Obtaining a patent is a company’s method for protecting the results of its investment in research and development. These efforts are costly both in scarce dollars and in the valuable time of scientists and engineers. The issuance of a patent gives the company the right to exact a fee from others for the right to use the patented technology. It also gives the company a legal monopoly to exploit the technology covered by the patent.

In either case, patent rights may mean many millions (and sometimes hundreds of millions) of dollars for each year of a patent term in which the patent owner can enforce a patent against infringers. Accordingly, the delay of even one year in the issuance of a patent can mean significant loss of revenue for a company.

The Traditional Approach

The traditional approach to patent prosecution often involves appeals to the Board of Patent Appeals and Interferences—which as of September 16, 2012 will be renamed the Patent Trial and Appeal Board—as an expensive, last-ditch effort. Using this traditional approach, companies respond to patent office actions and, if unsuccessful after two responses to the examiner’s rejections, will file a Request for Continued Examination (RCE). This process is repeated a number of times until the patent finally issues or the company gives up.

Companies believe this serial RCE process is less costly than filing an appeal, because an appeal frontloads significant costs at the early stages of patent prosecution. According to information from the American Intellectual Property Law Association in its “Report of the Economic Survey” for 2011, an appeal—which can include a pre-appeal brief, appeal brief, reply brief, and oral hearing—may have a median cost of about $12,000. This report provides representative median costs, calculated from a large selection of law firms ranging in size and geographic areas. As such, the costs of appeal can increase or decrease from the median based on the particular facts of the case.

The costs of the traditional approach, although spread out over a longer period of time, can be about the same as an appeal. Filing a response to an office action could easily cost $3,000, and the filing fees for an RCE add another $930. However, if an application is important for a company, typically, the cost for preparation of a comprehensive response can be considerably more than $3,000.

For convenience, using the $3,000 response cost, each time an RCE is filed (often referred to as “rolling a case”), it will cost a company approximately $7,000: two unsuccessful responses and the RCE filing fee. After two RCEs have been filed, it costs more to follow the traditional approach than to appeal. Further, the timeline for the traditional approach is a great deal longer. The cost of an appeal, therefore, should not be merely measured against the traditional approach but against the additional revenue the company will realize by obtaining the patent earlier.

The traditional approach can be more cost-efficient and time-effective in certain circumstances, such as when the applicant’s arguments have not been fully considered, or where an amendment is likely to lead to an allowance. But unless the examiner is providing assurances that allowance is imminent, the company may still have to “roll” the case one or more times.

We believe there are definite situations where filing an appeal early in prosecution can have significant cost savings and strategic value over the traditional approach. This is bolstered by the recently enacted America Invents Act, as well as changes in prosecution practice before the U.S. Patent and Trademark Office.

Opportunity for a New Strategy