July 22, 2010 at 12:35 pm by Charles Eldering, Ph.D. and Robert Yost, Esq.

According to the Wall Street Journal, in 2009, the average time from filing until an examiner begins reviewing a patent application was 34.6 months. To address this backlog, David Kappos, the director of the USPTO, recently proposed creating a three-track system for review of patent applications.

An interesting part of this new system involves offering expedited review (Track I) of certain applications in exchange for what Kappos calls a “non-trivial” fee. This expedited review is intended to provide a first Office Action on the merits within four months of the USPTO’s grant of prioritized status, and final disposition of the application within one year. The second track in the proposed system will offer traditional examination, similar to the current process, while the third track is essentially a “patent slow lane” and is meant to allow applicants to park their applications for up to 30 months while perfecting and measuring the market for covered products- a concept which sounds something like a provisional application. The PTO seems to think that the proposed system will not only result in faster examination of applications through increased efficiency in the first two tracks, but that many applications placed in Track III will ultimately be abandoned by the applicants.

Although large corporations are expected to embrace the Director’s proposal, a concern relating to fee-based expedited review is that small entities’ applications could effectively be pushed to the back-burner if the expedited track is embraced en masse by large corporations, some of which file thousands of applications annually. Since startups are sometimes heavily dependent upon the issuance of patents for receiving venture capital investment, these already cash-strapped entities could find themselves stuck between a rock and a hard place, forcing them to pay the additional fees so as to avoid being repeatedly moved to the bottom of the stack. Kappos recently clarified the proposal, stating his intention to also grant small entity discounts for this expedited review in a manner similar to those currently available to such applicants under the current system.

Offering an expedited track could prove useful to applicants, but the tricky part is to set the fee properly – in other words attempting to guess at the supply-demand curve or elasticity of the patent application market – the fee must be high enough so as to avoid the priority/expedited track becoming the norm, as it could be difficult to expedite any applications if all are submitted on the high priority first track. The fee must also be low enough such that small entity applicants can still use the expedited track when they need to obtain patents quickly. Allowing the applicant control over the processing speed for a fee does sound like a good idea, and expedited service is certainly nothing new for government offices (e.g.; passport applications, priority mail, etc). Only time will tell if this three-track system will work for the PTO- hopefully, if implemented, it will actually reduce application backlog and not just result in increased costs for everyone.

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