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Patent Office Delay Contributing To Small Business Failures?

If you’ve paid even marginal attention to the Senate’s patent reform debates (which may come to an end this week), you’ve no doubt heard the patent office “delay” statistics repeated time and again. In particular, the Senators have been repeating that a 3 year total pendency, and 2 year time before an initial response are simply unacceptable.  If you’re like me, and you read a lot of recently issued patents, and can’t help but pay attention to the filing and issue dates, these statistics actually don’t sound all that bad, especially when stories (such as this one) about 8 and 9 year (or longer) delays  are never too hard to find.  But parsing these numbers, an even more problematic trend emerges.

First, a three year total pendency shouldn’t, in all honesty, be that problematic.  When the US switched from calculating patent term as 17 years from issuance, to calculating patent term as 20 years from filing, it chose the 20 year mark in the hopes that the switch (while “harmonizing” the US) would end up being a wash.  Second, most innovators, start ups and attorneys would agree that the 2 year wait to get an initial response is far more damaging than the total pendency, especially for early stage companies.  So, what’s the big deal?

For starters, here is the current patent office dashboard, as of January 2011:

The first two dials show precisely the two figures the Senators keep quoting.  The average delay before a first action on the merits stands at 24.2 Months.  The second dial shows total pendency to be 34.5 Months (slightly less than 3 years).  The other telling statistic is the number of actions per disposal, 2.4 (in yellow).  The concepts of disposal, and total pendency, refer to the number of “rejections” made by the patent office, and the time elapsed, between when the application is filed until the time that it is no longer pending (which would mean that the application either issued as a patent or became abandoned by its owner).

Inventors, patent owners and patent attorneys alike can all confirm that, overwhelmingly, the first action you’re likely to receive from the patent office will be a decision that rejects at least one, and typically all claims in your application.  According to this chart, you’re likely to receive that information about 2 full years after filing.  As far as actions per disposal goes, that’s the first of your 2.4 that you’ll receive before your case is “disposed of,” which means you’ll receive, on average, between 1 and 2 more.  You’ll be given a timeframe of three months, with a maximum of six months, to respond to this office action, and your second office action will similar be issued in roughly 3-6 months after you send in your resposne.  In other words, expect to wait a total of between 6-12 months for the second office action.  At this point, you’re already past the 34.5 total pendency window, and you may have one (or more) rounds to go before getting your patent allowed.

Couple that with the stories about delays of 5 years or more, and the 34.5 month “total pendency” doesn’t seem to hold water at all. But remember, the other way to “dispose” of a patent application is for the application to become abandoned after the initial rejection.  Even a poor quality rejection will successfully kill off a patent if the applicant fails to formally respond within six months.  A formal response, as noted in John Smith’s book “Don’t File A Patent” (previous discussion here) typically involves several thousand dollars worth of your patent attorney’s time to review the rejection, review the prior art being applied to your claims, and formally write up a response.  Inventors that are strapped for cash after waiting two years for a response from the patent office may not be equipped even to defend themselves, even against specious reasoning used in a first action.

Thus, six months after that first action, in other words 30 months after filing, the application would simply go abandoned and would therefore no longer be “pending.”  So how many of these types of 30 month abandonments weigh down the overall “pendency” rate? Well, according to Bureau of Labor Statistics from 2007, about a third of small businesses fail to reach the 2 year mark, and less than half of small businesses make it to year 4.  Is it possible that the patent office delay is contributing to the slaughter of small businesses?



12 thoughts on “Patent Office Delay Contributing To Small Business Failures?

  1. “the other way to “dispose” of a patent application is for the application to become abandoned after the initial rejection”

    You are completely correct. The PTO is forcing small firms to abandon their apps as a result of unreasonable rejections. Attorneys will tell you inventor ares abandoning apps after first rejections more than ever. We simply cannot afford to fight the PTO to get our patents. With one inventor, it took almost 10 years just to get his first patent on his invention and he’s still trying to get other patents that cover other critical aspects of the invention after more than 15 years. Little wonder small firms are dropping like flies waiting on the PTO.

    But nothing in this bill will solve that problem, or any of the many others that are crippling America’s start up and small entities. Patent reform is a fraud on America. What it will do is help large corporations maintain their monopolies and kill their small entity and startup competitors (which is exactly what they intended it to do) and with them the jobs they would have created. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs.

    Just because they call it “reform” doesn’t mean it is.

    Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.

    Posted by staff | March 7, 2011, 7:46 pm
  2. Hello,

    So if i understood, an american company that fill the form and start to commercialize his product, have to wait almost 3 years to defend a copy of the product made for example) in china ?

    Posted by alex | October 11, 2011, 7:17 pm


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