Compact Prosecution in the USPTO is Anything But Compact

By Charles Gorenstein
February 27, 2012

Much has been said about the fact that the USPTO has struggled for too many years yet fails to keep up with filings.  In a message dated January 25, 2012, Professor Harold Wegner pointed out that, currently, 46% of “new” applications are not new at all but are actually RCE’s.  USPTO “count reform,” intended to encourage greater efficiency in the examination process, had only reduced the rate of growth of RCE filings to 10.7 percent.  At least one response to Prof. Wegner, shared in another posting on January 25, stated the view that doing away with RCE practice would serve only to generate a staggering number of appeals and shift the backlog to the Board of Appeals, make the application process inordinately costly, and discourage inventors from ever applying for a patent at all.  As things stand, there is not much doubt about such a result.

Considering the amount of hand-wringing that has occurred over the matter, and the disappointing results thus far, it appears that, as things stand, there is little hope for the PTO to get is work done in any timely manner except by hiring a veritable army of examiners, legions of administrative patent judges, together with innumerable support staff.   It is not difficult to foresee how a budget request for such an approach would be received in Congress.

Perhaps the root of the problem is in the way things stand.  It appears that the USPTO, and the profession as a whole, regards as fundamental a premise that limiting the number of actions on a patent application leads to faster examination, shorter pendency, and efficiency in operation of the Office.  This is a concept known as “compact prosecution.”  At least it was known by that name.  The concept has been around so long, however, that it seems all but forgotten that it has a name, or that patent examination was ever done in a different way.

In fact, patent application examination was done differently.  Examiners wrote as many actions as were reasonably necessary to develop and resolve issues, permit applicants to amend claims to accurately set forth the invention in view of prior art uncovered during examination, define the invention in a manner that was agreed to be allowable, or define clearly the issues to be considered on appeal.  This process often resulted in a fair number of office actions (more than two) per application.  This was the norm at a time when the level of examiner productivity and efficiency were not of paramount concern.

That changed – apparently sometime in the 1960’s, a number of years before this author entered the profession in 1972 and well before the tenure of mostly everyone in the profession today.  “Compact prosecution” became the order of the day.  Examiners were expected to prosecute a patent application thoroughly in the first office action.  Assuming that all went according to the plan, the second action could be made “final” at which time the applicant’s ability to prosecute further would be limited.  The objective –get it done completely and correctly on the first action, and then move toward a close of prosecution.  Efficiency counted, and a system was devised to keep track of what an examiner generated in the time worked.

In the USPTO, equipped (in those early days of compact prosecution) with computers that could read punch cards and generate reports, it became all too easy to monitor and reward examiners based on the “work” that could be so easily tabulated.  The Office adopted a new system to “count” how much work was completed by an examiner, measured in “balanced disposals.”   The time-honored “balanced disposal” or “BD” is the number of first actions on the merits of an application, plus the number of applications disposed of (by allowance, abandonment or forwarding to appeal), divided by two [BD = (N + D)/2].   All was well.  For many years the workings of the USPTO proceeded apace, without great incident and without great objection from its constituency.

The times they were a-changin’, however.  The decades that followed brought innovation at record pace.  Patent protection took on greater importance in a changing world economy.  The number of applications filed (and the backlog) in the USPTO grew steadily. Generations of examiners and PTO administrators have come and gone, procedures were tweaked here and there, and the methodology underlying   “compact prosecution,” designed to take a bite out of Office inefficiency, seems to have evolved into a creature eating away at the very ability of the Office to function. Moreover, that creature has been in residence so long – it has been around longer than nearly every member of today’s patent profession – it appears to have been overlooked that the Office need not be at the mercy of the beast.

What was likely conceived well over forty years ago as a reasonable measure of useful output has evolved into justification and encouragement for counter-productive action.  The measure, BD = (N + D)/2, has become a way for examiners to generate “counts” that bring reward and acknowledgement, yet defeat the very mission of the Office to examine, in the most efficient way reasonably possible, the many truly new applications that are filed day in, day out.  With few exceptions, in the examination of applications in the USPTO, a second action final rejection is now the norm regardless of how complete or incomplete the initial search or consideration of the application may have been.  Instead of being encouraged to actually search an invention thoroughly and address and resolve all issues, examiners are rewarded for pumping out as many first actions as possible followed by quick disposals, and further rewarded generously with additional, easy “first” actions and further disposals for forcing applicants to re-file.  Lots of apparent “work” is measured, but the backlog continues to grow and, in reality, not so much real work is getting done.

The situation described in the preceding paragraph is hardly news, and is surely understood by substantially everyone in the profession.   Also, before going any further, it is important to appreciate that this is not cause to point fingers in the direction of PTO examiners.  They are rewarded for certain actions and activities and it should be a surprise to no one that they do what they are rewarded for doing.

The problem, it seems, is in the disconnect between PTO policies, on the one hand, and the objectives of the Office, on the other hand.  The Office surely wants and intends to reduce the amount of unproductive work, including the need to deal with the many RCEs being filed.  However, stuck in the “two actions and out” mode of compact prosecution, the PTO continues to reward examiners with easy “production” for forcing applicants to re-file.  It seems safe to postulate that the backlog will not go away as long as this continues.

There has been lots of discussion about how to tweak the count system to encourage more efficient operation of the Office.  However, to the best knowledge of this author, it has never been seriously proposed to do away with the “two actions and you are out” approach to examination.  Perhaps this is because it is counter-intuitive to suggest that examination might proceed more efficiently in a system that permits any number of office actions per application, rather than taking every imaginable measure to limit actions to two.   Such an approach has not been seen in about forty five years and is, thus, not even showing up on the radar any longer.

So what is to be done about all this?  Change does not come easily.  At a minimum, the PTO must stop encouraging and rewarding examiners for actions that defeat the objectives of the office. As long as examiners are credited and rewarded for acting upon every application that they can force an applicant to file, examiners can be expected to seek the credit and reward, and the backlog will be with us.   As long as examiner performance is based upon the conventional (N + D)/2, the incentives will foster counter-productive behavior in the examining corps and the Office will not make meaningful strides toward accomplishing its mission.  Examiners will do what they are rewarded for doing – generating as many N’s and D’s as possible without regard to whether anything is really being accomplished.

It would be naïve to suggest that the task of examining patent applications would be accomplished by thousands of different individual examiners in a manner that is orderly and manageable without some approach to monitoring output.  How might this be accomplished?  With the understanding that the following is surely not a complete and detailed proposal, it is believed to represent a reasonable framework and approach to the matter and a basis for further discussion.

The fundamental principle that must guide any approach to monitoring the work of the examining corps is that productive actions must be encouraged and rewarded, and non-productive actions must be discouraged, or at least not rewarded.  This includes setting aside the time-honored but counter-productive notion that getting rid of an application – any application – in two office actions leads to efficiency.  The mission of the Office is to devote its resources to processing and passing judgment on the greatest number of inventions possible, not merely to process the greatest possible number of applications.

With that in mind, for the sake of discussion let’s assume that a meaningful measure of useful output is the number of actual inventions examined.  This might be calculated as I = (NA + TD)/2 where I is the number of hours devoted to examining an individual invention;  NA is the number of first actions on new applications directed to an individual invention (including first filings for an invention, legitimate divisional applications, but not re-filings simply to extend prosecution for any invention that was the subject of an earlier application); and TD is the true number of disposals (completion of examination of an invention resulting in an invention proceeding to allowance, abandonment without re-filing for the same invention, or forwarding an application for the invention to appeal).  No credit would be given for abandonment of an application in favor of an RCE or first actions on an RCE.   There would be no specific preference for fully examining an invention in any particular number of office actions (although true efficiency in examination would result in greater useful output for an examiner).   The objective is simply to get the job done properly, examining each invention completely to disposal within a reasonable number of hours.

It might be argued that this would simply lead to too many appeals.  That is a possibility.  However, if supervision is maintained over examination quality (i.e., at the Art Unit level by supervisors who teach examiners how to do their job correctly in the first instance, not by a quality review that, after the fact, simply disapproves of work by examiners with which they may disagree), and if examiners are graded poorly for sending to appeal an inordinate number of appeals that end up in reversals because they are not doing their job, such a possibility might be kept under control.

How many hours would be reasonable to examine one invention when credit is not given for churning useless continuing applications?  The USPTO has reams of historical data concerning how many hours per application is an appropriate goal for each art/technology under the long-standing system of “compact prosecution.”   A realistic goal might reasonably be higher than historical goals of hours per application, but not as many hours as examiners now justify by acting on truly new applications plus the many RCE’s that are necessitated by present practices.  Bear in mind that each examiner is now producing at some level that is a measure of hours per application but is examining only some lesser number of new inventions per year because many of those individual applications are RCEs resulting primarily from inefficient and/or ineffective examining practices.  If examiners are encouraged and rewarded for engaging in efficient behavior directed toward fully examining an application (i.e., thoroughly searching all of the claimed subject matter for the first action, addressing all claim elements and raising all reasonable issues in the first action, responding fully to all arguments presented by the applicant, engaging in telephone and personal interviews to more readily identify issues and resolutions, etc.) more real work would get done, applications would proceed more directly to issue, abandonment or appeal with well-defined issues, and a lot less time would be devoted to churning RCE’s and other measures to puff up measures of apparent productivity.

Some initial setting of goals under any new system might be accomplished based on rational evaluation of how much real examining work is accomplished presently, with a view toward taking advantage of improved efficiencies and actually examining more new inventions.  That will require a great deal of good faith cooperation between the Office administration and the examining corps and its representatives.  Over time, goals can be adjusted (as existing PTO goals have been adjusted over the years) based on actual experience.  Experience develops norms for such metrics as hours required to do a proper examination, reasonable allowance rates in a particular art, reasonable appeal rates, percentage of appealed issues that are affirmed or reversed, etc.  The extent to which such norms are identified, and the extent to which individual examiners gravitate toward such norms or deviate significantly can be used as measures for adjusting goals as time passes and for evaluating the effectiveness of individual examiners.

Making any such change in PTO culture will require that work quality be taken seriously at every level.  It will be necessary that supervisors monitor examiner work quality with a fair degree of diligence to assure that examiners are actually examining competently and not just “moving paper.”  Good work and a common-sense approach to examination must be acknowledged, appreciated and rewarded, not merely an ability to rack up numbers of actions by any available means.

Arriving ultimately at a fully-reasoned and well-supported method for monitoring examiner performance based on meaningful work accomplished will take some time.  However, the problems faced by the PTO today are at least forty five years in the making.  They will not be resolved conveniently within a PTO bi-week.  There will be the nay-sayers who maintain that any such cultural or managerial change is not possible, too much to expect, will not be accepted by the examining corps, cannot be implemented, cannot be monitored, etc.  Accepting such a negative view is to accept that the problems faced by the Office simply cannot be solved, and that is not acceptable.

The Author

Charles Gorenstein

Charles Gorenstein

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. A keen observer February 27, 2012 5:52 pm

    One big step the PTO could take: instead of basing the entire count system on (N+D)/2 Actions, about half of all counts should turn final disposal — I mean truly final — allowed or terminal abandonment with no continuation. Incentivize reaching the end point, not taking the greatest possible number of baby steps to get there.

    The current count system directly incentivizes extended prosecution. It incentivizes an examiner to put the minimum amount of thought/work into each Action that an SPE will sign off on. SPEs are likewise compensated based on the counts generated in their group, and thus have incentives to sign off on very little. The current system puts examiners and SPEs in direct conflict with the PTO and the public.

    If the count system rewarded truly compact prosecution, instead of churning Actions, and if the PTO actually enforced the rules that it publishes in 37 CFR and the MPEP, the backlog would disappear in a year.

  2. Mark Fearer February 28, 2012 9:25 am

    Mr. Gorenstein, thank you for the thoughtful article. If I may add a suggestion, as a recent Examiner, I know that PTO management had been pushing, for at least the past year, if not a little longer, the interview process, including additional (reward? especially if leading to Allowance) other time for an Examiner to claim. I suggest taking advantage of this. It may be a small step toward the change that your article mentions, but I believe that communication is key. There are some First Action Interview programs, but I believe that most Examiners would be receptive to interviews at early stages of prosecution. Again, management was promoting this. Blessings.

  3. Paul F. Morgan February 28, 2012 5:20 pm

    I can agree with arguments that the current count system [and the attitudes of some SPE’s toward junior examiner allowances] directly incentivizes extended prosecution, especially by falsly counting an RCE or continuation of an application as a “disposal” of an application, which it is clearly not.
    But, unlike the author, I did see some of the prosecution abuse and issuance delays by attorneys before Commr. David Ladd instituted “compact proscution,” Returning to such endless unlimited serial amendments is no solution.

  4. AAA JJ February 28, 2012 5:41 pm

    The solution is to institute something similar to oral proceedings in the EPO. If the applicant has been given the closest prior art, and still has not defined over it, the examiner should be able to summon the applicant to basically appeal. Of course, there can’t be any re-opening or new grounds from the examiners in such a situation.

    Similarly, Applicants should be able to request such a procedure. If the applicant does request and a conference of examienrs/SPE’s/QAS’s agrees that the rejections are no good, applicant gets a new OA without the need for an RCE, without the need for an appeal, and without a count to the examiner.

    If the examiners feel that applicants aren’t claiming narrowly enough, and applicants feel that examiners are not following Rule 104, the solution is clearly to put both in a room with the best that they’ve got and if no agreement can be reached, then it goes to the Board. No new amendments and arguments from applicants and no re-opening/new grounds from examiners.

  5. ptoobserver February 29, 2012 12:29 am

    Clearly, Mr. Gorenstein, the system needs adjustment for the reasons you discuss. However, I do not see eliminating the office action-to-office action battle aspect from the production count system as a way of fixing things. I think another major factor of the PTO’s mission, in additon to those you point out, is the task of handling a wide array of office action replies of different quality. There are practitioners who receive a non-final second office action about every other time. And there are practitioners who will argue rather than amend even when they are just plain wrong, until their partner or the client calls them on it. Likewise, some practitioners file many appeal briefs and rarely see an examiner’s answer, while other practitioners engage in a lot of appellate practice beyond the examiner’s answer stage. (Of course, other things come into play, like the particular art unit). What about the examiner who happens to get caught at the short end of the deal? Do we simply hope that his or her SPE realizes what has occurred? Some particularly articulate and persuasive examiners may be able to defend themselves, but, as a general rule, I do not think it is going to happen. And the SPE just will not have the time to make these analyses over an examiner’s entire body of work, which would be tantamount to doing the work himself or herself.
    As for the past, I was not around when “examination was done differently” and when “the level of examiner productivity and efficiency was not of paramount concern.” Perhaps, the number of billable hours for an office action in those days was mainly in the discretion of the law firm, response quality was more uniformly high, and the above scenario I am raising therefore did not exist. Another possible problem is that the well-to-do applicant can wear down an examiner under your scheme — yes I am keeping the claims broad but you might as well fold; whereas, other applicants are at a relative disadvantage. I think that increased quality control might mitigate this, but the resources needed would be huge. Although the present system is in need of major overhaul, I am not sure we can realistically do away completely with the self-regulating effect of acknowledging to some extent a winner/loser with respect to each office action. Maybe, the single most effective measure we could take on the PTO side would be to provide the resources so that the present system is characterized by examiners with more real examining time and primaries/SPEs who actually sample every few (or every several, as appropriate) office actions with detailed criticism of every correct/incorrect 112, every analyzed/unanalyzed dependent claim rejection, every valid/pattern-matching art rejection, etc., with real consequences for the examiner’s job rating. Again, with this approach, we have the resource problem. However, the problem is less massive, because we do not have to go over an examiner’s entire body of work.

  6. Arthur Z. Bookstein March 1, 2012 3:47 pm

    Kudos for the Gorenstein article. The “compact prosecution” system that has been in place from shortly after I began practice in the 60’s has been little more than a mechanism for generating additional fees for the PTO that has morphed into the “balanced disposal” system for monitoring the efficiency of an examiner’s work. The system is essentially one of “kicking the can down the road” with each kick, in theory, adding to an examiner’s perceived value and stature. Before the advent of compact prosecution there was no fixed limit on the number of actions or amendments and final rejections were not given until an issue was defined such that the applicant would have to abandon or appeal. While the compact prosecution system also enables such extended prosecution to continue, it places a toll booth every couple of actions that requires the payment of additional fees. While this may generated much needed funds for the PTO, I see nothing to indicate that the balanced disposal system has done anything to improve examiner efficiency or the quality of issued patents.

    Perhaps consideration should be given to a efficiency monitoring system that factors in the number of actions required to bring an application to the abandon-or-appeal stage. Wouldn’t a prosecution with fewer actions indicate a higher level of efficiency? And wouldn’t an examiner knowing that a prosecution that is unnecessarily extended have an incentive to do a better job at the outset to reduce the number of actions necessary? Would the PTO standards give examiners enough time to do a thorough job? Recognizing that the attorneys representing applicants are not entirely blameless, attention also should be given to providing incentives for them to conduct a more efficient prosecution.

    No formulaic approach for assessing examining efficiency cannot alone solve the problem. Too often I have found the examiner’s understanding of the law and how to apply it wanting. Whatever the current approaches to training examiners may be, they need to be studied and improved.

  7. ptoobserver March 1, 2012 8:37 pm

    “I see nothing to indicate that the balanced disposal system has done anything to improve examiner efficiency or the quality of issued patents.”

    As I mentioned, the experience of some practitioners is that about every other 2nd office action is non-final. This does not happen fortuitously. It is based on doing a thorough job on an office action, assisted by the rule against premature final rejection, and made challenging by the desire to avoid petitions. Yet, some are successful with it. Notably, examiner efficiency is indeed increased by this approach, probably to escape production count starvation and for professional pride in the face of oversight. The claims can be maintained appropriately broad, but an attempt at overbreadth probably would make the strategy break down. In a way, it is a way of coping with the BD scheme, and succeeding. Your biggest problem would be that you run out of office actions. That is how good it is. And with the decreased number of cycles until allowance, you are not contributing to the backlog. The down side is that you do put a lot of pressure on examiners who are working under challenging conditions. Something really needs to be done about giving them more time and more effective oversight, as I indicated above.

  8. Been there done that March 11, 2013 10:45 am

    IEEE (the electrical engineers’ professional association) submitted a comment letter to the PTO that covers much of this waterfront. It is not yet up on the PTO’s web site, but it is up on IEEE’s

    http://ieeeusa.org/policy/policy/2013/020413.pdf

    Comment 1, from keen observer, is echo’ed in IEEE’s letter, at pages 15-21. In addition, IEEE recommends that ALL counts for SPEs, TC Directors and the like be based on final disposals, and that supervisors should get no counts at all for today’s piecework churning. To get a different outcome, the incentives have to change.