Take a look at this post regarding the drop in allowance rates:

http://www.ipwatchdog.com/2009/03/02/pto-hiring-freeze-and-budget-problems/id=2099/

With respect to China, they historically did not protect IP, but they are offering more and more IP protections, and as a result more and more major US and international companies have started doing ever more business there. A convincing argument can be made that China’s economic growth started to grow at great rates once they started respecting IP, and patents in particular. So I strongly disagree that there are other facts influencing economic growth rates. The figures are really quite telling, and really only tell one story.

What patents do is give investors with high risk tolerance the ability to believe that if they invest the company they invest in will grow and have at least some insulation from competition for a time. This incentive is incredibly important. If you have a great product and a great company and no patents you will not get much, if any, investment. Investors look for competitive advantage and I know of companies and inventors who have great stuff, a lot of interest and when the time it takes to get a patent drags on investors go elsewhere. This is an enormous problem for small business, which is the engine that drives the US economy.

-Gene

I like the blog. Keep up the good work.

One point of contention I have though, is about the allowance rate. How do we know if the allowance rate is too low or too high? Is there research available on this topic? Even if the allowance rate is too high/low, is that really a large problem for the general economy?

As someone who is not a patent lawyer or patent examiner, I think all of you patent guys (lawyers and examiners) have a slightly overly inflated value of patents. Sure, patents do promote innovation, but only to a degree. For example, developing economies such as China have little to no intellectual property protection. Yet this has not inhibited their economic growth of late. Meanwhile, countries with strong IP laws have languishing economies (U.S., Europe, and Japan). This suggests that there are other fundamental economic factors, which are much more important then patents, are influencing economic growth rates.

Finally, on the global theme, the USPTO is not the only patent office in the world with a declining allowance rate. If you open the following link:

http://www.trilateral.net/statistics/tsr/2007/data.xls

You will see in the worksheet entitled “Procedures” that a declining allowance or grant rate is also affecting the European Patent Office and the Japan Patent Office. Is it coincidence that the grant (allowance) rates display convergence?

You say: “Additional formalist requirements for provisional patent applications will only serve to discourage small inventors from using the patent system.”

Not having any formal requirements leads to unsophisticated inventors being taken advantage of and thinking they are getting rights when they are not doing anything other than wasting money. Filing a useless provisional, which is what is allowed to happen under the current rules, is extraordinarily common and the USPTO should not enable such fraud, particularly with it being rampant.

If an independent inventor cannot afford to pay for a meaningful provisional patent application, which can be prepared and filed for $1,500 to $2,500, then they should not waste their time and energy in the patent system. Obtaining a patent is the easy part, and even with all the costs it is the cheap part of the innovation to market sequence.

Selling false hopes serves no one other than those who wish to take advantage of a market the PTO refuses to regulate.

-Gene

As you point out delayed prosecution makes no sense. However, I disagree that we should add more formalism to provisional patent applications. The patent system has become overly formalist already. Additional formalist requirements for provisional patent applications will only serve to discourage small inventors from using the patent system. The goal of the patent system should be to reduce formalism, reduce pendency times and reduce the costs associated with obtaining a patent.

Along that line, my three suggestions for reducing pendency can be found at http://hallingblog.com/2009/07/10/three-steps-to-reduce-patent-pendency-times/. How do you think the PTO can reduce pendency times?

For phramaceuticals the rule of thumb is one patent in a thousand will cover a marketed drug. Thus, the percentage should be 99.9% wheel-spinning.

Make the search fee and examination fee due when the search and examination actually start, as opposed to when the application is filed. This would provide an incentive for applicants to expressly abandon an application when they become aware of prior art that makes the valuable claims unpatentable.

While the interview record may not show the data, at least it will show that a model or results were shown and a discovery request can be made. If we go to off the record interviews it would not even be known that this happened.