Godici & Stoll Discuss Benefits & Pitfalls of Three Track

By Gene Quinn
November 14, 2010

Left: Bob Stoll; Right: Nick Godici

On Tuesday, November 9, 2010, CONNECT, a nonprofit organization dedicated to creating and sustaining the growth of innovative technology and life science businesses in San Diego, held a public policy forum to discuss the United States Patent and Trademark Office’s  proposed Three Track Examination process. Two distinguished speakers participated in the program: (1) Robert Stoll, Commissioner for Patents at the USPTO; (2) Nicholas Godici, a former Commissioner for Patents and former Acting Director of the USPTO, as well as a Special Advisor to Commerce Secretary Gary Locke, who is currently an Executive Advisor with Birch Stewart, Kolasch & Birch, LLP. According to Godici, who spoke with me after the event, the patent community needs to pay attention because Three Track is going to happen.  This isn’t a rules package that will languish and never reappear.

During the program Commissioner Stoll discussed the thought-process behind the current proposed three-track system and the Administration’s overall goals for improving the patent process in the United States. Godici provided a detailed analysis of the potential rule change and offered his expert opinion on how this may impact start-up businesses.  A panel of experts followed, with Stoll and Godici participating in the panel, along with Ken Jenkins, a partner with Townsend and Townsend and Crew LLP, and Vice-President of the San Diego Intellectual Property Lawyers Association; Margaret M. Dunbar, Senior Director, Intellectual Property and Legal Affairs at the Sanford-Burnham Institute for Medical Research; and Harry Leonhardt, Vice President, Deputy General Counsel/Corporate Governance at Amylin Pharmaceuticals, Inc.

In order to bring some real world perceptions to the discussions, when I was speaking at the SDIPLA on October 28, 2010, Jenkins asked me to put together a survey he could distribute to California patent attorneys regarding the Three Track proposal. The questions and responses follow at the end of this article. Most of the respondents came from the SDIPLA and the Silicon Valley Intellectual Property Lawyers Association, 41 and 39 respectively. The first question asked how many people ever were familiar with the Three Track proposal.  It may come as a bit of a surprise to some at the Patent Office, as well as those of us who closely follow the Patent Office, but 46.1% of respondents were not at all familiar with the Three Track proposal, perhaps focusing on the day-to-day practice, or having seen proposed rules come out before only to get buried and never revived.

I spoke with Godici by telephone the day after the program to discuss Three Track generally and the program.  He told me that he feels quite certain that within the year we will have final rules on Three Track, which will look much like the proposed rules, but with modifications to take into account the concerns and criticisms of the community.  For example, Godici does not anticipate the Patent Office will force SHARE provisions, which would force US prosecution to stall until an action in a foreign filed application became available to provide to the US patent examiner.  This was roundly criticized during the Three Track roundtable discussions at the USPTO.

Godici told me that those who are not familiar with Three Track will soon need to familiarize themselves because this is going to happen.  “This time next year we will be operating in some kind of a Three Track system,” Godici predicted.  He went on to say: “These rules are pretty significant from a practitioner standpoint,” because there will be “layers of questions” and opportunities to strategize with respect to the application process.

During my conversation with Godici I specifically asked him specifically about the lack of small entity treatment for Track 1 acceleration.  Those familiar will recall that Track 1 is the path through which an application can be moved to the front of the line in exchange for a higher filing fee.  The Patent Office has not announced the fee yet, but everyone I talk to (all on the periphery of knowing for certain) estimates that the fee will be somewhere between $4,000 to $5,000.  So without a small entity break that could be viewed as simply too high for any independent inventors and many, if not most, small businesses.  Godici explained that since the Patent Office has no authority to set fees a small entity break would have to come in the form of legislation.  I observed just how unlikely that would be given the fact that year after year Congress has been unable to move patent legislation that pretty much the entire industry agrees on.  Most recently, I am told there is a great compromise on the pending patent reform, which among other things would give the USPTO fee setting authority, yet the bill could not get any floor time for amendments that would make the legislation sail through.

I also spoke with Godici about the continued USPTO budget problems, and the recent revelation that the PTO is collecting $1 million a day it cannot use because rather than passing a budget Congress opted for a continuing resolution.  That means the PTO is taking in much more work than they did last year, a good sign to be sure, but that they are prohibited from using the fees they collect over and above what was authorized for them to keep in the 2010 fiscal year budget.  See PTO Collects $1 Million Per Day It Can’t Use.  This turned into a discussion about the AIPLA’s position that Track 1 is fine in theory, but only if there is an end to fee diversion.  No one wants to pay $4,000 to $5,000 for a filing fee, get a promise of quick action and then have Congress siphon off the money, leaving the applicants high and dry.  Godici said that the AIPLA has a good point, which is something that largely everyone seems to agree on.

It seems that the sticking points that exist with respect to Three Track are going to be the cost of Track 1 and the lack of existence of a small entity break, as well as the lack of any guarantee that Congress won’t simply take that money and not let the USPTO use it to pay for the extra cost associated with quicker examination.  Another sticking point will be with respect to patent term adjustment.  Those who attended the USPTO roundtable discussions know that BIO is pushing for a Track 3 that has no negative PTA consequences, meaning that if they chose Track 3 all of the delay would be forgiven.  That will be a tough sell since applicants are choosing to slow up, although the Patent Office really will need to sweeten the pot to get more folks into Track 3 in order to really fulfill the desire to allow the most important and time sensitive applications to proceed quicker.  Most of the industry insiders I have spoke to believe the Patent Office may split the baby, recognizing that while they are electing slower treatment the election is at the enticement of the USPTO, so perhaps 50% of the time won’t count against PTA.  So keep your eyes open for some compromise there.

Without further ado, here are the 10 survey questions I put together to facilitate discussion for the panel.  How would you have answered?

Three-Track Survey

1. Are you familiar with the Three-Track proposal put forth by the USPTO?
YES = 53.9%
NO= 46.1%
Respondents = 102

2. Track 1 would allow for accelerated consideration in exchange for a higher filing fee. Do you support such an initiative in principle?
YES = 80.6%
NO = 19.4%
Respondents = 103

3. Do you support the USPTO creating a single queue for examination of all applications accelerated or prioritized regardless of why or how they were accelerated (i.e., under Track 1 or under the green technology initiative, for example)?
YES = 61.4%
NO = 38.6%
Respondents = 101

4. The higher fee for Track 1 applications has not been announced, but is intended to recoup the cost associated with faster treatment. The fee may be as high as $4,000 to $5,000 without any break for small entities. This fee is:
TOO HIGH = 62%
TOO LOW = 6%
ABOUT RIGHT = 32%
Respondents = 100

5. The USPTO has proposed Track 1 applications be limited to 4 independent claims and 30 total claims. This is:
TOO MANY = 12.6%
TOO FEW = 15.5%
ABOUT RIGHT = 71.8%
Respondents = 103

6. How fast would Track 1 have to be to make it attractive at a fee of $4,000 and only 4 independent claims and 30 total claims?

6 MONTHS TO FOAM = 60.6%
9 MONTHS to FOAM = 24.2%
12 MONTHS to FOAM = 14.1%
15 MONTHS to FOAM = 1.0%
Respondents = 99

7. The USPTO is considering requiring early publication of prioritized applications under Track 1. Do you favor requiring early publication?
YES = 60.8%
NO = 39.2%
Respondents = 102

8. Track 3 essentially mimics PCT timing, by allowing examination to be deferred for up to 30 months. Would a non-PCT option such as Track 3 be interesting for your clients?
YES = 68.9%
NO = 31.1%
Respondents = 103

9. Those electing Track 3 would lose PTA because of applicant induced delay. For example, if the aggregate average time to issue a first Office action is 20 months and applicant requests that the application be examined at month 30, the proposed PTA reduction would be 10 months. Would this reduce the likelihood you would advise using Track 3 deferred examination?
YES = 48.0%
NO = 52.0%
Respondents = 100

10. Three Track would implement SHARE, which would have the USPTO suspend prosecution of non-continuing, non-USPTO first-filed applications until an Office Action is received in the first filed foreign application. Is this a good idea?
YES = 43.9%
NO = 56.1%
Respondents = 98

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. 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 6 Comments comments.

  1. Mark Nowotarski November 14, 2010 6:53 pm

    If there was a way to get a first office action in 6 weeks instead of 6 months, then some very interesting strategic options open up.

  2. Gene Quinn November 15, 2010 1:21 pm

    Mark-

    What are you thinking? I sense your wheels are spinning.

    -Gene

  3. Mark Nowotarski November 15, 2010 4:19 pm

    Gene,
    Thanks for asking.

    Many applicants maintain large patent portfolios primarily for defensive purposes. Red Hat, the open source software company, is a clear cut example of this. If a competitor sues them for infringement, they want to be ready to sue back. If they haven’t filed yet, it’s too late. That means that they have to over-file since who knows what defensive patents they are going to need 3 – 5 years in the future.

    Now if you could get patents in weeks instead years, then you might not need that large standing army of broadly filed issued patents. If you are sued for infringement by a competitor, you could file a swarm of defensive patents and have them issue in time to be effective negotiating tools in settling the litigation.

  4. patent litigation November 16, 2010 5:18 pm

    It hadn’t yet occurred to me how Track 1 will be affected, if fee diversion is allowed to continue unabated. This consideration lends even more urgency to the issue. If the three-track system is to be implemented within a year, then likewise the practice of fee diversion must end within that same time frame. At this point, I would be more than willing to settle for patent legislation that did nothing more than end this toxic practice.
    http://www.aminn.org/webcast-aipr-patent-reform-presentation-us-patent-and-trademark-office

  5. TINLA IANYL November 17, 2010 3:30 pm

    I think it is interesting that track 3 is viewed as applicant delay, but track 2 is not. If the PTO really wants to, they could scrap track 3 and go with two track 1s, where applicants opt to pay more for the most preferred treatment, etc. Then, the new track 3 would not be viewed as applicant delay, but the PTO would not get out of having to perform the search and exam.

    Meanwhile, track 3 bothers me because of how it will likely impact searching in the future if it becomes widely used. Right now, following foward and rear cited references of patents can very efficiently lead to the most relevant prior art, and that capability benefits search professionals and Examiners, while contributing to higher quality of examination. Published applications that never issued also have a file history that reveals the same information, albeit without the convenience available by the forward and rear citation search features. However, imagine, for example, if provisional applications were published. Wouldn’t there likely be huge amounts of such applications that were never converted to regular, and were never examined at all? Much of the closest prior art in emerging technologies would not even be classified. Isn’t that what we risk in a few years with track 3?

  6. Mark Nowotarski December 10, 2010 2:12 pm

    Applicants can already elect a “track 3” by requesting deferred examination of up to 36 months under 37 CFR 1.103(d).
    Similarly, applicants can already elect a “track 1” through the accelerated examination program.