First Quarter FY2014 PTO Numbers

January 21, 2014

The following is a comparison of the PTO’s numbers from December 2013 with September 2013 (at my last numbers update).  Time to refer again to the PTO’s Data Visualization Center to see how things are going.

First Action Pendency – 17.4 Months

At the end of FY2013, first action pendency was 18.2 months, and has been steadily dropping during the last two fiscal years.  That number is a significant improvement. The PTO continues to make significant improvements in this area.

“Traditional” Total Pendency – 28.6 Months

Traditional pendency is down from 29.1 months in September and over 35 months at the beginning of FY2011.  Again, the PTO is making significant progress in this area.

Application Pendency with RCEs – 37.6 Months

This number is up from 37.1 months in September, but is down from 39.4 months at the end of FY2012.  While the PTO is making significant progress on the front end with reducing first action pendency, the back end of applications requiring RCEs or appeals seems to be where the problem is being shifted.

Applications Awaiting First Office Action – 595,361

This number is up from 584,998 in September.  The PTO generally makes a big push to reduce this number at the end of each fiscal year and since then it has risen 1.8%.  It is a good reduction from 608,283 at the end of FY2012.

Patent Application Allowance Rate – 51.0%, 69.6%

The first number counts RCE filings as abandonments, while the second number does not, but counts them as continuing prosecution.  These numbers are down from 53.5% and 70.7%, respectively, in September.  The 18.5+% difference between the two numbers is, however, troubling.  It seems that RCEs are still being forced; especially considering the next number.

RCE Backlog – 79,120

This number is up from 78,282 at the end of FY2013, a relatively modest 1% increase.  Believe it or not, at the end of June, it was at 100,403.  Hopefully, progress in this area is not being stalled as it needs to continue.  The After Final Pilot Program is supposed to prevent examiners from churning RCE filings.

Number of Patent Examiners – 8,013

This number is up from 7,931 in September.  In November, the PTO passed 8,000 examiners for the first time ever.  Although improving examiner efficiency is a solid goal, as long as filings continue to increase, so should the number of examiners.

Pendency from Application Filing to Board Decision - 87.3 Months

The crisis at the Board continues, as the pendency is down from 88.5 months in September, but is merely back to June levels.   Pendencies of over 7  years from filing to Board decision are not acceptable.  New technologies become obsolete prior to getting a patent or decision by the Board.  The PTO hired a number of additional patent judges and attorneys to deal with this issue, but the sharp increase in the number of appeals filed has made tackling this an impossibility.   The Board now has significantly greater responsibilities with the beginning of the new post-grant review proceedings.

At the end of November (the Board doesn’t have its December numbers available yet), the Board had 25,151 pending appeals from ex parte application prosecution, a drop of 546 since August.  1,423 new appeals were filed since September (a pace for 8,538).  This is down significantly from the 10,758 in FY2013 and from FY2012 when 12,433 new appeals were filed.  Meanwhile, the Board disposed of 1,580 cases during FY2014 (a pace for 9,480).  This is down significantly from the 11,934 during FY2013.  They’re keeping pace here, but having a hard time denting the backlog.

In other types of cases, 166 inter partes review cases have been filed, 50 trials instituted and 23 concluded.  599 of these cases remain pending.  37 transitional business method cases were filed with 6 trials instituted.  1 of these have been concluded.  No post grant review petitions were filed in October or November.  3 derivation petitions were filed in November, giving the Board 4 such pending cases.  7 new interferences were declared, with 11 concluded, leaving the Board with 47 still to be decided.  3 new ex parte reexamination appeals were filed, with 14 being disposed.  13 such cases remain pending.  32 inter partes reexaminations have been filed.  The Board has decided 33, leaving an inventory of 104 cases pending.

Conclusion

The PTO is doing a good job on the front end.  Significant progress is being made on first office action pendency.  The problems begin, however, once an application reaches a final office action.  RCE filings seem to be dropping somewhat, but the rate is still pretty high.  Many or most of these are the result of examiners forcing them on applicants.  This is very inefficient and increases application cost and pendency significantly.

The PTO has still not come up with a plan to deal with its crisis at the Board.  Applicants deserve the ability to get a final agency decision on a patent application within a reasonable time frame.  The Board’s added workload with numerous types of proceedings for it to decide has made things more congested.  Presumably, if the proceedings work well, there may be many more filed in the coming months and years.  This could make things even worse.  Appeals must be decided more quickly.

Supreme Court to Hear Several Patent Cases

January 10, 2014

USSupremeCourtWestFacadeThe Supreme Court has agreed to hear two patent cases before the end of the current term.

Limelight Networks, Inc. v. Akamai Techs., Inc.

In 2012, a divided en banc Federal Circuit permitted divided infringement, where it takes more than one party to perform all of the steps of a claimed process, but only for induced infringement.  The court held that infringement can be found in cases where (1) a party performs some of the steps of a patented method and induces another party to perform the remaining steps; and (2) where a party induces multiple third parties to collectively perform the steps of a patented method, but no single party has performed all of the steps itself.   The knowledge requirement for inducement to infringe a patent claim means that collaborating parties cannot “accidentally” infringe.  A significant minority of the court argued that the statute requires a single entity to perform all of the steps for there to be infringement.

Nautilus, Inc. v. Biosig Instruments, Inc.

This case relates to the statutory requirement that applicants particularly point out and distinctly claim their invention.  This is referred to as the “definiteness” requirement of claims.

Sometimes the words used in a patent claim can be subject to multiple reasonable interpretations.  The Federal Circuit has ruled that such claims are only indefinite under the statute if they are “not amenable to construction” or are “insolubly ambiguous.”  This means that a patent claim is only ambiguous if one of skill in the art would read the claim and not know what the boundaries of the claim are based on review of the specification and prosecution history.

In Nautilus, the question is whether one of skill in the art can determine the meaning of the claim requirement that electrodes be in a “spaced relationship”.  The Federal Circuit, applying its standard, ruled that the term can be sufficiently understood and the claim is not indefinite.

The Supreme Court will address whether the Federal Circuit is using the correct standard for this determination.

The cases will probably be argued in April with decisions expected by the end of the term in June.

USPTO Reduces Patent-Related Fees

January 9, 2014

On January 1, the USPTO reduced or eliminated several of the fees it charges patent applicants.  This is fairly unusual in recent years, as most fees have only gone up.  There was discussion that when the PTO started setting its own fees that it would make them more commensurate with the scope of work involved.  In that regard, these reductions make sense.

The PTO eliminated the Publication Fee that was charged to applicants when they paid the Issue Fee.  The Issue Fee itself was reduced from $1,780 to $960.  There is some cost to the PTO with issuing the patent, but the new fees are more in line with the actual costs.  In effect, the fees due upon receiving a Notice of Allowance were reduced by about 54% ($2,080 to $960).  The Issue Fee is subject to discounts for small and micro entities of 50% and 75%, respectively.

The PTO also eliminated the $40 fee for assignment recordation, provided the assignment is recorded electronically.  This has been standard practice for patent practitioners for a number of years, so this will be a savings for virtually all applicants.

Finally, fees charged under the Patent Cooperation Treaty (PCT) are now subject to discounts for small and micro entity status.  Previously, all applicants paid the same fees for PCT filings.

Patent Application Drawings

January 3, 2014

One of the reasons that I tell inventors that we need to begin preparing a patent application well in advance of the deadline is the need for properly prepared drawings.

For provisional applications, just about any drawings will do.  Like other aspects of provisionals, the better prepared the provisional, the better chance of being able to properly rely on the provisional filing date.  Thus, even for provisionals, proper drawings are important.

For non-provisional patent applications, drawings are not an afterthought.  There are a number of very specific PTO rules that must be followed in the drawings.  The drawings must show every feature of the invention specified in the claims.  This means that it is not enough to simply discuss the idea of the invention generally in the specification; the invention must be discussed and the drawings described in detail.

When preparing the specification of a patent application, it is important to provide different levels of specificity.  The invention should be described broadly and generally, but also with increasing levels of detail.  This provides support for claims of varying breadth.

The drawings include reference numerals that point to various parts or elements in the drawings.  These numerals are referred to in the specification to describe the invention, including how it is made and used.  In this way, the drawings are not cluttered with a lot of words that make them difficult to read and understand.

Inventors sometimes think they can save money by preparing their own formal drawings.  There are also a number of specific requirements relating to margins, font size, and lead lines used in the drawings.  The rules for PCT applications are even more specific.  In a typical case, patent draftmen who specialize in preparing patent drawings only charge a couple hundred dollars to prepare the drawings for an application.  When I work with inventors who want to do the drawings themselves, I often go through multiple iterations that require a great deal of my time to correct and explain as the inventor works to comply with the drawing rules.  In these cases, the time involved costs a great deal more than a couple hundred dollars.

Like most aspects of patent preparation and prosecution, a patent attorney can easily provide advice and guidance on the preparation of drawings for a patent application.

Design Patents

December 19, 2013

Utility patents get all of the publicity in when discussing innovation.  This could be changing with Apple’s $1.05 billion verdict against Samsung, which was based in large part on infringement of Apple’s design patents.

Another option that an inventor may want to consider is a design patent.  Utility patents cover structural and functional aspects of an invention, while design patents cover the asthetic features.

Design patents differ from utility patents in a number of basic ways.  A design patent is granted to cover the ornamental design of an object that has practical utility.  For example, a design patent may be obtained for a new shape of a beverage container, the particular shape and features of the tread of a shoe, computer icons, and other items that have practical utility.

A design patent is not permitted for something that exists for purely aesthetic reasons, such as a work of art.  A painting, sculpture, or other work of fine art would be protectable by copyright and possibly other intellectual property rights, but would not be eligible for design patent protection.

An invention may be entitled to both a utility patent and a design patent since a utility patent protects the structure of an article and the way it is used and works; a design patent protects the way an article looks.  If the design–the way the article looks–is dictated primarily by the article’s function, it would not properly be the subject of a design patent.  An example may be the shape of a gear that is designed primarily to fit with other gears and not for aesthetic purposes.

The requirements for obtaining a design patent are similar to that for utility patents.  The design must be novel and non-obvious; the examiner will perform a search of the prior art to be certain that the design meets these requirements.  Furthermore, the drawings must clearly show the features sought to be protected by patent.  The drawings will typically be more detailed than in a utility application as they will often show more views of the invention.  The drawings contitute the claims of the design patent.  Because they don’t require a detailed specification like a utility patent, design patents are also less costly to prepare and file.

Design patent protection lasts for 15 years (for applications filed after December 18, 2013) from the date the patent issues compared to 20 years from the earliest filing date for a utility patent.  No maintenance fees are required for design patents.

Another advantage of design patents over utility patents is that they seem to be much easier to obtain.  In recent years, design patents have had an allowance rate of about 90% over the last few years, compared to utility patent allowance rates of under 50%.  Over 80% of design patent applications are allowed without rejection; only 1.2% are rejected based on prior art with a larger number rejected on formality grounds.

In an era of increasing backlog and pendency of utility applications, more than half of design patents are pending for less than a year, with the average pendency being about 16 months.

For an invention where design and utility patent protection are both appropriate, I would not skip the utility patent.  An inventor should at least file a utility application for its broader scope of coverage and should also consider a design patent.  A design patent would provide some protection while waiting for a utility patent to issue.  They are also cheap since they don’t involve a great deal of preparation and prosecution.  Inventors should always consider whether their inventions are eligible for design and utility patent protection.

Who is in Charge of the PTO?

December 16, 2013

The short answer to this question is “nobody.”  The long answer is, well, a bit longer.

Last November, David Kappos announced his resignation as PTO Director, effective in January.  At the time, there was also a vacancy at the Secretary of Commerce, so it was understood that once that position was filled, President Obama would nominate a new Director of the PTO who is also the Undersecretary of Commerce.

In the meantime, Deputy Director Teresa Stanek Rea was to be the Acting Director of the PTO.

In May, Penny Prizker was nominated as Secretary of Commerce.  She was easily confirmed.

We next expected a new PTO Director nomination.  And we waited . . .

Deputy Director Rea next left the PTO in November.  And we still waited for a new Director to be nominated.

MLee-uspto-635Last week, Secretary Pritzker appointted Michelle Lee to replace Teresa Stanek Rea as the new Deputy Director of the PTO, effective January 13.  Lee was the Director of the PTO’s new Silicon Valley satellite office.  Lee had previously spent a number of years as the Deputy General Counsel at Google where she was the Head of Patents and Patent Strategy.  She had also been a partner at the law firm of Fenwick & West.

Because the position of PTO Director remains vacant, Deputy Director Lee would automatically assume the position of Acting Director of the PTO.

Or will she?

There has been some discussion on the proper procedure for appointing PTO leadership.  A new PTO Director must be nominated by the President with the advice and consent of the Senate.  A Deputy Director may be appointed by the Secretary of Commerce, upon nomination by the Director.  This would mean that Secretary Pritzker could only appoint Michelle Lee as Deputy Director if nominated by the Director.  In the absence of a Director, this appointment would appear to be invalid.

Is President Obama seeking to bypass the Senate confirmation process for a new PTO Director?  If so, why?  Politics is always in play on the Hill, but a new PTO Director is rarely controversial.

According to Patently-O, the PTO has defended the appointment by suggesting the Lee was nominated by Commissioner for Patents Peggy Focarino, to whom the leadership duties at the PTO had been delegated.  The statute does not, of course, suggest that the Director’s nominating power can be delegated.  It actually puts Focarino in the strange position of nominating her boss.

Unfortunately for the PTO and President Obama, there is simply no statutory authority for the Commissioner for Patents to make such a nomination.  Therefore, the appointment of Michelle Lee as Deputy PTO Director is a legal nullity.

Apparently, President Obama does not see the PTO as important enough to nominate a true Director and Undersecretary of Commerce.

HT:  Hal Wegner.

Supreme Court to Review CLS Bank

December 9, 2013

Last week, the Supreme Court granted certiorari in CLS Bank v. Alice Corp.  This was the case where the 10 member en banc Federal Circuit could not garner sufficient votes for any kind of precedential opinion on whether certain computer-related claims constituted patentable subject matter.  The Supreme Court will review the two sentence per curiam opinion of the court, as well as the numerous concurring and dissenting opinions of the judges.

The question presented for the appeal:

Whether claims to computer-implemented inventions-including claims to systems and machines, processes, and items of manufacture-are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

Unfortunately, the Supreme Court’s recent forays into patentable subject matter have not added clarity to this area of law.  Bilski didn’t really change anything or give any real guidance for business method patents.  In Prometheus, the Court seriously confused patentable subject matter with obviousness and patentability.  They did do a bit better with isolated DNA in Myriad.

The Court should probably choose which cases to review a bit more wisely.

Oral argument in CLS Bank will take place in the spring with a decision expected by the end of the current term in June.

Innovation Act Passes House

December 6, 2013

Yesterday, the House of Representatives passed the Innovation Act, H.R. 3309, by a vote of 325-91.  The bill now heads to the Senate where a similar bill, the Patent Transparency and Improvements Act, S. 1720, is currently pending.

Prior to passage by the House, several amendments were made to H.R. 3309.

The use of demand letters or notice to potential infringers has often been used to later establish claims of willful infringement.  Once the potential infringer is put on notice of the patent, continued infringement is alleged to be willful.  One amendment seeks to provide significantly greater requirements for such letters. A claimant seeking to establish willful infringement may not rely on evidence of pre-suit notification of infringement unless that notification identifies with particularity the asserted patent, identifies the product or process accused, identifies the ultimate parent entity of the claimant, and explains with particularity, to the extent possible following a reasonable investigation or inquiry, how the product or process infringes one or more claims of the patent.

The requirement to identify the “ultimate parent entity of the claimant” was added.

The provision to repeal 35 U.S.C. § 145 was deleted.  Section 145 permits applicants who are dissatisfied with a final PTO decision on the merits of a patent application to sue the PTO in district court to obtain the patent.  This section has nothing to do with patent trolls and should be taken up and debated in a separate bill.

A requirement for an economic study of the impact of the legislation on individuals and small businesses owned by women, veterans and minorities was also added.

Not surprisingly, this legislation is controversial.  Industry groups are lining up for and against the legislation.  One specific problem is that the PTO has not weighed in.  This is also not surprising given that the agency has been leaderless since David Kappos stepped down in January.  Acting Director Teresa Stanek Rea has also left the PTO last month.  Kappos testified against passage of the bill, but seems to carry much less weight since leaving the Office.

The PTO no longer has a Director or a Deputy Director.  What is the Administration waiting for to nominate new leaders for these positions?  Margaret (Peggy) Focarino has been delegated to undertake the leadership positions that have been vacated.

Provisional Patent Application

December 2, 2013

A provisional patent application is a patent application that may be filed at the PTO that can be used to establish a filing date or date of invention.  The application expires 12 months from its filing date.  This means that, in order to claim the benefit of the provisional application filing date, a non-provisional or foreign patent application must be filed within that 12 month period.

There is no such thing as a “Provisional Patent”, although you may hear that term.  A provisional patent application does not give the inventor any rights to exclude, as an issued patent does.

The PTO does not examine provisional applications, but merely keeps them in its records.  Filing a provisional application does not get the invention examined any more quickly; in fact, the application does not go into the examination queue at all, so it actually takes longer from the initial filing date of the provisional application to begin examination than if a non-provisional application were filed initially.

The public does not get access to a provisional application unless and until a non-provisional application that claims the benefit of the provisional application filing date is published.  A provisional application can delay publication of the invention, even if the applicant will be filing outside the US.

Why File a Provisional Application?

The main reason is actually the delay.  The provisional application gives an additional 12 months to further develop the invention and to see if there is a market for the invention, and it can also delay prosecution costs associated with the application.

First, it often takes a long time to perfect a new product or process.  There are many details to work out and many improvements can be made in the early stages after the initial concept is completed.  To establish an early date of invention, a provisional application can be filed once the initial concept is completed, but prior to the perfection of the invention.  The 12 months before the non-provisional application must be filed can be an aid in this endeavor.  Additional provisional applications can be filed during the 12 month period to establish an invention date for any improvements.  Various strategies exist for which applications should be used for a priority claim.

Second, a provisional application delays some of the expenses associated with obtaining a patent.  For example, the filing fee for a provisional application is currently only $260/130/65 (large/small/micro entity), while the filing fee for a non-provisional application is $1600 ($730 for small entity filed electronically/$400 micro entity).  There are additional fees for excess claims, prosecution fees, and issue and publication fees.  It may be advantageous to delay these fees until it is determined that there is a market for the invention.  A provisional application gives the application 12 months to find investors, buyers, or licensees for the product or process.

A provisional application can be a good way to be certain that the inventor’s own activities will not be available for use as prior art.  If there is an imminent publication or product launch of the invention, say in a few days, and there is not time to prepare a complete and thorough application, a quick provisional can be helpful.  A complete non-provisional should be filed as soon as possible thereafter, it is not necessary and can be dangerous to wait the entire 12 months prior to doing so.

Now that the US has transitioned from a first-to-invent to a first-to-file regime, filing a provisional application may be even more important.  Given that the grace period is severely restricted and that you need to beat any other potential filers to the Patent Office, filing a provisional application and later following up with a non-provisional can be a great strategy.  If you need to publicly disclose your invention, file a provisional application for it first.

Is a Provisional Application Cheaper?

There are ads on Google for $99 or $149 provisional patents.  It can be cheap to file a quick application to protect against public disclosure as noted above.

Many people believe that filing a provisional application is a simple thing.  Some inventors will do it themselves, before going to a patent attorney for a non-provisional application a year later.  Others want their attorney to prepare a bargain application of maybe a few pages or so.  After all, provisional applications don’t even require claims.

Sometimes, it is necessary to file a quick and dirty provisional application, such as where there is going to be an imminent product release or publication that could create a bar to getting a patent in the future.  In general, however, it is not cheaper to prepare a provisional application than a non-provisional application.

In order for a later-filed non-provisional application to obtain the benefit of the filing date of a earlier provisional application, US patent law requires that the claims of the non-provisional application be supported by the provisional application.  What this means is that an applicant must include sufficient detail in the provisional application in order for it to do any good.  Otherwise, you are only entitled to the filing date of the non-provisional application.  In that case, the provisional was a waste of time and money and the delay in filing the non-provisional application may be detrimental to obtaining a patent for the invention.

Applicants should take the time and spend the money to have a good provisional application prepared that includes as much detail as is available at the time of filing the provisional application.

In summary, a few points are worth mentioning or repeating:

  • A provisional application can be a good idea to establish an early filing date and to give additional time to perfect the invention or work on improvements, as well as to determine whether there is a market for the product or process.
  • A provisional application can also be a good way to delay filing and prosecution costs until a later date.
  • A provisional application should not be filed until the invention includes sufficient details to reduce the invention to practice.
  • Provisional patent applications should include sufficient detail to support claims in a later-filed non-provisional application.
  • A provisional patent application permits the applicant to mark a product as “patent pending.”
  • A quick provisional application can be filed to protect against public disclosure provided that a complete non-provisional application is filed shortly thereafter.

Innovation Act Approved by Committee; New Troll Bill Introduced in Senate

November 21, 2013

Congress continues its work to pass legislation aimed at reducing abuse from patent trolls.

Earlier this week, House Judiciary Committee Chairman Bob Goodlatte (R-VA) had introduced a Manager’s Amendment to the Innovation Act, H.R. 3309.  The Amendment eliminated provisions in the original bill that had nothing to do with patent trolls, such as the provision expanding and making permanent the PTO Business Method review proceedings.

Yesterday, the Committee held a markup session where the majority turned back numerous proposed Democratic amendments aimed at softening many of the bill’s provisions related to discovery, fee shifting, and other provisions.  There were objections that the bill is ostensibly aimed at patent trolls, but its provisions apply to all patent infringement plaintiffs.

The only amendment of any substance that was approved by the Committee was intended to somewhat soften the fee shifting provisions.  While the original bill called for automatic fee shifting unless the losing party’s conduct was “substantially justified,” the language was amended to “reasonably justified.”  Fee shifting could also be waived if it would cause economic hardship to the losing party.  The new provision is meant to apply only to egregious cases.

The Committee also lumped in provisions related to licensing demand letters, requiring them to contain more detailed information.

The amended bill was approved by the Committee in a 33-5 vote.  The bill will now move to the House floor for full debate and vote.

Patent Transparency and Improvements Act

Meanwhile, on the other side of the Capitol, Sens. Patrick Leahy (D-VT), Mike Lee (R-UT), and Sheldon Whitehouse (D-RI) introduced a bill in the Senate that is aimed a patent trolls, S. 1720.  This bill is aimed primarily at the most egregious actors and not at patent owners generally.  House Judiciary Committee members Reps. John Conyers (D-MI) and Mel Watt (D-NC) have expressed support for this bill instead of the House’s more extensive reform bill.

S. 1720 would authorize the Federal Trade Commission (FTC) to act against parties sending out patent demand letters that include include materially deceptive or fraudulent assertions.  Such letters would need to include sufficient details to permit a party to investigate and respond to the allegations, including the patent owner’s identity, patent being asserted, and reasons for the assertion.

The Senate bill also includes provisions to change claim interpretation of issued patents by the PTO.  Currently, the PTO uses the “broadest reasonable interpretation,” while courts review the patent specification and file history to determine the correct claim interpretation.  This provision would make the two standards the same and add to predictability in post-grant proceedings.

HT:  Patently-O.

The good news for patent owners is that a number of bills are now being proposed in Congress to address perceived problems with patent litigation and demand letters.  Perhaps this will spur analysis and debate of the competing bills rather than quick passage of a bill without sufficient review and consideration.

The actions of some patent assertion entities have certainly caused anguish among their targets and needs to be addressed.  Revamping the entire system, however, is not the answer as it will deter legitimate infringement allegations and further reduce the value of patents.


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