New Patent Application Processes Promise Both Potholes and Potential

by William N. Hulsey, III, Esq.
Boylan, Brown, Code, Vigdor & Wilson, LLP

Not too long ago, I sought from the U.S. Patent & Trademark Office (USPTO) a status report on a client’s pending patent application. The patent application was for novel processes and software products for performing certain types of financial transactions. The client was seeking use of the U.S. patent laws to protect invention from illegal infringers who would offer competing services and products. Imagine our amazement and frustration to learn that, according to the USPTO’s estimate, at least 132 months would lapse—that’s right, 11 years—before examination of his application!

The USPTO now suffers from significant backlog in the examination and prosecution of patent applications in a number of important technology areas, including business methods, Internet technologies and other software technologies. To address this problem, the USPTO now offers an accelerated examination process, whereby a patent applicant may speed along his patent application. The stated goal—which we in our practice have now seen frequently achieved—is to complete the examination of patent applications within one year. However, speed has its costs! In order to use the accelerated examination process, an applicant essentially performs the search and analysis portions of the examination process himself. These steps have historically been a principal part of the USPTO’s examination. The steps include searching millions of prior patents and published applications, as well as prior non-patent public literature for applicant’s claimed subject matter. While patent attorneys are particularly adept in performing these searches, doing them takes time and costs an applicant additional money, time and resources.

Stand by: A search similar to that required for accelerated examination may become the patent application way of the future for ALL patent applications by anyone other those applicants who are newest to the U.S. patent procurement process. This comes about by virtue of new legislation presently working its way through congress.

Last year, the House of Representatives approved the most sweeping changes to U.S. patent law in more than half a century. Now, the US Senate must act on its patent reform bill. The Senate and House Judiciary Committees are reported to be working to ensure that the bill that goes to the Senate floor will be substantially similar to the House bill, thereby avoiding the need for a conference on the bill. Consequently, any Senate-passed bill could simply be approved by the House, and then sent to the President.

One particular, often-overlooked provision in the pending legislation is entitled "Applicant Quality Submissions" or "AQS." This provision, which the USPTO is pushing very hard, mandates that all applicants submit a search report and analysis relevant to patentability with every application. According to the proposed legislation, the USPTO will require a patent applicant to submit a search report and analysis relevant to patentability and any other information relevant to patentability that the USPTO determines necessary. The legislation further states that if a patent applicant fails to submit the search report, analysis, or information required in the manner and within the time period prescribed by the USPTO, such application shall be regarded as abandoned.

There is some relief from this requirement for those individuals and companies that do not have significant financial resources and have not previously sought many patents. Any application for a patent submitted by a "micro-entity" shall not be subject to the requirements of this section. A "micro-entity" means an applicant who makes a certification that the entity qualifies as a small entity, as defined in USPTO regulations, and has not been named on 5 or more previously filed patent applications. Moreover, to a micro-entity, the patent application must not have assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or any other ownership interest in the particular application. Furthermore, the micro-entity must not have a gross income exceeding 2.5 times the average gross income in the calendar year immediately preceding the calendar year in which the examination fee is being paid (the "2.5x income limit").

If a patent application has been assigned to another, the AQS is not required if each applicant can certify that he qualifies as a small entity and does not have a gross income exceeding the 2.5x income limit. Moreover, the assignee cannot have been named on 5 or more previously filed patent applications. Also, the assigned application must be assigned, granted, conveyed, or be under an obligation to assign, grant, or convey, a license or other ownership interest to an entity that has 5 or fewer employees and the assignee’s income cannot exceed the 2.5x income limit. So, unless you are or your company is new to the process for obtaining U.S. patents, it would be reasonable to expect your patent application costs to increase, perhaps by a significant amount. In addition, you should make certain that your patent counsel has achieved measurable experience and success with the new ways of performing on-line database searches and uses the most advanced patent and non-patent literature searching tools.

On the other hand, using the processes outlined by the accelerated examination and, if passed, the new patent legislation, will provide to the applicant the most accurate understanding of the true likelihood of obtaining needed patent protection in an ever more competitive, international market for new products and services. In today’s marketplace, having this type of information may be as valuable as any other information to help assure your company’s success.

William N. Hulsey III, Esq., is Of Counsel to Boylan Brown Code Vigdor & Wilson, LLP. Mr. Hulsey focuses his practice on the protection and licensing of intellectual property, including patents, copyrights, and trademarks. For more information, contact him at whulsey@boylanbrown.com or (585)238-3587, or visit Boylan Brown on the web at www.boylanbrown.com.