Even the Patent Office gets a Stimulus Plan (that may benefit your small company)

Just when you thought you had heard the last of Stimulus Plans in the US, think again. The United States Patent Office (USPTO) has initiated its own version of a Stimulus Plan. Secretary of Commerce for Intellectual Property and Director of the USPTO, David Kappos, announced the pilot program at the Annual Independent Inventors Conference in early November. “The program will accelerate protection for important innovation from independent inventors while reducing our unacceptable backlog,” Kappos said. “Getting these inventions to the marketplace quickly will also help stimulate the economy and create jobs”.

The program is called the Patent Application Backlog Reduction Stimulus Plan and it went into effect on November 27^th, 2009 (http://www.uspto.gov/patents/law/notices/74fr62285.pdf). By the recent reports made on https://alpineeng.com, the pilot program is only running until the end of February (unless extended by subsequent notice), it may provide an important strategic tool for small companies, particularly medical device start-up companies. In short, the plan provides small entities (solo inventors, companies having less than 500 employees, and nonprofit organizations) with the opportunity to have one of their patent applications accorded special status for examination in exchange for the abandonment one of their other co-pending applications.

Newly filed patent applications are typically examined in the order in which they are received by the USPTO. Anyone who has filed an application in the US can tell you, this typically means about a three year wait before your application is even looked at, let alone issued. Under this new program, applications that have been “made special” or accorded special status for examination will be advanced out of turn for examination and will have special status for any appeal to the Board of Patent Appeals and Interferences (BPAI) and in the patent publication process. An application accorded special status for examination may be first examined by an examiner within weeks of obtaining special status. This special status can therefore provide the great benefit of receiving an issued, enforceable patent in a much shorter time frame – on average about 1 to 2 years rather than about 4 to 5 years. An issued patent can be helpful if the applicant is aware of a potential infringer and it also provides an increased level of certainty for the purposes of licensing or seeking funding.

In order to qualify, the small entity must have at least two patent applications that meet the following criteria:

• The applications that you wish to “promote” (i.e. receive special status) and “fire” (i.e. abandon) must both be nonprovisional applications with an actual filing date earlier than October 1^st, 2009 and the applicant must have established small entity status;
• The application that you wish to “fire” must be a “complete” application – i.e. one that contains an oath or declaration executed by the inventors and is one for which all fees have been paid;
• Both applications must be currently pending at the USPTO and must not yet have been examined; and
• Both applications must be either owned by the same entity or share at least one common inventor.

So what’s the catch?

Well, the obvious catch is that you have to abandon one of your pending applications, and as you can see from the requirement that this application must be “complete”, you have already paid a few hefty filing fees (totaling to a minimum of about $550 for small entities) and attorneys fees (ranging from about $7K to $20K) to bring this application into existence only to turn around and abandon it before you receive the benefit of the knowledge that can be gained in a first office action. It should also be mentioned that under alternative patent rules, rather than receiving special status, a pending, unexamined patent application may be expressly abandoned in exchange for the refund of the search fee and any excess claims fee paid in the application.

The patent office has also snuck in at least two additional, less obvious catches. The first one being that you cannot file a subsequent application claiming priority to the application you wish to “fire”, and the “fired” application cannot have any applications that claim priority to it, even if they claimed priority before the intent to abandon the application was established. An application that successfully “claims priority” to a previously filed application receives the same filing date as that application. Earlier filing dates typically aid the applicants in avoiding prior art references, for example, when the earlier filing date falls before those of the prior art references.

Catch number two – under this program, the special status that the “promoted” application will receive is a limited special status. Typically, when an application is made special, the application will continue to be treated as special throughout the entire prosecution process with the USPTO. However, under this program, if an application is made special under the basis of express abandonment of another co-pending application, the application will lose its special status once the first office action has been received, even if the first office action is simply a non-substantive restriction requirement. This means that while the application will be moved to the front of the examination queue, once prosecution has begun the application will return to regular status. Therefore, all prosecution that occurs between the first office action and any appeal to the BPAI will occur at the same pace as any other standard, non-special application.

Considerations for medical device start-up companies

Due to the nature of the medical device industry and the longer development cycles of our technology through clinical trials, FDA approval, reimbursement challenges, etc., patent prosecution strategy for medical device companies tends to include creating large patent families. A patent family is a group of patents that all share the same effective filing date. The patent family will include a parent application and subsequent children applications all claiming priority to either the original parent application or to other children applications within the patent family. In order for a child application to receive an effective filing date that is the filing date of a parent application, the subject matter claimed by at least one of the claims in the child application must be described and enabled by the parent application. Therefore, there is at least some description of subject matter that is shared by multiple members of the patent family. In some instances, parent and child applications may include the exact same description of subject matter.

In practice, a parent application is typically filed early on in the technology development process. As developments are made, priorities change, and new products are identified, new claims may be filed in children applications that receive the benefit of the filing date of the parent application while being directed to a valuable alternative not previously claimed in the parent application. Furthermore, as these developments are made and priorities change, some pending applications may become less valuable to the applicants while others become even more valuable. It is these less valuable applications that may be prime candidates for abandonment through the Patent Application Backlog Reduction Stimulus Plan in exchange for the more valuable applications receiving special status and a shorter wait to examination.

By definition, all members of a patent family must each describe at least some common subject matter. Therefore, the benefit to abandoning a patent application that is a member of a patent family is that the subject matter described and enabled by the abandoned application will not necessarily be lost – it may “live on” in other members of the patent family. A further benefit to abandoning a patent application that is a member of a patent family is that a new application to replace the abandoned application may be filed, claiming priority to a different application within the patent family. Although, as described above, an applicant cannot claim priority to the abandoned application, an applicant is allowed to file a new application replacing the abandoned application which claims priority to other pending members of that patent family. Therefore, not only will the description of the subject matter not be lost, the entire application may be replaced, albeit at a lower place in the queue for examination with the USPTO.

One warning – do not make the decision to expressly abandon an application lightly. Once an application has been expressly abandoned, there is absolutely nothing that you can do to revive it with the USPTO. It is therefore important to be sure that accelerating examination of one application is worth the loss of another application. I encourage you to speak with your patent attorney or agent and asses if any of your patent applications may be suitable candidates.

In conclusion, while I do believe that this program provides an interesting new tool to add to our patent prosecution arsenal, I have trouble seeing how this program can truly make a dent in the enormous patent backlog. First of all, due to the limitations described above, I do not believe that this program will be largely utilized. Furthermore, small entity applications only make up a small portion of the pending applications. For example, in 2007, only about 30% of the patent grants were issued to small entities. Finally, the USPTO has a tremendous backlog to deal with. In 2009, there were almost 720,000 patent applications waiting to be examined, with only about 6,000 examiners to handle them (http://www.uspto.gov/patents/stats/appbacklog.jsp). It will be a long time before we see the end of the patent backlog.