss the lawsuit related to continuation rules. From todays' PTO press release:

Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos has signed a new Final Rule rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property. The regulations, which addressed the number of continuation applications as well as the number of claims that could be included within each application, were published in the Federal Register in August 2007, but were enjoined and never came into effect.

The USPTO also announced that it will file a motion to dismiss and vacate the federal district-court decision in a lawsuit filed against the USPTO that sought to prevent the rules from taking effect. GlaxoSmithKline - one of two plaintiffs in the Tafas v. Kappos lawsuit - will join the USPTO’s motion for dismissal and vacatur.

“The USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market,” Kappos said. “These regulations have been highly unpopular from the outset and were not well received by the applicant community. In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.”

Interestingly, plaintiff Tafas has not agreed to drop the action and maintains that the district court decision should be upheld to limit the USPTO’s substantive rulemaking power.

Read the USPTO press release here (link)

Tuesday, October 06, 2009

First Action Interview Pilot Program Expanded by the USPTO

Lat week the USPTO announced that it is expanding its First Action Interview Pilot Program, where an applicant is entitled to an interview with the patent examiner prior to the first office action on the merits in a new utility application.

Previously, the program was limited to two computer-related technology areas, but now includes additional technology areas for a six-month period beginning on October 1, 2009. According to the USPTO, the initial pilot program showed that

[T]he patent process benefits when interaction between the applicant and the examiner are enhanced at the beginning of examination because patentability issues can be resolved early when the applicant and the examiner discuss them one-on-one. For the applications involved in the initial pilot, the First-Action Allowance rate increased six-fold when compared to applications from the same technology area not involved in the pilot.

Currently, an applicant may request an interview prior to a first action. However, granting of an interview is within the discretion of the examiner who has not yet reviewed the case, and the applicant may be required to identify relevant documents and explain how the invention is patentable over these documents.

Under the expanded pilot program, the examiner will conduct a prior art search and provide the applicant a pre-interview communication, which is a condensed preview of objections or rejections proposed against the claims. Within 30 days from the issue date of the pre-interview communication, the applicant must either choose not to have a first action interview with the examiner, or schedule the interview and file a proposed amendment or remarks (arguments).

Should the applicant choose not to have a first action interview, a First Action Interview office action will be promptly issued and the applicant will have one month or 30 days, whichever is longer, to reply. If an interview is scheduled, the applicant must be prepared to discuss issues related to the patentability of the claims. In this interview, if the applicant and the examiner reach agreement on all claims in regards to patentability, a notice of allowance and fees due will be issued. If agreement is not reached on all claims in regards to patentability, the applicant will be given a First Action Interview office action setting forth any requirements, objections and rejections to which the applicant will be given one month or 30 days, whichever is longer, to reply, with limited extensions of time. It is this First Action Interview office action that is considered the first action on the merits in the application.

There have been several improvements made to the program since the initial pilot. For example, the response period to reply to the pre-interview communication can now be extended by 30 days. Also, the applicant can now waive receipt of the First Action Interview office action during the interview with the examiner, convert the previously-submitted draft amendment to a formal amendment and proceed directly to the second substantive examination. This may be preferable to those who would prefer not to wait for the First Action Interview office action and refile the proposed amendment formally.

For details regarding eligibility and criteria for participation in the pilot, click here (link) (to see the enhanced page, click here)

Read the USPTO press release here (link)

- Generally, an applicant's request to participate in the program must be filed during the six month life of the program and at least one day before a first Office action on the merits of the application appears in the Patent Application Information Retrieval (PAIR) system.

- The request to enter the Pilot Program must be made via EFS-Web

Thursday, October 01, 2009

USPTO Alert: Software Not Calculating National-Stage Patent Term Adjustments Correctly

The following notice from the PTO is important for any overseas patent filer having recently allowed or issued patents stemming from § 371 applications:

The USPTO is in the process of correcting an error in the computer program that it uses to calculate the patent term adjustment that affects patents issuing from international applications entering the national stage as to the United States pursuant to 35 U.S.C. § 371. The USPTO's computer program incorrectly calculates the three-year pendency provision of 35 U.S.C. 5 154(b)(l)(B) in international applications as being measured from the date that the requirements of 35 U.S.C. 9 371 were fulfilled rather than the date the national stage commenced under 35 U.S.C.4 371(b) or (f) in the international application.

Read the full notice here (link)

N.D. Illinois Issues Local Patent Rules

From the Northern District of Illinois website:

"The judges of the Northern District of Illinois have enacted the Court’s Local Patent Rules to guide the pretrial procedures in patent cases. The Local Patent Rules are effective as of October 1, 2009, and are available on the court’s web site,, under Local Rules."

Click here to view the local rules from the court's website.


Final Local Patent Rules (link)

Final Estimated Patent Case Schedule (link)

Appendix A (link)

Appendix B (link)

Judge Michel on the Patent System

On the nomination of Kappos as USPTO Director:

I think the selection of David Kappos as the director of the USPTO is the clearest indication of the new administration's appreciation of IP issues . . . This appointment is salutary - Kappos is a highly experienced lawyer with a worldwide perspective and strong management, as well as legal and technical, skills.
On USPTO funding:

The US Congress decided some years ago that the USPTO must be self-supporting. However, this works only if the fees are adequate to generate the revenue needed for a high-quality, speedy process for both trademarks and patents. I think the reality is that the fees, although they have been raised over the years, are still woefully inadequate to support the examination and IT resources required on the patent side and they barely cover the internal costs incurred on the trademark side. In my opinion, Congress has relied excessively on fee revenue to support the office. During the current economic crisis it would make sense to alter the financing arrangements in place for the USPTO so that it can draw on both taxpayer and fee-generated funds. I am not suggesting that this dual-funding option should be ongoing, but I do think it would be justified as an emergency stop-gap measure. A transfusion of public money to the USPTO would help rescue it from its current mission impossible. It simply cannot do the job needed by industry, the corporate world and ultimately the national economy with the totally inadequate resources it currently commands.
Michel's remarks can be viewed in full at World Trademark Review (registration required). You can also read comments from Joff Wild at the IAM Blog here (link).

Also, Judge Michel does not appear to be enamored with the tenor of arguments in favor of patent reform, or the diversity of voices - recently, he implored a group of lawyers to "voice their views" in the congressional debate over patent reform, and "lamenting that California technology companies are currently driving the discussion." Michel remarked:
Patent legislation is an opportunity for things to get much better, but it's also a risk for things to get much worse, and it's not entirely clear which direction it's going to head in . . . It will depend a lot on what people in the profession do. If we each do our part, then I think the odds go up greatly that the outcome will be favorable to the broad mass of companies.
From today's article from
Michel estimates that 14 Silicon Valley companies, which mainly produce computer and telecommunications equipment, are influencing the debate the most. The interests of many other industries and geographic regions and the bulk of some 30,000 U.S. companies with more than 100 employees, he suggested, are not being heard.

In reviewing most of the congressional testimony from the past five years, Michel said he found it lacking. Specifically, he said statements that the patent system has been ruined by an explosion of litigation and that there have been rampant and excessive damage awards are wrong. Both the number of patent infringement cases filed and the median award in those cases have been stable for the past 15 years, he said.
Read "Judge Michel Calls for More Voices in Patent Reform Debate" (link)

"That's One Small Step . . ." Kappos Starts PTO Reform By Tweaking Examiner Productivity Metrics

Yesterday, the PTO published a briefing paper that was provided to the USPTO examining corps (via POPA) on a proposal that would change the "count system" in the USPTO, which is universally blamed as being a large contributor to the current backlog. Under the current count system, examiners are paid using a modified GS schedule and earn more money through productivity "count" incentives. As examination progresses, examiners get counts to earn incentive credits at various stages. The more "counts" an examiner gets, the more money he/she typically earns.

Of course, this has led to accusation of examiners (as well as applicants) "gaming" the system to gain an advantage (e.g., "RCE churning"). The current proposals are aimed at curbing these practices.

The modified count proposal rests on the following:

• Combining count system with more time for examiners;

• Providing more time overall for examiners by: (1) adding 2 hours to each examiner’s FY09 Hrs/BD); and (2) add additional time, if necessary, to account for reduction in RCE counts so that every examiner gets at least 1 net additional hour over their FY09 expectancy;

• Give more time for First Action on the Merits - shift counts so FAOMs get more credit, and subsequent actions get less;

• Diminish credit for Requests for Continued Examination (RCEs);

• Provide time for examiner-initiated interviews - one hour of non-examining time would be granted for conducting the interview and preparing the post-interview documentation for examiner initiated interviews (interviews for restrictions would be excluded); and

• Provide consistent credit for transferred or “inherited” amendments - initial or first Office Action done by the new examiner on the transferred or “inherited” amendment will get a set amount of counts (non-RCE transfers = 1.5 additional counts total; RCE transfers = 1.75 counts).

With regard to patent quality review:

- No examiner shall receive an oral warning based upon a single clear error in Patentability Determination.

- No examiner shall be deemed to have failed an oral warning improvement period on the basis of a single clear error in Patentability Determination.

- However, an examiner may receive an oral warning for multiple clear errors in Patentability Determination over a period of two or more consecutive quarters during a fiscal year.

As a side note, the Kappos proposal is not final - the modifications must still be approved by agency employees in the coming weeks. If enacted, the modifications to the count system would be the first major change since 1976.

Applicants should be encouraged that this proposal came so quickly after Kappos took over in the USPTO. Additionally, the USPTO has traditionally been less-than-eager to post or otherwise publish these types of internal documents - the openness of the current regime is certainly refreshing.

To view the briefing paper, click here (link)

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