Allowance Rate of 45.6% at USPTO for Fiscal 2010

By Gene Quinn
October 14, 2010

Yesterday David Kappos, the Director of the United States Patent and Trademark Office, wrote on his blog an article titled Reflections on the USPTO Dashboard.  Largely the article discusses the statistical reporting of the USPTO, and provides a look back at fiscal year 2010 and offers some comparisons to fiscal year 2009.  One paragraph in particular captured my interest:

Overall in FY 2010, the allowance rate increased to 45.6%, compared to an allowance rate of 41.3% in FY 2009.  In addition, actions per disposal decreased to 2.42 from 2.73 in FY 2009.  Furthermore, as a result of a concerted campaign to begin turning the tide on our backlog, the patent application backlog dropped from 718,835 at the end of FY 2009, to 708,535 at the end of FY 2010.  Pretty remarkable considering that application filings were up about 4%, that our examiner workforce shrunk and we were unable to authorize overtime for most of the year due to funding challenges, and that we affirmatively gave our examiners *more* time to examine each application as a clear signal that quality is our first priority.

If you ask me it is rather remarkable that team Kappos was able to dig into the backlog despite having fewer patent examiners month after month for virtually all of fiscal 2010, not being able to authorize overtime and giving more time for examiners to work on cases. True, the more time may have been a bit of a gimmick because patent examiners were encouraged to engage in early interviews, which leads to a more streamlined review of the application, but that only means that the methods encouraged by Kappos are working. Still, an allowance rate of 45.6% seems remarkably low compared to historical averages.

There is no denying that an allowance rate increase of 5.3% is not something to shake a stick at, and I am certainly grateful for the increase, but even a nice increase in an otherwise abysmally small number results in only a slightly larger abysmally small number.  So I decided to set out and see if I could make any sense of this, given that there is a perception in the industry that things are remarkably different in terms of allowances under the Kappos Administration when compared to the Dudas Administration.  So what gives?

Take a look at the allowance rate for utility patents, plant patents and reissue patents during fiscal year 2009 and 2010, looking at allowance rates by month.

This chart uses data available through the USPTO Dashboard.  For those who might want to verify this information I took a screen shot of the allowance data available for fiscal years 2009 and 2010, not knowing whether this will remain available moving forward on the PTO website.

The blue line in the chart represents the allowance rate for applications that do not require a Request for Continued Examination.  The red line represents the overall allowance rate when you factor in allowance in RCEs.  Director Kappos took the helm at the USPTO in early August 2009.  You can see the blue line starts a slow but largely steady increase starting in August of 2009, and the overall allowance rate factoring in RCE filings starts that same assent in October 2009.  Thus, under the stewardship of Director Kappos it looks like things are getting better, albeit slower to rise to a historically appropriate allowance rate than anticipated by many.

The chart below shows the historical allowance rate as presented by Rob Clarke at the PLI Patent Law Institute in March of 2009.

As you can see, between 1975 and 2002 the allowance rate largely varied between about 62% to 72%, with the majority of years between 65% to 70%.  In July 2010 the overall allowance rate was 60.1%, in August 2010 it was 60.2% and in September it was 61.1%.  So for the last quarter of fiscal year 2010 we have finally inched back up, but barely, to the very low end of the historical average of between 60% to 70%.

If you look at the raw numbers in September 2010 the allowance rate without RCEs was 45.6%, which is what Director Kappos said in his blog was the overall rate for the entire year, so it would seem that the numbers are cumulative.  Thus, which much of the year being in the between 43% to 44%, that would mean there was rapid increase in allowances in the later part of fiscal 2010, which likely accounts for the feeling in the industry that the Patent Office is once again open for business and allowing patents.  But 45.6% without an RCE and 61.1% with an RCE seems quite low still, although no doubt an improvement.

It is hard to compare historical allowance averages to today without acknowledging the 800 pound gorilla in the room, which is the Request for Continued Examination. Section 4403 of the “American Inventors Protection Act of 1999” amended 35 U.S.C. § 132 to provide, at the request of the applicant, for continued examination of an application for a fee, without requiring the applicant to file a continuing application under 37 CFR 1.53(b) or a continued prosecution application (CPA) under 37 CFR 1.53(d). To implement RCE practice, the Office added 37 CFR 1.114 to provide a procedure under which an applicant may obtain continued examination of an application by filing a submission and paying a specified fee, even if the application is under a final rejection, appeal, or a notice of allowance. The final rule went into effect on August 16, 2000, so at that point the RCE monster was let out of the box and patent examiners who were already not getting nearly enough time to examine an application found that they could force RCEs by simply not allowing a patent in the first application. This would lead to increased quota points for the examiner, longer delays in getting a patent, enhanced frustration for applicants and their representatives, but it did provide examiners more time. What is interesting is that the precipitous decline in allowance rate didn’t start until 2002, which is well after RCEs first became available. What is also interesting to note is that this also coincides with the reigns of Q. Todd Dickinson and then Nick Godici coming to an end, and a start to the Bush era where political appointees without any patent experience took the helm at the USPTO.

What is less clear, however, is why with all the improvements to the examiner quota system and the Kappos encouragement to allow patents if there is any subject matter that can be allowed has not lead to a more dramatic increase to the allowance rates. The one hypothesis I think is most likely relates to the fact that the enormous backlog lead to nearly ridiculous average pendency, and in some technologies patent applications that realistically would need to remain pending for upwards of 5 or 6 years, sometimes much more. This means that by the time an application is picked up by an examiner it may no longer be relevant in any real technological sense, the industry passing by the inventor. This is tragic because in many cases it would represent businesses that could never get off the ground because no patent meant no investment, or not enough investment to last long enough to get a patent or see the development of a truly viable technology. I know for many with patent applications pending for many years they simply gave up once the patent examiner got around to issuing an Office Action. I know this for fact since it happened to me personally on an application where I was the inventor.

Thus, while it is disappointing to see such low allowance rates for fiscal year 2010, the numbers do truly demonstrate that we are better off than we were in 2009, and better off without overtime from examiners and with fewer examiners and more applications. As team Kappos continue to dig into the backlog and eventually start to decrease average pendency we will get to the point where we can see more realistically what the picture looks like at the Office, hopefully not being clouded by applications that go abandoned due to lack of interest after missing windows of opportunity. Those missed windows of opportunity caused by the backlog and pendency problems not only make getting a real sense of the magnitude of the Kappos difference, but are also quite depressing given it represents countless jobs not created and an unacceptably high number of patent applications pending and waiting far too long for consideration.

Hopefully the seemingly modest successes of team Kappos in fiscal 2010 will be viewed for what they are, which is rather extraordinary, by our leaders in Washington, DC. With all the odds against them, having to fight daily for adequate funding, fewer patent examiners and a Congress that STILL siphons money paid by innovators away from the Patent Office, team Kappos was still able to increase allowances by 5.3% and dent the backlog. Can you imagine what they could do with adequate funding?

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 8 Comments comments.

  1. Mark Nowotarski October 15, 2010 3:17 pm

    To really make a step change in examination efficiency, team Kappos might want to take a look at implementing modern communication technology between examiners and applicants. Since Kappos took office, for example, examiners have been a lot more willing to use email exchanges to iron out claim language with applicants. This goes a long ways towards making responses to office actions more effective.

    Other technologies, like wiki platforms, might also be worth exploring.

  2. an examiner October 15, 2010 7:43 pm

    @Mark Nowotarski – The MPEP still forbids examiners from conducting discussions or “office business” via emails with applicants without applicants having first filed a form. Applicants are free to send emails to the examiners but not the other way around. Examiners must still either fax the correspondence or call and discuss it over the phone. Crazy, yes, but those are the rules and an examiner can get into trouble for sending emails to applicants that contain substantive discussion of an application.

  3. holetingexaminer October 17, 2010 12:22 am

    agreed that its technically not allowed, but we as examiners are allowed to get emails for applicants/attorneys, i treat these essentially as an expression that communication can be conducted this way (though i don’t disclose any substantive discussion in those emails)

    as a whole, however, i’m in favor of any initiative that allows more dialogue between the examiner and the applicants – in my situation/art, it seems to almost always help to avoid problems (i.e. need for appeal) and lead directly toward allowance

  4. Mark Nowotarski October 18, 2010 9:50 am

    @hotelingexaminer

    Do you think it might lead more directly to abandonment as well?

  5. Jason C. June 15, 2011 5:27 am

    Gene,
    I am confused about the USPTO calculation of allowance rate. Please correct me if I am wrong, but I think it goes like this. For the USPTO, an RCE is counted as an “abandonment” for purposes of final disposal. In that case, allowance rate “including RCEs” is low because cases where an RCE were filed were counted as abandoned. For “without RCEs,” the USPTO is not counting RCEs as equaling an abandonment, and is instead counting applications that were in fact abandoned by the applicant, whether or not an RCE was filed before that happened. Does this sound right? After reading a variety of blogs, it seems there is a lot of confusion out there as to how the PTO is actually coming up with this number, and the language on the Dashboard is not clear. It says, “including RCEs” includes the “abandonments for RCEs in the disposal.” I interpret this to mean, “we count RCEs as an abandonment.” Any clarification you can offer would be hugely appreciated!

  6. Mark Nowotarski June 15, 2011 4:12 pm

    Jason,

    If I may jump in for Gene, you are basically correct.

    Why do you ask?

  7. Jason C. June 15, 2011 8:32 pm

    Mark,

    The reason this came up was because I was trying to evaluate the rate of allowance of cases filed by my company against the average, and had assumed along with everyone else I talked to that the 1975-2008 graph (shown above) represented the overall rate of allowance. I.e., = Issued Patent / (Issued Patent + Abandoned Applications), regardless of whether an RCE was filed. I guess the key misunderstanding was not realizing that RCEs were being counted as abandonments in creating that graph, thus resulting in a much lower figure. From an applicant perspective, filing an RCE does not typically equate with abandoning the case (though it’s not a desirable step to have to take), whereas from the PTO perspective, I suppose the RCE starts things over (including perhaps the point system?) and so it is sort of like abandoning and starting again. I think when companies record status data regarding their apps, they are typically not in the mindset of equating RCEs with abandonments, so it is easy to confuse the data.

    Also, Gene stated: “The blue line in the chart represents the allowance rate for applications that do not require a Request for Continued Examination.” What confuses me is that I thought the blue line also includes applications where an RCE WAS filed, the only difference being that they were counted as an abandonment, thus resulting in the lower allowance rate. Maybe its just a different way of saying the same thing? Hopefully you can see where I am getting confused.

    Thanks for your response!

  8. Mark Nowotarski June 16, 2011 2:18 pm

    “the rate of allowance of cases filed by my company against the average”

    Jason,

    Interesting. Is this just out of curiosity or for a specific business purpose? The reason I ask is that if you are looking to see how effective your patent prosecution is relative to your competitors, you might want to look at our blog posting “Reducing Patent Backlog and Prosecution Costs Using PAIR Data” http://bit.ly/reducingbacklog. This talks about measuring “allowances per rejection” as a reliable way to determine how good your patent counsel is versus your competitors. The ratio, and ultimately your cost per issued patent, can vary by more than 10x depending upon the art unit you file in. Feel free to contact me at my web site if you would like to discuss this further. http://www.marketsandpatents.com/contact.html

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