With the stated qualification that “the entire value of the company going forward is based on IP” then I can see that delay in getting an issued patent would undoubtedly be a factor in an investor’s decision. But I would question whether it would be the only or even the primary factor in that situation. If a number of years have gone by and the company’s sole remaining value proposition is the hoped-for enforcement of patent rights, then there are probably more fundamental underlying problems. The fact that they still need outside capital suggests that the product has not become a great commercial success. Having the issued patent in hand would not necessarily change that. Novelty does not guarantee commercial viability.

Skeptical,

To clarify, I meant that the likelihood of being the _target_ of a patent lawsuit would be a disincentive to most investors. Of course I agree that the cost of _bringing_ a lawsuit if necessary to enforce a patent is generally acceptable to investors as a normal risk factor in a high-tech venture.

I guess we travel in different circles. I hear with some frequency about inventors who pull the plug. They wait for many years sometimes, hear and know all the excuses, but at some point in time when the entire value of the company moving forward is based on IP and there is no patent they move on. In many start-up companies there is just no long term value proposition if there is not prospects of exclusive rights.

-Gene

I don’t buy it. Any patent brings with it the prospect of a patent lawsuit. That prospect is part of the enforcement mechanism.

Even if sophisticated investors know that patents take a long time, a pending application will always represent more investment risk for them than an issued patent, particularly if it has yet to be examined. Once the patent issues, you know where you stand, you have actual assertable rights, and there’s nothing stopping you from also having a pending application.

Recognizing the good applications and getting them out of the PTO’s pipeline is part of quality. Aggressive weeding doesn’t do much for your garden unless you also let some flowers bloom.

I understand your concerns, but I do have a different take on some things.

First, you are right that a quality application is or should be more valuable than a junk patent, but prior to the Kappos Administration so many applicants were held hostage for 4, 5, 6 years or more, which caused investors to give up because it seemed like a hopeless cause. Unfortunately, they were right in certain high tech areas where examiners simply stopped granting patents as a result of two pair of eyes review and the disincentive to issue as a result of how quality control was carried out.

I am not a fan of having government pick winners and losers, but there are certainly patent applications pending that could lead to investment and job creation. For at least a while I would move those to the front of the line in hope of having some positive impact on the economic crisis. Long term I think additional payment for speed is reasonable. There are some who would happily wait years, such as pharma, biotech and Universities, and others who need action quickly. Paying higher fees is just a different way to let the market decide, but wouldn’t necessarily promote the most business formation and job creation.

Quality is a concern, but don’t forget that quality as the major issue and more important than issuing in a relevant time frame is what caused the patent backlog we now have. That being the case I find it difficult to honestly say that quality is the problem. We have seen that movie before and know how it ends, and it is ugly. I think the far more critical issue is the lack of speed, particularly in certain high tech areas where there is a limited shelf life and limited opportunity to establish a start-up business.

-Gene

As for accelerating patent examination, my solution would be very simple. Rather than trying to pick winners through a variety of criteria as the government is prone to do, just implement a sliding scale of fees. If you want to move up in the queue, you just pay more. If an investor sees the need for a quicker issuance of a key patent application, they would simply factor that into the amount they need to invest. It’s called capitalism.

The bigger problem, in my opinion, is the quality of patents that are being granted, not the speed (or lack thereof) in granting them. Higher fees might help in terms of funding a more thorough examination. But as long as the examination process looks primarily at the patent literature, it will never be adequate. Most of the prior art is in non-patent literature, which the PTO largely ignores. Something like peer-to-patent, which actively involves the private sector in vetting patent applications, is the best and only really practical solution, in my opinion. No single human being (i.e. examiner) can possibly unearth all of the relevant prior art. The examiner’s job should be primarily one of evaluating the prior art and properly applying the statutes. The collective knowledge of the community needs to be tapped to provide that prior art to the examiner.