Every patent practitioner wants to effectively represent his or her client’s interests. Every patent examiner wants to effectively represent the public’s interests. Unfortunately, these goals are not always met. This is particularly true in the newer and more controversial fields of patentable subject matter, such as business methods. There is a relatively new source of information, however, that can help both the patent practitioner and patent examiner make substantial improvements in the speed and efficiency of patent examination. This resource is the Patent Application Information and Retrieval system (PAIR). A new PAIR-based metric, the ratio of allowances to rejections, can be tabulated and analyzed quickly to reveal where significant inefficiencies exist in the patent examination process and suggest how fundamental improvements can be made.
The ratio of allowances to rejections is the total number of allowances for a given portfolio of patent applications divided by the total number of rejections for the same portfolio. This data can be tabulated by looking up the PAIR files for each individual application in the portfolio and examining the transaction history of the application. The transaction history lists all of the rejections and allowances along with the dates of each. Advisory actions, decisions of pre-appeal brief conferences to proceed to appeal, examiner’s answers to appeal briefs and BPAI decisions to affirm an examiner are also counted as “rejections”. Restriction requirements and other miscellaneous correspondence are not counted.
All of the rejections in the portfolio are counted, including those for applications that have been abandoned or are still pending. Each one of these rejections could have been an allowance presuming that the applicant was making a genuine effort to advance prosecution.
Patent applications as a whole over the past 10 years have had an average allowance to rejection ratio of about 0.3. We arrived at this ratio by generating a list of 300 randomly selected application serial numbers in the 10/, 11/, and 12/ series, and individually reviewing the transaction histories for each serial number. An allowance to rejection ratio of 0.3 corresponds to about one allowance for every three rejections. First office actions have a somewhat lower allowance ratio than the average. This is consistent with the common knowledge that applicants will take a more aggressive position with the claims that they file relative to the amended claims they present after a rejection. The allowance to rejection ratio for second and higher rejections remains relatively constant. This has the somewhat disturbing implication that practitioners and examiners are not getting any better at understanding each other as prosecution progresses. If practitioners and examiners were learning from each rejection – response interchange, then the allowance ratio would increase for each succeeding office action.
Figure 1 illustrates that allowance to rejection ratios are very different for different technologies.
These ratios were generated by randomly selecting samples of published applications within a particular class or class/subclass. The file wrappers of the applications were then reviewed in PAIR. The samples covered about 10 years of filings. Traditional fields of patentable technology, such as electrical connectors, have high allowance to rejection ratios. Newer fields, such as insurance and finance have very low allowance to rejection ratios.
Allowance to rejection ratios translate directly to prosecution costs. Electrical Connectors have an allowance ratio of 0.45. This corresponds to about 2 rejections per allowance. If each response to a rejection costs about $2,000 in legal fees, then the prosecution cost per patent in the field of electrical connectors is about $4,000. At the other extreme, insurance and finance applications have an allowance to rejection ratio of only 0.05. This corresponds to about 20 rejections per allowance. The prosecution costs for these applications are about $40,000 per issued patent.
The allowance to rejection ratio in insurance & finance is very sensitive to the law firm that is handling a given portfolio of applications. Figure 2 shows the allowance ratios for three different law firms, each preparing and prosecuting applications over a five to seven year period for the same major financial corporation. This corporation has several hundred applications pending and, until recently, each law firm handled a comparable share.
Prosecution costs for these firms range from $16,000 per issued patent (Law Firm A) to $120,000 per issued patent (Law Firm C). While reviewing the file wrappers in PAIR, we discovered that the client recently transferred all of the cases filed by Law Firms B and C to Law Firm A. Figure 2, therefore, only shows the allowance ratios for each law firm prior to the transfer. After the transfer, the allowance ratio for the cases that Law Firm A took over then increased to the same level as the cases originally prepared and filed by Law firm A.
It’s not clear why there is such a large difference in examination efficiency in business methods between equally experienced and equally competent practitioners in different law firms. It’s also not clear why there is such a large difference in examination efficiency between equally experienced and equally competent examiners in different technology centers. Identification of the root causes, however, could lead to substantially reduced backlog and lower prosecution costs.
There is a tremendous wealth of information in the USPTO’s patent application information and retrieval system. New statistical measures of patent examination efficiency, such as the allowance to rejection ratio, can now be readily calculated and tracked over time. Practitioners that take advantage of this data will be in a better position to serve their clients effectively. Patent office personnel that take advantage of this data will be better able to serve the public.