PTO Aims in a New Direction: Pulls Dreaded Prosecution Rules; Seeks Improved Quality of Its Services

By Bruce Sunstein.

October 2009 IP Update

In a press release issued on October 8, the Patent and Trademark Office (PTO) announced that it is rescinding the sweeping rules—adopted in 2007 and halted by court order before going into effect—that would have restricted the ability to file continuation applications and effectively limited the number of claims that could be filed in an application. (We previously described the rules here and the court proceedings here and here.)

The PTO’s press release quotes David Kappos, its newly appointed director: “These regulations have been highly unpopular from the outset and were not well received by the applicant community. In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.”

Meanwhile, effective October 1, the PTO also expanded its first-action interview pilot program, under which examiners can get an understanding, directly from patent counsel, of the invention described in the application before actually issuing an action on the application. In a speech given to the annual meeting of the American Intellectual Property Law Association on October 15, Kappos described this initiative:

We have expanded our ‘first action interview’ pilot program. The program improves communication between examiners and applicants during the initial phase of application review.

It is proven effective, and everybody in this room should be using it. Statistically, it increases your chances of getting a first action allowance by over 600%.

The speech of Director Kappos described numerous other initiatives under way, including the way examiners are evaluated for productivity:

For years, the men and women in this room have been urging the USPTO to reform the count system. As you know, that is the system by which we incentivize and measure our examiners.

So, shortly after I started at the USPTO, we commissioned a joint labor-management task force to reengineer the count system. In less than two months, the team delivered on its objective. We’ve completed a plan that we believe will fix the count system.

Specifically, the changes will give examiners more time for a first action on the merits, and time for examiner-initiated interviews. The new system will allow examiners to get it right the first time. The new system will also reduce the credit given for multiple continuing applications.

This will put the emphasis on improving quality on the front end of an examination and prevent unnecessary re-do work, while also recognizing that continuation practice remains a necessary and important component of the application process in many cases.

We believe these changes will improve the quality of examinations and give examiners the time and resources they need to make the right decision the first time. They may also have the added benefit of reducing pendency.

In response to questions, Kappos said that he was changing the patent quality review program, under which a small cadre of supervisors reviews applications that examiners have found to be allowable to determine whether they should in fact be rejected. “Let me be clear,” he said. “Quality does not equal rejection. Part of fixing the problem is resetting the culture.” He said the incentives are skewed in that the quality review program rewards examiners for rejection and penalizes them for allowances. Said Kappos, “I turned the notion that quality equals rejection on its head.”

Kappos urged support for now pending legislation on patent reform. He pointed out that it is compromise legislation in which all constituencies—including small inventors, life sciences, and information technology sectors—fail to get precisely want they want, but will still witness an important step forward for the patent system.

One aspect looming in patent reform legislation is to address the inability of the PTO to set and retain its fees for use in its own operations without risk of diversion of these fees by Congress. Giving the underfunded PTO control over its budget would enable it to cure its financial problems and help it better to address its backlog of 800,000 patent applications and reduce the time it takes to get a patent. The prospect of a sound financial footing for the PTO, to underpin its efforts to get on top of its backlog, is no doubt an important reason why Director Kappos supports patent reform.

Although PTO culture cannot be expected to be transformed overnight, for the first time in years, changes brewing in the PTO augur well for those who care about patents.