Knowing when to give up on a patent application is one of the most critical questions facing for any patent applicant, whether they be an independent inventor or a large corporation. Resources are finite even for the largest corporations, and throwing good money after bad is not a strategy for success.
When you do not want to give up on a patent application filing an RCE can be an extremely attractive option compared with the cost and delay associated with filing an appeal to the Patent Trial and Appeal Board within the United States Patent and Trademark Office. The filing of the first RCE for a small entity costs $600, and the cost of filing a second or subsequent RCE for a small entity costs $850. These fees are double for large entities, and half as much for those that qualify as micro-entities. Filing an RCE also gives the applicant another two attempts, generally speaking, to convince the examiner that patentable claims are present in the application.
Filing an Appeal is a decision that many applicants simply forego at all costs. The cost of filing a Notice of Appeal is currently $400 for a small entity, double that for a large entity, and half as much for those that qualify as micro-entities. If you want an oral hearing that adds $650 for small entities, $1,300 for large entities and $325 for micro-entities. But the real cost of moving forward on appeal is the attorneys fees that will be encountered. According to the 2013 Economic Survey of the American Intellectual Property Law Association (AIPLA), the median attorney cost for preparing a brief is $4,500, and the median cost for those appeals that include an oral argument raises by another $4,100. Compare this with the filing of an RCE, which depending on the complexity of the technology will vary between about $2,000 to $3,500.
There’s an old expression that Murphy (of Murphy’s Law fame) “was an optimist.” That expression certainly applies to the recent Federal Circuit panel decision in Novartis AG v. Lee, as well as the companion decision in Exelixis, Inc. v. Lee on the meaning of the Patent Term Adjustment (PTA) Statute (35 U.S.C. § 154(b)), and particularly what’s called the “B period” portion (i.e., 35 U.S.C. § 154(b)(1)(B)) of PTA. In Novartis, this Federal Circuit panel (opinion by Judge Taranto, joined by Judges Newman and Dyk) ruled that the second exclusion from PTA in the “B period” portion (i.e., 35 U.S.C. § 154(b)(1)(B)(ii)) excludes from PTA any time consumed by a Request for Continued Examination (RCE), even if that RCE is filed more than 3 years after the “actual filing date” of the patent application. Not only is this ruling a questionable interpretation of 35 U.S.C. § 154(b)(1)(B)(ii) for reasons I’ll discuss below, but it creates an unfortunate, and surely unintended impact on RCEs specifically, as well as continuation practice generally. And the more I dig into the PTA statute, the more problematical this ruling in Novartis becomes.
Novartis also addresses another thorny issue of when a patent applicant dissatisfied with the PTA determination by the USPTO may timely challenge such a determination (i.e., 35 U.S.C. § 154(b)(4)(A) (and which also went against the patentee, Novartis), but I’m going to focus solely on the B period exclusion issue. I’m also going to provide here a summary of the PTA statute as it relates to these 3 periods used for determining the cumulative PTA that the patent applicant gets. See the 2012 Eastern District of Virginia’s decision in Exelixis, Inc. v. Kappos which was vacated by the Federal Circuit’s companion decision to Novartis, and provides a nice, concise explanation of how these 3 periods work for determining the cumulative PTA owed the patent applicant.
Last week the United States Patent and Trademark Office (USPTO) announced in the Federal Register that it would modify the After Final Consideration Pilot Program (AFCP) to create an After Final Consideration Pilot Program 2.0 (AFCP 2.0). The goal of AFCP 2.0 is much the same as it was when the USPTO initially introduced the precursor AFCP. According to the USPTO, the goal of AFCP 2.0 is to reduce pendency by reducing the number of RCEs and encouraging increased collaboration between the applicant and the examiner to effectively advance the prosecution of the application. Thus, this can and should be viewed as part of the USPTO effort to continue to try and address the RCE problem.
AFCP 2.0 began on May 19, 2013 and will run through September 30, 2013. The USPTO says that any request for participation in the program must be filed on or before September 30, 2013. Of course, as is always the case, the USPTO left open the possibility that the pilot would be extended beyond that date.
A Request for Continued Examination (RCE) is typically the procedural vehicle of choice at the end of a patent application when no claims have been allowed but the applicant still believes that claims should be allowed based on the disclosed invention. The trouble with this, however, is that there is an enormous RCE backlog that has nearly doubled over the past two years. Just several years ago it would take a patent examiner 2 to 3 months to pick up an RCE, but today in many Art Units the wait is well over 2 years, and for recently filed RCEs the wait could be 4 or more years. See The RCE Backlog: A Critical Patent Office Problem.
The RCE backlog is unacceptable, and quite frankly a growing embarrassment. Emphasis has been on bringing down the unexamined patent application backlog, but at the same time the RCE backlog has grown to epic levels. Overall the allowance rate at the USPTO during the Obama Administration is up compared to the Bush era Patent Office, and the total number of unexamined patent applications (unexamined patent applications plus unexamined RCEs) is down by just over 8% between the start of fiscal year 2011 and the end of fiscal year 2012. That is due to a 15.1% drop in the number of unexamined patent applications because unexamined RCEs grew over 95% over that same interval.
The United States Patent and Trademark Office (USPTO) has made great strides over the last several years, there is no doubt about it, but there is still work to be done. The patent system was collapsing under the crushing weight of an ever increasing demand for U.S. patents, antiquated computer systems and policies that lead to second guessing every allowance. This crippled the Patent Office. The Patent Office is better today than it was at the end of the Bush era, but the USPTO has a problem; a very big problem.
At the end of a patent application proceeding (a process known as “prosecution”) there are a number of possible outcomes. A patent can be granted on all of the claims sought, which is rare but not unprecedented. See Patent Bigfoot: The Mythical First Action Allowances. The applicant can give up and not respond to a final rejection for one reason or another, perhaps because the patent examiner has found strong prior art that will be difficult to overcome. Still further, allowed claims can be accepted, rejected claims canceled and a patent issue. In this last scenario the patent application can pay the issue fee, accept the patent and file a continuation or continuation-in-part pursuant to 37 CFR 1.53(b) in order to seek other claims on the disclosure.
But what if the patent prosecution results in no claims allowed? In this scenario, which is unfortunately far more common than either the patent bar or Patent Office would like, the procedural vehicle of choice is a Request for Continued Examination (RCE) under 37 CFR 1.114. An RCE can be filed in situations where claims are allowed, but they are far more common in the scenario where all claims are rejected because with an RCE, which is not considered a new patent application and will have the same serial number as the previous application, all claims go back into prosecution. That means both allowed claims and rejected claims are back on the table during prosecution. That can be dangerous when claims are allowed because patent examiners are known to reject previously allowed claims in an RCE.
On November 1, 2012, a federal district court (EDVA) issued an order that may have profound consequences for calculations of patent term adjustment (“PTA”). The district court held that the Patent Office’s interpretation and application of the “RCE carve-out” provision of 35 U.S.C. 154(b)(1)(B)(i) is incorrect. In general, the district court held that the “carve-out” provision only applies if applicants file an RCE within three years of the application’s filing date. Courtenay Brinckerhoff discusses the details of the court’s decision further on her blog. See District Court Invalidates USPTO Interpretation Of Patent Term Adjustment RCE Carve-Out. In this article I will comment on the court’s order and its potential consequences.
Before discussing the court’s order, let me review the law and regulations about PTA—which can be complex. In 1994, Congress altered the calculation of U.S. patent terms. Previously, Congress set the patent term as 17 years from patent issuance. After the change, Congress set the patent term as generally 20 years from the filing of the patent application.
The famous inventor Jerome Lemelson provides a colorful example of patent terms before the 1994 change. Lemelson filed serial continuations of patent applications. In some cases, the original applications did not result in patents until decades had passed since their filing dates. Eventually, a panel of the Federal Circuit held that some of Lemelson’s patents were unenforceable under the doctrine of laches. See Symbol Technologies v. Lemelson Medical, 422 F.3d 1378 (Fed. Cir. 2005).
Earlier today the United States Patent and Trademark Office (USPTO) announced the start of the After Final Consideration Pilot (AFCP). The USPTO touts this After Final pilot as part of its on-going efforts to further both compact prosecution and increased collaboration between examiners and stakeholders. This initiative, however, seems to squarely be targeting the growing problem of lengthy waits for RCEs (now up to 2 years or longer in some areas) when little additional work is realistically necessary to put the case in condition for allowance.
Over the past several months, including at the PLI Patent Law Institute and at the MIP Patent Forum in Washington, DC, last week, former Commissioner for Patents Bob Stoll took the blame for the growing RCE backlog. Those familiar with patent practice know that RCEs were previously placed at the front of the line in the patent examiner’s active work pile. Stoll changed this, placing RCEs on the new work docket, which effectively lengthened RCE consideration from several months to several years. This was done to expedite patent examiners picking up new cases, which worked, but came at the expense of what is now over an 85,000 case RCE backlog. In retrospect Stoll says moving RCEs was probably a mistake. It has taken the USPTO well over a year to do anything about this because of the need to negotiate with the union over additional examiner time and credit for dealing with After Final submissions in the pilot program.
On Monday, July 19, 2010, I was granted behind the scenes access to the United States Patent and Trademark Office, and was allowed to follow USPTO Director David Kappos throughout the day as he went from meeting to meeting. Nearly 18 months has passed since, and we have just entered what could be the final year of the Obama Administration, so it seemed as if the timing was right to once again sit and chat with the Under Secretary of Commerce for Intellectual Property.
I requested an interview through proper channels and it was arranged to take place at the USPTO on the 10th floor of the Madison Building in Director Kappos’ office. The interview took place on Thursday, December 22, 2011. The title Kappos 2.0 is how I have referred to this follow-up series. In the initial series spawned three different articles; one about what I observed as a day in the life of Director Kappos, the interview with Director Kappos and an article about Kappos’ Senior Management Team. In addition to what will be a three-part interview with Director Kappos, the Kappos 2.0 series will also entail in depth interviews with some of Kappos’ Senior Management Team, so stay tuned through the first quarter of 2012 for more.
The patent process actually starts well before you file a patent application or seek assistance from a patent attorney. Every patent application starts with an invention, and every invention starts with an idea. While ideas are not patentable, there will be a point in time when the idea you are working on comes into vision with enough detail to cross what I call the idea / invention boundary. To have a protectable invention you have to be able to describe it with enough detail so that someone of skill in the relevant technical field can understand how to both make and use the invention. Once you can do that, or once the patent attorney or patent agent you hire can, you are ready to file a patent application.
The first step in the patent process should really be a patent search. Doing a patent search is really the only way to get a realistic idea about whether the invention is likely able to be protected. There is nothing wrong with inventors doing their own preliminary search, and in fact that is very useful task. At some point as your project proceeds it will be necessary to have a professional patent search done. Only with a professional patent search will you really discover everything that can be found. Just like a novice in your field would make mistakes, as a novice relative to patent searching you won’t find everything that can be found, including many things that really need to be considered during the drafting stage of a patent application. After all, the whole point of a patent application is to articulate how the invention is unique. How can you do that without a comprehensive knowledge of what exists in the prior art?
Leading off at 8:45am, from left to right: Herbert Wamsley (IPO Executive Director), Peggy Focarino (Deputy Commissioner for Patents), William Smith (Woodcock Washburn), John Owens (USPTO CIO) and Bob Stoll (Commissioner for Patents).
Earlier today some of the top manages from the patent side of the building at the United States Patent and Trademark Office were on stage at the IPO Education Foundation PTO Day to discuss the current state of affairs at the USPTO and what to look forward to next year. The morning started off with Bob Stoll (Commissioner for Patents), Peggy Focarino (Deputy Commissioner for Patents) and John Owens (Chief Information Officer), sharing the stage to provide a year in review, as well as updates on patent operations and the IT infrastructure. The early morning patent session, which I attended, was moderated by Bill Smith, currently Of Counsel with Woodcock Washburn and himself a former member of the BPAI. Later in the day the head man himself arrived. The luncheon speaker was David Kappos, Under Secretary of Commerce for IP and Director of the USPTO.
All of these management officials seems quite open, very straight forward and created news. For example, at lunch Director Kappos explained that the goal for fiscal year 2010, which ended on September 30, 2010, was to get the backlog down to 699,000 — dubbed “project 699.” The Office was not successful, but Kappos says they will get well below 700,000 for fiscal year 2011, perhaps as low as a backlog of 650,000. Kappos’ immediate follow-up: “I say that as Commissioner Stoll starts to choke at me saying that.” Indeed, there are ambitious goals at the USPTO for FY 2011, including a move to unity of invention.
Over the last couple weeks I have heard from several people who believe that there is activity that would be considered infringing but for the fact that the patent application has not yet issued. The question asks: is there anything that can be done? The answer is a resounding YES! I know this for fact because I am an inventor on an invention where there is activity that would be infringing, and as soon as my patent is issued I plan on bringing an infringement action, perhaps on the day that the patent issues. So there are tried and true things you can do while your application is pending, which can help you later. I have employed these strategies, and continue to move forward to employ them in my situation. Perhaps I will soon have an opportunity to employ them for others as well.
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.