|The Legal Intelligencer
November 5, 2008
By Brian A. Cocca, Ph.D. and Paul F. Prestia
Swamped with record numbers of new patent applications in the past several years and increasing criticism for the delays in patent examination and the quality of resultant patents, the U.S. Patent and Trademark Office (PTO) struggles to regain control of the patent examination system. If it cannot regain control, that system will likely continue to become less efficient and less effective as the gatekeeper for patents that reliably protect and incent innovation.
To address the issues facing the U.S. patent system, the next Congress will likely revisit patent reform legislation. When it does, deferred examination, a concept entirely new to U.S. patent law, may be on the table. Deferred examination traditionally has been adamantly opposed by U.S. industry and intellectual property associations, and as a result, has never been seriously considered in the U.S. In that respect, the U.S. patent system is somewhat unique. In most major countries, a patent application is not examined until examination is specifically requested. On average, this request may be deferred for two to three years from the application filing date, but in some countries such as Canada and South Korea, this request may be deferred for as long as five years.
For many applications filed in countries with a deferred examination system, examination is never requested. From statistics in other countries with deferred examination systems, it is estimated that up to one third of new applications may never require examination. Typically, information generated after initial filing and before the date when examination must be requested impacts the decision as to whether or not examination is requested. This may include an official search report, indicating the prior art likely to be relied upon during examination. Other considerations may include the commercial viability or importance of the invention and the perceived difficulty in persuading an examiner as to the patentability of the invention.
Deferred examination would benefit the PTO by reducing its examination workload. It would also benefit applicants by sparing them the expense of examining applications which the passage of time reveals not to be justified. But most importantly, deferred examination would free PTO resources to deal with more important applications.
In the United States, the PTO is required, by statute, to examine all patent applications and applicants pay for this service on filing. With the current backlog, the PTO does not begin examining a new patent application, on average, for over two years following the filing date. This is almost twice the average delay experienced just seven years ago. In certain PTO examining units, the current delay is considerably longer than two years and may approach three years, roughly coincidental with the period of examination deferral which an applicant may elect in most deferred examination systems.
Thus, the U.S. is essentially already operating a de facto deferred examination system, with the period of deferral sure to increase unabated. New patent filings from the U.S. and other traditional sources are projected to continue to rise, and a large increase in applications from China is anticipated as China pursues its goal of transitioning from a manufacturing economy to one based on research and innovation.
It is with this background that the PTO seems now to be considering some form of deferred examination. Implementing such a system would require a statutory change, and at least one congressional committee has made inquiries of the PTO as to the implications of this change. In response to that request, the PTO alluded to possible PTO rule changes that would permit some deferral of examination without requiring statutory implementation.
Because of the PTO backlog and the de facto deferral of examination already occurring, deferred examination is likely to be seriously considered by the next Congress. Given the experience of the present Congress with patent reform legislation, those interested in the patent system would be wise to consider the previous objections to deferred examination and to consider how best to minimize those objections.
The past opposition to deferred examination in the U.S. stems largely from concern over the uncertainty of actual and potential patent claims in pending but unexamined applications. Progress, the primary objective of the patent system, is not fostered when one is trying to develop a new product or a new business, but cannot be sure of the patent rights which others may acquire in the future based on an application with an earlier filing or priority date. Indeed, a patent applicant may use such tactics to keep prospective competitors off balance or to capture market developments made subsequent to the filing of the application but not anticipated at the time of filing. A more certain knowledge of the barriers posed by patents furthers progress by reducing risk and thereby encouraging investment of capital and resources in research and development. The sooner this knowledge is made available and the uncertainty is resolved, the sooner technological advances can be made.
The uncertainty inherent in a deferred examination system is acerbated, under current U.S. law, by the potential for a string of continuation applications, all based on the filing or priority date of the original parent of those applications, and by the potential for entering claims in that application family significantly different and/or broader than the claims originally filed.
Can Congress devise a U.S. deferred examination system that minimizes or avoids these problems? We think so.
An effective U.S. deferred examination system can greatly reduce the uncertainty of an unpredictable future patent landscape if (1) it includes provisions for an early and reliable reading of the prior art against which pending claims will be judged and if (2) it limits applicants’ abilities to significantly change or broaden what they claim initially. Such provisions are commonly found in other patent systems.
First of all, deferral of examination need not include deferral of an official search and official search report. In fact, it may be more efficient to divorce these functions which are both now part of the U.S. examination process and are commonly performed by a single examiner. In Patent Cooperation Treaty applications, for example, a search report is issued before the application proceeds to national stage examination. When performed by a competent search agency, this provides not only the applicant but the public generally with an official reading of the prior art against which the application will be judged. This in turn enables competitors to gauge the likelihood of the issuance of any patent claims and the likely scope of those claims and thus greatly reduces the uncertainty otherwise inherent when examination is deferred.
The degree to which that uncertainty would be reduced would be directly proportional to the quality and competency of the search agency. In this respect, knowledgeable attorneys have long recognized the superiority of European Patent Office searches to those of U.S. examiners and a U.S. deferred examination system would greatly benefit by the inclusion of an upgraded official U.S. search agency. Moreover, this enhancement of the information available to gauge prospective patent claims before examination would easily justify inclusion of a search fee, by which applicants would pay for this service. Such a fee should be considerably less than the present application fee which covers both search and examination.
The importance, in a deferred examination system, of a competent and reliable search agency and early publication of a report resulting from such a search cannot be overestimated. Such a report would provide applicants and competitors a picture of the confines of the prior art, and may cause an applicant to decide ultimately not to request examination. More importantly, while not completely air-tight, a search report gives would-be innovators a point of reference from which to reasonably predict the scope of claims that may issue.
To some extent, the PTO is already experimenting with ways to upgrade its search function by outsourcing that function to private agencies. While the merit of this initiative may be questioned on other grounds, the need for a more competent official search agency cannot be questioned. In a deferred examination system, this need would become even more urgent as a means to reduce the uncertainty of unexamined applications (whether because of de facto or de jure deferred examination). Absent this upgraded search facility, deferred examination will do little to encourage applicants to abandon their applications. Nor will it alleviate the uncertainty of unexamined claims and worst of all, it will frustrate the goal of reducing the backlog through attrition.
The unique characteristic of the U.S. patent system, which makes deferred examination even more problematic than it would otherwise be, is the ability of applicants to change and broaden their claims as they prosecute not only their original application but also continuations of that application. Such claims, made late in the examination process, make it difficult for a competitor to foresee the scope and breadth of a future patent that it may have to avoid.
To be fair, a deferred examination system should include ways to minimize this risk. This might be done, for example, by statutorily providing intervening rights to a third party who undertook a development, prior to the filing of the new claims, such that the new claims would not be assertable against any product or process commercialized as a result of that development. Such claims may also be restricted by limiting their effective priority or filing date. If denied the benefit of the priority or filing date of the original application from which they emanate, these late or new claims would be more readily challenged based on intervening prior art. Still another possibility would be to impose a deadline, measured from the original application filing date, after which an applicant could not file claims broader in scope than the originally filed claims.
These and quite likely other means may be devised to minimize the risk of unforeseen patent claims that should be unacceptable in a deferred examination system.
In fact, these late claiming risks are equally problematic in the current environment, in which examination is de facto deferred. A good case can be made for fixing the late claiming problem, therefore, even in the absence of a de jure deferred examination system.
Whether Congress can give these problems the attention they deserve remains to be seen. Any solution will be complicated. The growing backlog of unexamined applications is a major problem facing the U.S. patent system. With Congress unlikely to allocate the money necessary to staff the PTO sufficiently to chip away at this backlog, the challenge will be for Congress to find sensible alternatives that allow the PTO to operate effectively and efficiently, respect the rights of patent applicants, and encourage investment in innovation.
Deferred examination, with safeguards against the inherent risks of such a system, may be one such alternative.
Reprinted with permission from the Nov. 5, 2008 edition of the Legal Intelligencer Blog, 2010 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.