Editor’s Note: A. José Cortina is a member of the Intellectual Property Practice Group at Ward and Smith, P.A. where he focuses primarily on patents, trademarks, copyrights, and related matters.

Changes in U.S. Patent and Trademark Office examination procedures and recent court decisions have led to a random and unpredictable process at the Patent Office, leading some to question the desirability of pursuing patent protection for their inventions.

The Problem: Declining Patent Allowance Rates

Patent Office allowance rates for patent applications have dropped dramatically over the past several years from an average of above 60% per year to only 44% in 2008. Part of this decline in allowances is a reaction to popular press reports about “bad” patents being issued in the past by the Patent Office resulting in a stifling of innovation. The Patent Office has responded to those press reports by instituting very strict procedures for scrutinizing patent applications. Those new procedures include a stricter enforcement of the procedure allowing applications determined by the patent examiner to be allowable to be returned to the patent examiner for additional review, which has resulted in the eventual rejection of many applications previously determined by the patent examiner to be allowable. Similar enforcement has not been instituted for additional review of rejected applications.

Under the new procedures, a patent examiner who has more than a set number of allowances returned for additional review within a set time period cannot allow any more applications during that period without risking a bad performance appraisal.

In explaining the drop in allowance rates, the Patent Office has stated repeatedly that it is not statistically driven, and that those patent applications that are worthy of being allowed are allowed. It has asserted that its recently tightened procedures are driven by “quality control,” not statistics. However, two years ago, a Patent Office official boasted to an audience at the annual American Intellectual Property Law meeting in Washington, D.C. that the Patent Office had reduced allowance rates dramatically on a purely statistical basis.

Another factor adding to the drop in allowance rates is turnover of examiners at the Patent Office. This has led to more inexperienced examiners unwilling to take any chances in a system that allows returns of applications previously determined by the patent examiner to be allowable to be held against the examiner’s performance review.

Additionally, because of the current economic situation, patent application filings are down dramatically because inventors cannot afford attorneys’ fees and the fees charged by the Patent Office. As a result, the Patent Office faces a budget shortfall in fees of over $100,000,000 in 2009 alone. To counter that revenue shortfall, the Patent Office instituted a hiring freeze, despite a backlog of unexamined applications exceeding 700,000 for which the Patent Office fees were paid years ago. Moreover, the drop in allowance rates translates into a drop in future revenue because fewer patents issued means less revenue will be received as maintenance fees for issued patents – a literal “perfect storm” of bad leading to worse because of short-sighted policy.

Given the hiring freeze and the new scrutiny placed on allowed patent applications, it is unlikely that there will be a change in examiner behavior any time in the near future. In fact, a further decline in the patent allowance rate may be in store due to the purely personal concerns of examiners about their job security.

Moreover, recent court decisions have held an increasing number of issued patents to be invalid because of indefiniteness. Indefiniteness means the description and claims of the invention are not clear and subject to a great amount of speculation. All of this adds up to what appears to be an all-out assault on patents.

A Changing Landscape

The landscape at the Patent Office may be about to change even more dramatically. The United States Supreme Court has agreed to hear the case of Bilski v. Doll (a case which was addressed previously in this column). Bilski involves issues regarding what can be patented, and the Supreme Court decision could change the current approach to “method patents,” and perhaps even impact “software patents.”

A further and more significant change may come from the President’s nomination of David Kappos of IBM to be the next Director of the Patent Office. While in the past, IBM was a prolific filer of patent applications, many of them covering business methods and software, it has filed an amicus brief in Bilski opposing the patentability of business method patents. However, and perhaps not surprisingly, IBM defends approval of software patents.

Mr. Kappos announced his opposition to business method patents last year by stating that “[y]ou’re creating a new 20-year monopoly for no good reason.” Thus, it is unclear where Mr. Kappos will attempt to draw the line between software and business method inventions worthy of patent protection.

The Solution: Navigating the New Patent Office System

Given the decreasing allowance rate, apparently random allowances, the current Patent Office employment policies creating a bias in favor of disallowances, unfavorable court decisions, uncertainty over the outcome in Bilski, and the Kappos appointment, what are you, as an applicant, to do?

• Invest more time, money, and effort up front preparing your patent applications. Your patent application should be as complete and detailed as possible. While this is what should have been occurring all along, prior practice and Patent Office policies may have led some applicants to give less than a 100% effort. Now, it is clearly important to spend time, money, and effort up front. A complete and very detailed application will allow a greater number of possible amendments to the claims to distinguish over cited prior art. A fully diligent approach also will avoid the indefiniteness problem. In addition, when a first office action (which is an initial communication from the patent examiner about the application and most commonly a rejection) is received from the Patent Office, a complete and detailed specification will provide greater options in formulating your response.

• In responding to a first office action, make all necessary amendments. Upon receipt of any communication indicating a rejection by the patent examiner, you should make any and all amendments necessary so that your application is in a condition to proceed through the patent application process directly on appeal if the examiner does not withdraw the rejection. If necessary, you can supplement the evidentiary record supporting the patent application on file with the Patent Office with declarations from experts and other evidence.

• Responding to a Final Rejection. If, and when, the patent examiner issues a Final Rejection of your application, do not refile it. Instead, prepare a Response in the form of an Appeal Brief. This will signal to the examiner that you, as the applicant, are serious about the application because most of the work required to prepare the legal arguments encompassed in an Appeal Brief already will have been done.

If the patent examiner does not back down, then proceed on appeal. You have no choice if you want your application to be allowed. Of course, this will place an additional workload burden on the Board of Patent Appeals and Interferences and lead to a backlog of appeals. But, perhaps such a backlog eventually may force changes in Patent Office policy to make the process less random and not statistically driven.


Unfortunately, the Patent Office system is settling into a new era, one in which its internal procedures often overshadow the merits of the patent applications it reviews. The current budget crunch is only exacerbating this problem. While this may seem like a very gloomy story, the Patent Office has a history of changing its procedures when flaws appear to be about to break the system. The hope is that the current flaws in the system will start to be corrected, if not by the Patent Office, then by Congress, as the full and immediate effects of the budget and system crisis become apparent to the business world beyond the universe of applicants. Of course, what happens in the Bilski case and with the Kappos appointment also will have an effect. Given the self-protective history of the Patent Office, the unpredictability of Bilski, and the Kappos appointment, now is not the time to completely give up on patent protection for your inventions, including business methods and software. Instead, fight harder to get what is rightfully yours – a patent.

© 2009, Ward and Smith, P.A.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. A. José Cortina practices in the Intellectual Property Practice Group where he regularly represents clients with respect to patents, trademarks, copyrights, and related matters. Comments or questions may be sent to ajc@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.