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The U.S. Patent and Trademark Office is drowning in paperwork. To reduce its considerable backlog, the agency wants to dramatically change the rules governing examination of patent applications. The PTO proposals, announced in January, would change current practice in substantial ways. Strategic and financial burdens would shift from the PTO to those seeking patents. This may reduce the agency’s backlog, but it would come at the expense of inventors, universities, research corporations and patent lawyers. To understand the impact of the proposed changes, it is important to first look at the existing patent process and its growing problem. A patent application contains a description of an invention together with a number of claims, statements that precisely define the parameters of the patent sought. When an application is filed, the PTO first checks that the formalities have been satisfied and the filing fees paid. Then the application is classified according to its technology and assigned to an examiner in the appropriate technology group. The examiner studies the application to determine whether the claims describe something that is novel, non-obvious and useful — i.e., something that warrants a patent. In making this determination, the examiner also searches the prior art in the field, usually by computer. Ordinarily, the examiner will reject at least some of the claims as not patentable. The filer then may rewrite the claims so that they are less ambitious and/or present a written argument explaining the merits of the invention. The examiner may reject the claims again, and the filer can present another response. The process usually ends with the second round, however. After two rejections, the filer can abandon the application or resubmit as a continuation application, which enables the filer to try a different approach to win a patent. Under accepted practice, the filer can repeat this process of filing continuation applications as long as the filer develops legitimate new positions to argue. Traditionally, the PTO has examined all claims presented in an application, subject only to the requirement that the claims all are directed to a single invention. As the number of claims grows, the filing fee increases substantially, in part to cover the cost of examination and in part to discourage filers from presenting a large number of claims. This seems to have worked well in the past. Until recently, the PTO initially examined applications in most technologies within 18 months and patents issued within two or three years. Problems Now, however, the mushrooming number of filings is causing the backlog to swell out of control. According to PTO statistics, patent-seekers filed nearly 400,000 new applications in 2005, and the current inventory of unexamined applications is more than 900,000 — a number expected to grow. If the PTO makes no changes in current procedure, it will not perform the initial examination on an application filed today for anywhere from two to 10 years (in the case of business-method patents). Moreover, the quality of that examination is poor. An internal PTO audit found that about 15 percent of all papers examiners issue contain at least one error considered significant to the examination process. Nearly 5 percent of approved applications have at least one claim that a court would find to be invalid.
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The problem is that patent-seekers are filing too many new patent applications for the PTO actually to be able to examine them. This is aggravated by the amount of time that examiners are spending on continuations of previous applications. According to the PTO, about one-third of applications under examination are continuations. Why not just hire more examiners? In town hall meetings, John Doll, the commissioner for patents, unveiled a plan to hire 1,000 additional examiners, who the PTO would then train for eight months in a new academy. However, the PTO has calculated that even this effort would barely make a dent in the backlog and quality problems (though its reason for this conclusion is unclear). The examination burden is just too great, says the PTO. Instead of hiring sufficient personnel, the agency is proposing rule changes to reduce the number of filings. The specific changes fall into two proposals: one addressing initial claims and one addressing continuation practice. The first proposal would limit to 10 the number of claims a patent-filer can present for examination. If the filer exceeds this limit, the filer must identify up to 10 claims as representative. The rule would be retroactive to include any application that is pending but has not received an examination. This would create serious problems for patent law firms, which may have hundreds or even thousands of pending applications that fall into that category. The patent application also would need to identify the closest earlier technology and to include a patentability report explaining exactly why the invention is thought to be patentable. This would be a significant change in the procedural burdens. Today, it is the responsibility of the examiner to do this work and then, if necessary, tell the filer why claims are not patentable. The second set of proposed changes would limit the number of continuation applications to only one, in most cases. If a filer submits a second continuation application, the filer would have to demonstrate that he could not have raised the issues in the continuation earlier. But most continuations cannot satisfy this requirement. Issues simply evolve during the patenting process; they theoretically could have arisen earlier. As a practical matter, using continuations in the traditionally accepted manner to perfect the claims would be out. It is difficult to fault the PTO for attempting to design new rules to reduce the backlog and enhance examination quality. But the new rules would have a negative impact on those who file patent applications. Patent-seekers often initially submit fundamental inventions to the PTO in the form of deliberately broad applications with many claims, which the filer refines during the examination of the original application and its continuations. This strategy is common to universities and corporations doing cutting-edge work in such technologies as physics, biotechnology and pharmaceuticals. In all these fields, the practical applications of a fundamental innovation initially may not be well developed but will evolve over time as the application is being pursued. The back and forth between the PTO and the filer is how weaker claims are weeded out and stronger patents are granted. Many independent inventors, whatever their field of innovation, need to start with a good number of claims and rely on multiple continuations to achieve a worthwhile patent, so the limits would hurt them. The proposed changes, especially the added requirements for a prior art search and a patentability report, would raise the cost of obtaining a patent. Preparing an application may simply become too expensive for many independent inventors. Also at a disadvantage would be foreign corporations, whose patent applications often are an amalgamation of several related applications initially filed in their home countries. They too need the back and forth of continuations to work out viable U.S. claims. They cannot realistically retreat from this strategy. One practical result and unintended consequence of the proposed changes may be to multiply the number of separate applications filed. That could actually increase, rather than decrease, the backlog. Although the PTO is presenting additional rules to discourage gaming of the system, filers would find ways around the restrictions. And consider the time that the PTO itself would spend navigating through the added layers of procedure that the rule changes would create. The proposed rules also would impose a considerable burden on attorneys. The process of selecting representative claims, researching prior art and drafting a patentability report is rife with pitfalls. The good-faith efforts by a lawyer to meet these requirements could become one more issue in patent litigation, with opponents charging negligence, if not deception, of the PTO. Moreover, it is disconcerting to contemplate that a filer might lose the ability to seek a patent through a second continuation application simply because the filer’s position purportedly was not adequately presented in the first place. Under the new system, lawyers would have to be very, very careful. Fortunately, the PTO’s proposals are still only proposals. Significant opposition from multiple sectors of the public could change the agency’s mind. Stephen Becker is a partner in McDermott, Will & Emery in Washington, D.C., where he heads the patent procurement group. He is the author of “Patent Applications Handbook” and the chapter on U.S. practice in “Patents Throughout the World.” This article first was published in The Recorder, a Texas Lawyer affiliate.

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