Patent System

THE STATE OF THE PATENT SYSTEM BACKGROUND FOR RULE PROPOSALS Los Angeles Intellectual Property Law Association “Washington and the West” Conference January 25, 2006

UPR Applications Filed

19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05

400000 350000 300000 250000 200000 150000 100000 50000 0

FAOMs in FY05

 FY 05 plan 375,080 (5.5% above FY 04)  FY 05 actual 384,228 (8.1% above FY04)  2.6% over plan 2

TC Application Inventory

1600

1700

2100

2600

2800

3600

3700

Total*

Design

New Applications1 9/30/2004

55,402

63,923

71,778

97,380

77,651

56,738

65,005

508,87 8

18,451

New Applications1 9/30/2005

62,644

72,697

76,529

115,58 5

94,425

70,354

83,225

586,58 0

24,534

Application inventory” is the number of new applications designated or assigned to a technology center awaiting a first action. 1

“New

*Total inventory includes applications not assigned to a particular TC, awaiting processing either pre- or post-examination.

3

Patent Pendency (as of 1/1/2006)

Technology Center

Average 1st Action Pendency (months)1

Average Total Pendency (months)2

1600 - Biotechnology and Organic Chemistry

23.3

33.5

1700 - Chemical and Materials Engineering

20.6

29.8

2100 - Computer Architecture Software and Information Security

33.1

44.8

2600 – Communications

31.2

43.9

2800 - Semiconductor, Electrical, Optical Systems

15.0

25.0

3600 - Transportation, Construction, Electronic Commerce

19.8

27.5

3700 - Mechanical Engineering, Manufacturing and Products

18.6

26.6

“Average 1st UPR action pendency” is the average age from filing a newly filed Total (as of 10/1/2005) 21.8 to first action for30.6 application, completed during October-December 2005. 2 “Average total pendency” is the average age from filing to issue or abandonment of a newly filed application, completed during October-December 2005. 1

4

First Action Pendency by Art Areas High Pendency Art Areas

Pendency

Low Pendency Art Areas

Pendency

1

1

(months)

(months)

1640 – Immunology, Receptor/ Ligands, Cytokines, Recombinant Hormones, and Molecular Biology

27.7

1620 – Heterocyclic Compounds and Uses

16.9

1743 – Analytic Chemistry & Wave Energy

30.8

1752 – Radiation Imagery

12.1

2123 – Simulation and Modeling, Emulation of Computer Components

39.7

2125 – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control

20.0

2617 – Interactive Video Distribution

50.4

2651 – Dynamic Information Storage & Retrieval

16.1

2836 – Control Circuits

24.3

2833 – Electrical Connectors

8.8

3628 – Finance & Banking, Accounting

52.1

3612 – Land Vehicles

12.0

3731 – Surgery: Cutting, 30.9 age from 3723filing – Tools & Metal Working “Average 1st action pendency” is the average to first action for a newly filed 10.9 Clamping, Suturing application, completed during October-December 2005.

1

5

Inventory by Art Examples High Inventory Art Areas

Months of Inventory*

1614, 1615, and 1617 – Drugs, Bio-affecting and Body Treatment

38-51

1620 – Organic Chemistry

15

1753 – Radiation Imagery

34

1734 – Adhesive Bonding and Coating Apparatus

10

2127 – Computer Task Management

46

2125 – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control

10

2611 – Interactive Video Distribution

114

2651, 2653 – Information Storage and Retrieval

12

2836 – Control Circuits

22

2831 – Electrical Conductors

8

3651 – Conveying

12

3620 – Business Methods

22-136

Low Inventory Art Areas

Months of Inventory*

3731 and 3737 – Medical 38-47 3742 – Thermal and 8 Instruments, Diagnostic Combustion Technology *The number of months it would take to reach a first action on the merits (e.g., an action addressing patentability Equipment issues) on a new application filed in July 2005 at today’s production rate. Today’s production rate means that there are no changes in production due to hiring, attrition, changes to examination processing or examination efficiencies, and6 that applications are taken up in the order of filing in the given art unit/area. Of course, USPTO is taking aggressive

Quality of Products – FY 05 Fiscal Year 2005 FY 04

1600

1700

2100

2600

2800

3600

3700

Design

FY 05

FY 05 Target

Patent In-Process Examinati on Complianc e Rate1*

82.0%

81.7%

82.9%

88.1%

84.7%

90.9%

84.4%

86.6%

94.3%

86.2%

84.0%

Patent Allowance Error Rate2*

5.32%

4.88%

6.46%

3.56%

2.25%

4.43%

4.94%

6.43%

1.6%

4.55%

4.0%

*Compliance and error rates as measured by OPQA. Compliance is the percent of office actions reviewed and found to be free of any in-process examination deficiency (an error that has significant adverse impact on patent prosecution). 1

Patent allowance error rate is the percent of allowed applications reviewed having at least one claim which is considered unpatentable on a basis for which a court would hold a patent invalid. “Allowance” occurs before a patent is issued, so these errors are caught before any patent is actually granted. 2

7

Technology Centers Rework* Statistics FY 2002 FY 2003 FY 2004 TC % FAOM % FAOM % FAOM Summary Rework Rework Rework 1600 36.4% 39.7% 40.3% 1700 25.2% 26.9% 27.1% 2100 23.9% 24.0% 24.6% 2600 24.8% 24.1% 24.3% 2800 19.1% 22.0% 24.9% 3600 17.7% 21.2% 23.1% 3700 22.2% 25.1% 24.0%

UPR

23.2%

25.3%

26.1%

FY 2005 % FAOM Rework 42.4% 28.0% 28.2% 25.4% 24.1% 28.5% 28.1%

28.3%

* Rework first actions are those actions that are in a Continuing (CONs and CIPs), RCE, CPA or 129(a) applications (excludes Divisionals).

8

Continuation Filing Rates 100,000 80,000 60,000 40,000 20,000

Continuations (CON, CPA/RCE) As of 10/24/2005

CIPs

FY2004

FY2002

FY2000

FY98

FY96

FY94

FY92

FY90

FY88

FY86

FY84

FY82

FY80

0

9

Continuation Filing Percentage 30% 25% 20% 15% 10% 5% 0% 80 Y F

82 Y84 Y F F

86 Y F

88 Y90 Y F F

92 Y94 Y F F

96 Y F

98 Y00 Y F F

02 Y04 Y F F

% Continuations (CON, CPA/RCE) of Total Filings As of 10/24/2005

10

APPEAL PENDENCY FY01 – FY05 16 14 12 10 8 6 4 2 0

14.5 11.8

Time to Decision

Inventory

9.9

7.7 6 3.5

FY01

FY02

FY03

Inventory Reduction Measure

FY04

4.8 3.8

FY05

Time to Renewfrom Docketing 11

Appeal Conference Initiatives  Pre-Brief Appeal Conference Pilot Program  1296 Off. Gaz. Pat. Office 67 (July 12, 2005)  The USPTO is extending the program until further notice.  Appeal Conferee Specialists Pilot Program

12

Average Number of Claims at Filing 24

16

8

0 FY 1990

FY 1999

FY 2005

13

Rule Makings on Representative Claims and Continuing Applications  Objectives:  Better focused examination – help us get it right the first time  Create greater finality in examination:  To help the Office turn to new inventions and create public certainty on patent protection 14

Pendency Reduction Action Plan 50.0

Historic

Without Strategic Plan

1,000 Hires & Low Attrits

Plus Claims & Continuation Rules

Plus Patentability Report

Pendency

40.0

30.0

20.0

10.0

1982

1984

1986

1988

1990

1992

1994

1996

1998

Fiscal Year

2000

2002

2004

2006

2008

2010