Patent Examination Procedures as Inputs to Patent Quality

John L. KingUSDA Economic Research Service

Conference on New Research on the Operation and Effects of the Patent System

October 22, 2001

NAS Board on Science, Technology and Economic Policy

Examination procedures affect the quantity and quality of issued patents.

• The decision to allow patents is part of a process, but ultimately the decision of a patent examiner.

• The effectiveness of examiners depends on the resources available to them, and the workload they are required to examine.

• The allocation of those resources also influences patent outcomes.

Research Strategy

• Detailed panel data set– 15 art units, 1985-1997– Examination hours (adj. for experience),

disposals, rejections, actions, interferences, etc.

• Conduct cross-sectional,time series analysis

• Relate examiner inputs and outputs to examination workload and measures of quality.

Important Examiner Inputs

• Examination hours made the largest and most statistically significant contribution to patent awards.

• Examiner actions were also significant.

• Both of these measures were stable over time with respect to patent approvals, despite an increasing workload in patent applications.

Examiner hours per disposal remained relatively constant through time.

1985

1989

1993

1997

111213152122232425263132333435

AV

G

0

5

10

15

20

25

30

GS12 HPD

Year

Art Unit

11

12

13

15

21

22

23

24

25

26

31

32

33

34

35

AVG

• Some variation across art units, but generally consistent through time.

• Min: 17.6 (art unit 12) Max: 29.3 (art unit 23)

Rejection rates decrease with successive examiner actions.

0102030405060708090

100

Rejection Rate

# o

f A

rt U

nit

-Year

Ob

serv

ati

on

s

1st Action 2nd Action 3rd or Higher Action

• More examiner actions associated with fewer rejections; evidence that applications improve with more examination.

• 1st action awards probably result from continuations, etc.

Mean:27.3% Mean: 45.8% Mean:87.1%Mean: 87.1%

Mean: 45.8%

Mean: 27.3%

Most patents receive multiple actions, consistently through time.

• Number of patents receiving single actions has recently increased, but only slightly.

Patent pendency has increased with application workload.

• Average pendency increased by 25% while applications more than doubled.

0

5

10

15

20

25

30P

ende

ncy

(mon

ths)

0

50000

100000

150000

200000

250000

300000

350000

App

licat

ions

Pendency Applications

The rate of interference hearings has declined with application workload.

• Interference hearings per application fell from 0.47% in 1985 to 0.16% in 1997– declined also in absolute terms

0

0.001

0.002

0.003

0.004

0.005

1985 19861987 19881989 19901991 19931994 19951996 1997

Year

0

50000

100000

150000

200000

250000

Interference Hearings/Disposal (Left Scale) Applications

Examination and Litigation

• Estimates suggest that an increase in patent examination hours would reduce the number of patents involved in litigation.– Derwent LitAlert data, 35 USC 290.

• A 1% increase in GS12-equivalent examination hours might reduce the amount of litigation by an est’d 3.94 cases per year– Cost of increased hours: $2,050,000 (estimate)

Conclusions

• Examination hours and examiner actions contribute most to patent awards.

• These factors have kept pace with patent awards, if not patent applications.

• Other factors (interference hearings, pendency) may have suffered.

• Evidence suggests that patent disputes could be reduced with greater examination effort.