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The Patent Office Backlog and Satellite Offices

Posted Tuesday, September 25, 2012 by Mike Cicero

Over the last few decades, patents have become increasingly important to the long term business strategies of many companies worldwide. Accordingly, the total number of patent applications filed at the United States Patent and Trademark Office (PTO) has increased steadily. This increase is obviously driven by the clear appeal to businesses to participate in the U.S. market economy, and slightly less obviously by the fact that patents are territorial in nature. Therefore, companies both foreign and domestic have increased the number of United States Patent Applications filed each year.

Utilizing data published by the PTO’s Patent Technology Monitoring Team in the U.S. Patent Statistics Chart: Calendar Years 1963-2011, I’ve calculated the percentage of increase in total patent application filed in several past years as compared to 2011. The results show that in 2011, there were 70% more applications than in 2001, 204% than in 1991, 376% than in 1981, and 389% than in 1971.

Undoubtedly, the increase in application filings has caused an increase in the Unexamined Patent Application Backlog (Backlog) during this time period because, so far, the PTO has been unable to increase its own resources at an appropriate pace. Based on information from the PTO Patents Dashboard there are roughly 623,168 Unexamined Applications as of August 2012. Moreover, the Dashboard shows that First Office Action Pendency, i.e. the time from filing to receiving a First Office Action on an application, is 22.3 months as of August 2012. However, the trends on both of these figures seem to have been improving over the last two years. Additionally, these figures inherently represent past performance of the PTO because it includes all pending applications, even those filed many years ago.

Perhaps a better indicator of the PTO’s current performance is the Forward-Looking First Action Pendency which represents an estimate of the number of months it would take an application filed today to receive a first office action. This estimate seems to be steadily falling and has decreased by nearly 10 months over the past two years. As of August 2012 this figure is estimated at 16.7 months and the PTO aims for this to be reduced to 10 months by 2015. These improvements seem to have been accomplished without a decrease in the quality of examination as indicated by PTO Quality metrics, e.g. Final Disposition Compliance Rate, as displayed on the Patent Dashboard.

What steps is the PTO taking to improve its performance?

On March 9, 2012, I attended the 17th Annual Intellectual Property Institute CLE in Seattle, WA where I was fortunate enough to hear David Kappos speak on this subject. David Kappos is the Under Secretary of Commerce for Intellectual Property and Director of the PTO.

Of the Backlog causes Mr. Kappos mentioned, perhaps the principal cause is a lack of PTO personnel, and more specifically, patent examiners. Like any understaffed agency or corporation drowning in work, the PTO attempts to incentivize examiners to work overtime in order to reduce the backlog. Unfortunately, as Mr. Kappos explained, many of the most senior and productive examiners already earn a salary near the level of the federal statutory salary cap. The result is that, generally, the most productive examiners have the least incentive to work overtime because after only a few hours they end up working for free. Additionally, examiner attrition rates have been a problem because some examiners leave the PTO to work in the private sector where they can potentially earn more.

In light of these difficulties, the good news is that the Leahy-Smith America Invents Act attempts to mitigate them by requiring the Director of Patents, currently Mr. Kappos, to “[within 3 years] establish 3 or more satellite offices in the United States to carry out the responsibilities of the [PTO].” The stated purposes of establishing satellite offices are to “(1) increase outreach activities to better connect patent filers and innovators with the Office; (2) enhance patent examiner retention; (3) improve recruitment of patent examiners; (4) decrease the number of patent applications waiting for examination; and (5) improve the quality of patent examination.” Id.

During his speech earlier this year, Mr. Kappos certainly seemed excited to take on the task of establishing satellite offices. His excitement obviously makes sense because additional offices mean additional resources, including patent examiners. On July 16, 2012, the PTO opened its first ever satellite office in Detroit, Michigan. Additionally, it has publicly released its plans to open three additional offices in: Denver, Colorado; Dallas, Texas; and San Jose, California. Each of the offices will house roughly 100 patent examiners and, additionally, serve as check in centers for patent examiners participating in the PTO’s telework program which allows patent examiners to work remotely.

In many situations it does not make economic sense to further invest in a technology until it is known whether that technology can be protected by a patent. Accordingly, many applications being stuck in the PTO Backlog likely results in delayed investment and presumably delayed jobs. With the current state of the economy in such dire straits, hopefully the PTO’s steps to reduce the Backlog and increase the rate at which new technologies can hit the market will help our economic situation.

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