Patents in the Knowledge-Based Economy (2003) / Chapter Skim
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Patent Examination Procedures and Patent Quality
Patent Examination Procedures and Patent Quality
Pages 54-73
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From page 54... ...
Department of Agriculture ABSTRACT This study examines a detailed panel data set of patent examination procedures that affect patent quality. A main conclusion is that the most important of these inputs (examiner hours and examiner actions)
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From page 55... ...
In addition, this chapter presents results of multivariate regression analysis indicating the correlation between measures of examination quality and areas of policy concern, such as patent litigation and incentives for inventors. Although patent examination is only one element in the complex landscape of intellectual property rights, it is a subject with important implications and one that is amenable to empirical analysis.
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From page 56... ...
Also, when the patent examination process fails to reject patent applications with serious flaws, patent monopolies for inventions with little benefit to society impose additional welfare costs. These costs are more likely to accrue as a greater number of patents are issued each year, underscoring the importance of examination quality in the patent system.
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From page 57... ...
Comparison of examination effort to level of examination output measures the intensity of examination, providing some insight into examination quality. Multilinear regressions show which examiner activities are most closely associated with patent awards, establishing a relationship between inputs and outputs.
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Patent disposals are the sum of patent approvals and rejections issued by examination groups, providing a good absolute measure of total examiner output.
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If a complex technology requires more examiner input to provide the same examination quality, regression analysis must account for this difference. Likewise, examiners in more mature technological areas must consider more prior art.
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The data do not appear to support a general decline in patent examination quality, although a trend for increasing workload might create delays in the examination process if it continues. Between 1985 and 1998, the USPTO issued approximately 1.4 million patents and 775,000 final rejections, summing to almost 2.2 million patent disposals.
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Panel estimation controls for different examiner input requirements among different technical areas. With this sense of the level of examiner effort necessary to process patent applications, Figure 2 illustrates how the workload of examiners varied over time.
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and 2600 (communications, measuring, writing, and lamp/discharge) experienced temporary decreases in examination hours per patent award, but both reestablished and eventually increased examination intensity.
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To summarize Figures 1 through 3, examination hours per patent disposal varied significantly across groups but were more or less constant within groups over time. Patent awards issued by examination groups varied quite closely with the number of examiner hours each group employed.
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by an examination group, GS-12 examiner hours (Table 2) have the largest and most statistically significant effect on production.8 Because the coefficients on either independent variable increased in magnitude when the other was excluded, examination hours are probably somewhat collinear with the number of examiner actions per patent disposal.
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Additional data are needed to clarify the role of examiner actions in improving examination quality. Examination Quality and Patent Litigation Patent protection is asserted through litigation or through negotiation backed by the threat of litigation.
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From page 66... ...
Also, the panel nature of the data holds constant effects that vary with technological area. The number of GS-12 examiner hours per patent disposal has the greatest effect on the complaint rate of the variables included in the analysis.
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General construction, petroleum and mining engineering 0.001469 0.001303 0.001729 0.001071 0.001371 0.001042 0.000535 0.000050 0.000000 0.001948 0.003137 0.003702 0.004774 0.004485 0.004393 SOURCE: Derwent LitAlert, USPTO Annual Reports. TABLE 4 Panel Regression of Complaint Rate on Measures of Examination Quality (Dependent Variable: Logarithm of Complaint Rate)
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estimates the median cost of patent litigation at $600,000 per side through the discovery phase and $1,200,000 per side if litigation proceeds all the way to a i2In addition to linear and quadratic specifications, the sign and significance of the examiner hours coefficient were robust to exclusion to one or both of the other explanatory variables. i3At 186,000 patent awards per year, and a complaint rate of 0.221 percent, an increase in GS-12 examiner hours from 17.6 to 18.6 translates to 24 fewer cases when elasticity is -1.055, and 26 fewer cases when elasticity is -1.33.
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From page 69... ...
Another benefit of decreased litigation from higher examination quality is the reduction in caseloads and associated public expenses for the court system. Increasing the number of examiner hours by an hour for every patent disposal carries substantial costs, however.
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Using the estimated elasticity TABLE 5 Ratio of Predicted Benefits and Costs from Increased Examiner Hours Examination Group Estimated Reduction in Litigation Expenses Divided by Cost of Additional Examination Hours 1100. General metallurgical, inorganic petroleum, and electrical chemistry and engineering 1200.
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The examination intensity of groups that employ relatively few examiner hours per patent disposal can be increased relatively cheaply; likewise, the potential reduction in patent litigation incidence varies with the frequency of litigation (from Table 3) and the number of patents awarded (from Table 1~.
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Although examination has kept pace with the number of patent awards, it has fallen somewhat behind with respect to the number of patent applications. The duration of patent pendency has increased, so that applications take longer to go through the examination process.
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From page 73... ...
. "The Settlement of Patent Litigation." RAND Journal of Economics 20(1)
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