Whether an invention is patented can dramatically influence a company’s market share and investment attraction. Thus, this outcome can affect the money, time and effort that decision-makers at the company are willing to invest in the research, development and marketing of the technology and may even influence whether the company is to exist at all (or is alternatively never formed or does not survive). No matter how critical a patent is, the outcome lies primarily in one person’s hand, and that person is the examiner who happened to be assigned to examine the application.
If a patent applicant and examiner reach an impasse, the patent applicant may appeal pending rejections, via an ex parte appeal, to the Patent and Trial Appeal Board (PTAB). However, the costs of this strategy are high. In terms of financial costs, the large-entity USPTO fees are $800 for filing a Notice of Appeal and $2,000 for having the appeal considered by the Board, and the median attorney fees at large firms for drafting the Appeal Brief is $5,000. Thus, the total cost for filing an appeal is typically around $8,000. In terms of time, the average time between a Notice of Appeal filing and PTAB decision is 36 months. Thus, money or time constraints may make an appeal an economically unfeasible option.
Nearly exactly a decade ago, the USPTO established a third option: Rather than interacting with a sole decision-maker, and rather than incurring the resource expenses of an appeal, an applicant could request that an examiner’s rejections be considered in a Pre-Appeal Brief Conference. This program was designed to allow an applicant to avoid the full appeal process and PTAB consideration when “rejections of record are clearly not proper and without basis”. To be considered for the program, the applicant is to file (with a Notice of Appeal): (1) a request (e.g., a completed USPTO “Pre-Appeal Brief Request for Review”); and (2) a five-page or less set of arguments for which the review is being requested. Aside from the fee now required for the Notice of Appeal, no additional fee is required for the Pre-Appeal Brief Conference program.
For each request, a supervisor will designate a panel of examiners to review the request. The panel will include at least a supervisor (frequently the supervisor of the application’s art unit) and the examiner of record. The panel may include an additional examiner (or supervisor) from a same or different art unit. The panel is to reach one of four decisions:
- The application is to proceed for consideration by the PTAB due to there being at least one actual issue for appeal.
- Prosecution is to be reopened, such that a new Office Action is typically to follow.
- The application is allowed.
- The request was defective.
Should applicants be using this program? The program appears to provide an opportunity for an applicant to avoid the monetary and time expenses of a full PTAB appeal and is not itself accompanied by a fee. However, the program requires the applicant to generate another document for consideration, which may correspond to additional attorney fees. (Notably, though, such additional fees may be relatively inexpensive due to the required brevity of the arguments and the opportunity to recycle the arguments for an Appeal Brief. Further, the program could further increase the total delay of a PTAB decision. That is, a successful Pre-Appeal Brief Conference would save an applicant time and money, and an unsuccessful Pre-Appeal Brief Conference would cost an applicant time and money. Thus, determining whether the program should be used requires analyzing empirical data to determine the probability that a Pre-Appeal Brief Conference is successful.
Only 6% of Pre-Appeal Conferences Decisions are that an Application is Allowable
To investigate the empirical data behind the Pre-Appeal Brief Conference Program (or “Pre-Appeal Program”), we submitted a Freedom of Information Act request to the USPTO. We requested, for each request for the Pre-Appeal Program for which a decision had been made, that the application number, art unit, request date, application’s current status and pre-appeal conference decision be identified. We analyzed the data corresponding to non-defective requests (n=85,506). FIG. 1 shows the distribution of the decisions.
For 61% of the non-defective requests, the panel decided that there was an actual issue for appeal, such that the applicant would either need to file an Appeal Brief, reengage the Examiner or abandon the application. The decisions do not include any substance (e.g., analysis insight) aside from the decision itself, such that – for these 61% of applications – the request resulted in time and money and not producing any result to facilitate a patent allowance.
For only 6% of requests were the panel decisions that an application was to be allowed.
For 33% of the non-defective requests, the panel decided that prosecution was to be reopened. Reopening prosecution likely indicates that a rejection of record was improper, but that the panel opined that another rejection was appropriate. Is this a “win” for the applicant? While a contested rejection is likely overcome, the applicant is positioned so as to once again receive rejections from a same examiner who with the applicant previously had difficulty.
To further investigate whether reopening prosecution is a result favorable for an applicant, we segregated the request data based on the decision and generated distributions for each decision type of the applications’ current status: patented, abandoned or pending. (See FIG. 2.) 67.4% of the applications having received a reopen-prosecution decision are currently patented, as compared to only 39.3% of those with decisions indicating that the Board would need to consider the arguments. Because the final status of the pending applications is yet undetermined, it may be instructive to identify the percentage of final dispositions that are patented. Amongst applications for which the panel found an appealable issue, 58.0% of the finally disposed applications are patents, while 79.5% of the finally disposed applications for prosecution was reopened are patents. Thus, in general, it appears as though this intermediate decision corresponds to rather strong patent prospects, which slightly exceed the overall USPTO allowance rates.
We further segregated our data based on the calendar year of the request. FIG. 3A shows the number of non-defective requests per year. FIGS. 3A and 3B show the distribution of decisions per year, either in an unnormalized (FIG. 3A) or normalized (FIG. 3B) representation.
FIG. 3A shows that the program grew in popularity during its first five years. However, the popularity has seemingly dwindled in recent years. These dynamics seem to closely follow the fluctuations in the number of appeal briefs received at the Board. (See FIG. 3B.)
FIGS. 3A and 3C show that there have been modest changes in the decision distributions. In 2006, 4.9% of the decisions were that an application was allowable. That percentage dropped to 2.5% in 2008 and was 7.7% in 2015. Meanwhile, the percentage of decisions indicating that an actual issue exists for appeal (and thus is suitable for PTAB consideration) has dramatically and steadily increased throughout the years: from 56.9% in 2006 to 68.6% in 2015 (a 20% increase).
Analysis by the Technology-Center
We also segregated our data based on the technology center (TC) of the application. TC 3600 was further separated into business method (BM) art units (art units 3621-29 and 3681-96) and other art units. FIG. 4A shows the number of non-defective requests per TC. FIGS. 4A and 4B show the distribution of decisions per TC, either in an unnormalized (FIG. 4A) or normalized (FIG. 4B) representation.
Relatively few requests were received in TC 1600, which is consistent with the relatively low number of appeal briefs filed in TC 1600. (See FIG. 4A.) Meanwhile, the most requests were filed in TC 2600, which, interestingly, is not one of the top TCs for appeal brief filings.
Despite the small number of filings in TC 1600, the fraction of decisions that withdrew rejections was highest for this TC – reaching 15.0%. (See FIG. 4B.) This probability was over five times that of the business method art units, where the allowability probability was only 2.9%.
Art Units’ Allowance Rates Predictive of Pre-Appeal Conference Decisions
It is perhaps unsurprising that the business-method art units correspond to the least satisfying Pre-Appeal Program results. These art units are known to have exceedingly low allowance rates. Given that at least two members of a panel considering the request are likely within the same low-allowance-rate art unit, one may expect that the overall low allowance rate would also translate into a low pre-appeal conference allowance rate.
To further investigate the relationship between art unit allowance rates and Pre-Appeal Program decisions, we used LexisNexis® Patent AdvisorSM to identify an allowance rate for each art unit based on the number of patents issued and the number of abandonments from May 2013 to May 2015. We then assigned each request to one of five brackets depending on the art unit allowance rate, and we generated an outcome distribution for each of these allowance-rate brackets.
As shown in FIG. 5, pre-appeal brief conferences are generally most favorable for applicants in the higher allowance rate art units. The probability that an application will be allowed in the lowest art-unit allowance-rate bracket was 1.2%, whereas the probability was 7.3% for the highest art-unit allowance-rate bracket. Similarly, the probability that the decision was that an appeal should proceed to the Board was 77.9% for the lowest art-unit allowance-rate bracket and 57.3% for the highest art-unit allowance-rate bracket.
The Pre-Appeal Program remains a cost-effective weapon in the patent practitioner’s arsenal, if wielded wisely. For only the Notice of Appeal fee ($800 for large entities) and what should be relatively-modest attorney’s fees, an applicant receives the benefit of two additional “sets of eyes” reviewing the validity of the standing rejection. With 39% of requests resulting in direct allowance (6%) or re-opening of prosecution (33%, with more than half of those being ultimately allowed), it’s hard to argue there’s no ROI. And re-opening of prosecution generally results in more relevant prior art during prosecution that, once overcome, produces a more enforceable patent (i.e., less likely to be invalidated in litigation), which is what every applicant should want.
Even where the panel decides a case should proceed to PTAB, having this additional data point (i.e., the panel supports the rejection) may make participation in the Pre-Appeal Program a worthwhile endeavor. Armed with this data identifying multi-examiner support of the rejection, the applicant may make a more-informed decision to proceed with the appeal, submit new claim amendments (upon filing an RCE) or abandon the application. Decisions to amend the claims or abandon the application may result in a savings of the additional costs associated with the appeal, which may then be used to support other portions of the applicant’s patent portfolio.
But the Pre-Appeal Program is not a panacea. Because success rates correlate strongly to the applicable art units’ allowance rates, applicants should think carefully when their cases are in less favorable units. In such cases, time and money may be better spent directly with the PTAB, or on other post-final strategies.
In sum, the data indicates that the Pre-Appeal Program is an option that should strongly be considered whenever an applicant is facing a final rejection.
 USPTO. USPTO Fee Schedule.
 AIPLA. Report of the Economic Survey, 2013: I-1117.
 USPTO. FY 2013 Performance Measures.
 USPTO. New pre-appeal brief conference pilot program. Official Gazette 2005.
 The FOIA response identified four unique decisions: “Request Defective”, “Rejection withdrawn”, “Reopen prosecution”, and “Proceed to BPAI”. We assumed that “Rejection withdrawn” corresponded to the “Allowed” type of decision identified in the Federal Register notice for the program.
 USPTO. PTAB/BPAI Statistics Archive Page.
 Gaudry KS, Grab L, McKeon T. 2015. Trends in subject matter eligibility for biotechnology inventions. IPWatchDog.
 Unless the final rejection cited new art, the 5-page request should mostly be a re-formatting of the most recent office action response. And if the case proceeds to appeal, the fees may be at least partially recovered in reduced appellate brief fees.