Patently-O is reporting that the PTO issued a record number of patents during the 2010 calendar year, just shy of 220,000. This is a 31% increase over 2009 and about 27% more than 2006 when the PTO issued a record 173,000 patents. Why the significant increase in the number of issued patents?
Filings were up slightly in 2010, but not 31% over the previous year, so that’s not the reason. Patently-O believes the increase in issued patents is due to administrative changes by PTO Director Kappos who took office in mid-2009. He notes that more applications are being rejected as well, but that the allowance rate is increasing over recent years.
Is it time to get all panicky that examination quality is going down? Is the PTO issuing a lot of bad patents? Patently-O suggests that it is time for a quality study comparing patents issued in late 2008 with those in late 2010.
According to the PTO’s Data Visualization Center (the Dashboard), the current allowance rate using the traditional method of considering RCEs to be abandonments is 45.6%, while the allowance rate considering RCEs to not be abandonments, but rather continued examination, is 62%. Are these numbers particularly high? Should we be worried? In December 2008 (the time for comparison suggested by Patently-O), the allowance rates were 42.3% and 60.3%, respectively.
Has the allowance rate increased significantly during this time? It has gone up about 3.3% or 1.7% during those two years. The rate is up, but historically the allowance rate had been about 65% under the traditional method, so this increase is hardly cause for alarm that quality must be suffering. There must be another reason for the increase in patents issued.
Further review of the Data Visualization Center provides some clues. First, in December 2008, the PTO had 6,063 patent examiners, while in December 2010 there were 6,420, an increase of nearly 6%.
Next, the PTO is decreasing actions per disposal. Generally, when an applicant files a patent application, he is entitled to 2 office actions, a first action and a final action. To continue examination beyond a final office action, the applicant must file an RCE or continuing application. When an examiner must do a new search that is not related to claim amendments, such as when the first search is incomplete, additional non-final office actions may be issued after the first one. This decreases the examiner’s efficiency because the first action was incomplete or otherwise defective.
In December 2008, the PTO averaged 2.85 actions per disposal; in December 2010 that number was down to 2.42. This means that applications are allowed or abandoned (or RCEs are filed) with nearly half an office action less over the last two years. This means that examiners are able to get to more and more applications without having to re-do work on existing cases. As a result, more applications will be allowed and rejected. This has aided the PTO in reducing the backlog of unexamined applications from 760,000 in December 2008 to about 720,000 in December 2010.
Based on the PTO’s own quality initiatives, in comparing the first quarter (Oct-Dec) of FY2009 with FY2011, the final rejection and allowance compliance rate has risen from 94% to 96.2% and the in-process compliance rate has risen from 93.4% to 94.9%. Independent verification is helpful, but the PTO itself thinks its quality is increasing, not decreasing.
Thus, there appear to be multiple reasons that more patents are being issued (and applications rejected) and it does not automatically mean that examination quality has become lax. Quality studies are nearly always helpful and patent quality is very important, but we need to be careful not to have a pre-conceived notion of what the result should be prior to conducting such a study.