If you have been in the patent industry for any length of time and you represent individuals or small entities, you have almost certainly heard complaints about the perception that corporate giants are treated differently at the United States Patent and Trademark Office. Until recently determining whether there was any merit behind the often mumbled whispers alleging disparate treatment was exceptionally difficult. With the recent unveiling of PatentCore, however, it is easy to collect all kinds of information about Patent Examiners and Art Units.
Although not a part of their basic offering, PatentCore also provides detailed analysis of assignee portfolios, including issued patents, pending applications and abandoned files. So what do you suppose those numbers show? It does seem clear that the allowance rate for large corporations is much higher than the average allowance rate for all patent applications. But does that suggest some nefarious bias? Not so fast my friends!
The table below shows some of the data I uncovered using PatentCore for 10 of the top patent filers at the USPTO.
|Company||Granted||Abandon||Allowed||1 RCE||2+ RCEs||Avg. Time||Avg. # OA|
|Canon||4242||474||89.9%||29.8%||31.1%||3 y, 3 mo||1.6|
|GE||1227||488||71.5%||20.7%||15.0%||3 y, 2 mo||1.7|
|Honda Motor||988||100||90.8%||18.1%||16.2%||2 y, 11 mo||1.4|
|IBM||7930||2558||75.6%||20.8%||22.7%||4 y, 0 mo||1.9|
|Intel||860||311||73.4%||26.9%||29.4%||3 y, 8 mo||2.2|
|LG Electronics||1844||736||71.5%||28.5%||27.6%||3 y, 9 mo||2.0|
|Microsoft||3635||719||83.5%||47.5%||34.7%||4 y, 4 mo||2.4|
|Samsung||5331||2647||66.8%||31.5%||21.9%||3 y, 5 mo||1.7|
|Seiko Epson||2726||638||81.0%||22.1%||22.3%||3 y, 1 mo||1.5|
|Sony||1806||498||78.4%||25.9%||26.5%||3 y, 8 mo||1.7|
The first thing that needs discussion is how RCEs are handled in PatentCore. The first column relating to RCEs shows what percentage of allowed patents required the filing of at least 1 RCE. The next RCE column, which is labeled 2+ RCEs, relates to a subset of the 1 RCE column. So, for example, if there were 2,000 granted patents and 1 RCE or more was required in 1,000 then the 1 RCE column would be 50%. Focusing on those applications having at least 1 RCE prior to allowance, if 400 required 2 or more RCEs then the 2+ RCE column would show 40% (i.e., 400 out of 1,000).
The next thing that bears discussion pertains to the last column, which relates to the average number of Office Actions. The PatentCore data handles this number differently than the USPTO does on its Patents Dashboard. According to the USPTO Patents Dashboard, the number of actions per disposal reflects the average number of examiner actions leading to the final disposition of a patent application, whether the application is allowed, abandoned or on appeal. If an application were to receive a first office action, a final office action and then be allowed, the USPTO would characterize that application as having three actions per disposal.
PatentCore, however, counts all final and non-final office actions that precede a notice of allowance. So, if an application were to have a first non-final action, a final rejection, RCE, non-final action in the RCE and then a Notice of Allowance this would count as three office actions before allowance. The USPTO would presumably count this as four actions per disposal.
According to PatentCore creator, patent attorney Chris Holt, “if you look at Sony, for example, you see that they have more than 400 applications with a first action allowance. That means the office action count attributed to our average in those cases was zero. But before you decide they are getting quick and unfair treatment, I also see Sony has 130 allowed applications with 5 or more office actions.”
Indeed, if you look at the average actions per disposal from the USPTO Patents Dashboard as of December 31, 2012 (the last time it was updated) and appreciate the slightly different way that the USPTO and PatentCore handle this data, you find that the average actions for these 10 representative large companies seems to largely be within the Office average for all applicants. Notwithstanding, 400 applications with a first action allowance? That is something I will be looking at in more detail in the near future. Stay tuned!
Perhaps the one column that jumps out as potentially demonstrative of disparate treatment is the column showing percentage of allowed applications. According to the Patents Dashboard the percentage of allowed cases, including RCEs, in December 2011 was 50.1%. Our representative set of 10 large companies shows allowance percentages well in excess of 50.1%, but does this show bias?
Holt has experience representing large clients that are heavy users of the USPTO. He offered this rationale for why the allowance rate may seem higher than one would initially expect:
For my large clients, I get almost all of my cases allowed. Perhaps it is because I prosecute so many cases that I understand when to compromise, and I do it early. So maybe these companies get outcomes because their representatives are very experienced. Also, my large clients will often abandon cases if allowance is not obtained after two RCEs unless they are really high business importance. As we get close to the second RCE we tend to do what we need to do to get the case allowed.
Holt concluded: “none of the numbers for large companies really surprise me. They seem about right to me.”
If you ask me, Holt is largely correct. Certainly there is a disparity in the percentage of allowed cases for large corporate users of the USPTO, but there are numerous factors that explain why this would be without ever needing to get to the point where a conspiracy theorist would conclude that there is a nefarious effort afoot to benefit large entities while making it difficult for individuals and small businesses to succeed.
First, whether anyone wants to accept it as true or not, disparate financial resources absolutely factors into why large corporations enjoy a higher allowance rate. In many, if not most, situations an individual, small business or start-up company needs to obtain broad rights to build upon. Those broad rights sought require broad claims filed, and broad claims are most susceptible to being rejected as reading on the prior art literally or as being obvious in light of the prior art. Broad patent rights are simply harder to obtain.
Similarly, many small entities affirmatively do not want a patent portfolio. They want a patent that covers all the claims they need. Large corporations will frequently take what they can get from the Patent Examiner and then circle back to file either a continuation or continuation-in-part to seek to obtain broader claims in a future patent. This strategy is an excellent strategy, but it can be expensive. Every time you file a continuation you have a new filing fee, and if you are lucky enough to get that continuation allowed there will be issue fees and maintenance fees associated with that second patent. Pursuing this “take what you can get and circle back for more” strategy costs a lot more in fees; fees that many small entities simply cannot afford. Thus, they are forced to fight over wanting broad claims they think they deserve rather than allowing some claims to mature into an issued patent. This easily depresses allowance rates for small entities.
Another reason large corporations would be expected to have a higher allowance rate than independent inventors and small businesses is because they are deep in the industry and have better systemic knowledge about what competitors are doing and where the state of technology is at any given moment. This allows them to make better filing decisions and not pursue inventions that have marginal likelihood of receiving a patent.
Of course, a comprehensive patent search can help independent inventors and small businesses figure out whether this is a likelihood that any claims can be obtained, but many don’t want the expense of a patent search or prefer bargain basement patent searchers or even patent searches conducted abroad by an individual who speaks English as a second language. I’ll never understand why you want someone who speaks English as a second language doing a patent search. Regardless of how cheap those searches are they are compromised by the fact that the searcher may not grasp the language. If you are not a large corporation and/or are new to the patent world you absolutely need to start with a comprehensive patent search and analysis or you are going to be among those pulling down the allowance averages.
At the end of the day it seems to me that the way patent applications are prepared and strategic decisions made during prosecution of the patent application explain why larger corporations have a much higher allowance rate than the average. I don’t see evidence of anything nefarious, although I am sure there will be some who reach a different conclusion.
SHAMELESS COMMERCE DIVISION: PatentCore is still offering a free 2-day trial, so give it a spin and see whether it might help you obtain actionable information about the Art Units and Patent Examiners you are dealing with.