THE STATE OF THE PATENT SYSTEMBACKGROUND FOR RULE PROPOSALS

Los Angeles Intellectual Property Law Association“Washington and the West” Conference

January 25, 2006

22

UPR Applications FiledUPR Applications Filed

0

50000

100000150000

200000

250000

300000350000

400000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

FY 05 plan 375,080 (5.5% above FY 04)

FY 05 actual 384,228 (8.1% above FY04)

2.6% over plan

FAOMs in FY05FAOMs in FY05

33

1600 1700 2100 2600 2800 3600 3700 Total* Design

New Applications1 9/30/2004

55,402 63,923 71,778 97,380 77,651 56,738 65,005 508,878 18,451

New Applications1

9/30/200562,644 72,697 76,529 115,585 94,425 70,354 83,225 586,580 24,534

TC Application InventoryTC Application Inventory

1 “New Application inventory” is the number of new applications designated or assigned to a technology center awaiting a first action.

*Total inventory includes applications not assigned to a particular TC, awaiting processing either pre- or post-examination.

44

Patent PendencyPatent Pendency(as of 1/1/2006)(as of 1/1/2006)

Technology CenterAverage 1st Action

Pendency (months)1Average Total

Pendency (months)2

1600 - Biotechnology and Organic Chemistry 23.3 33.5

1700 - Chemical and Materials Engineering 20.6 29.8

2100 - Computer Architecture Software and Information Security 33.1 44.8

2600 – Communications 31.2 43.9

2800 - Semiconductor, Electrical, Optical Systems 15.0 25.0

3600 - Transportation, Construction, Electronic Commerce 19.8 27.5

3700 - Mechanical Engineering, Manufacturing and Products 18.6 26.6

UPR Total (as of 10/1/2005) 21.8 30.6

1 “Average 1st action pendency” is the average age from filing to first action for a newly filed application, completed during October-December 2005.2 “Average total pendency” is the average age from filing to issue or abandonment of a newly filed application, completed during October-December 2005.

55

First Action Pendency by Art AreasFirst Action Pendency by Art Areas

High Pendency Art AreasPendency

1

(months)Low Pendency Art Areas

Pendency1

(months)1640 – Immunology, Receptor/ Ligands, Cytokines, Recombinant Hormones, and Molecular Biology

27.71620 – Heterocyclic Compounds and Uses

16.9

1743 – Analytic Chemistry & Wave Energy

30.8 1752 – Radiation Imagery 12.1

2123 – Simulation and Modeling, Emulation of Computer Components

39.72125 – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control

20.0

2617 – Interactive Video Distribution 50.42651 – Dynamic Information Storage & Retrieval

16.1

2836 – Control Circuits 24.3 2833 – Electrical Connectors 8.8

3628 – Finance & Banking, Accounting 52.1 3612 – Land Vehicles 12.0

3731 – Surgery: Cutting, Clamping, Suturing

30.9 3723 – Tools & Metal Working 10.9

1 “Average 1st action pendency” is the average age from filing to first action for a newly filed application, completed during

October-December 2005.

66

Inventory by Art ExamplesInventory by Art Examples

High Inventory Art AreasMonths of Inventory*

Low Inventory Art AreasMonths of Inventory*

1614, 1615, and 1617 – Drugs, Bio-affecting and Body Treatment

38-51 1620 – Organic Chemistry 15

1753 – Radiation Imagery 341734 – Adhesive Bonding and Coating Apparatus

10

2127 – Computer Task Management 462125 – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control

10

2611 – Interactive Video Distribution 1142651, 2653 – Information Storage and Retrieval

12

2836 – Control Circuits 22 2831 – Electrical Conductors 8

3620 – Business Methods 22-136 3651 – Conveying 12

3731 and 3737 – Medical Instruments, Diagnostic Equipment

38-473742 – Thermal and Combustion Technology

8

*The number of months it would take to reach a first action on the merits (e.g., an action addressing patentability issues) on a new application filed in July 2005 at today’s production rate. Today’s production rate means that there are no changes in production due to hiring, attrition, changes to examination processing or examination efficiencies, and that applications are taken up in the order of filing in the given art unit/area. Of course, USPTO is taking aggressive steps to ensure changes that will significantly lower the inventory rates in high-inventory art areas.

77

Quality of Products – FY 05Quality of Products – FY 05

Fiscal Year 2005

FY 04 1600 1700 2100 2600 2800 3600 3700Desig

nFY 05 FY 05

Target

Patent In-Process

Examination Compliance

Rate1*

82.0% 81.7% 82.9% 88.1% 84.7% 90.9% 84.4% 86.6% 94.3% 86.2% 84.0%

Patent Allowance Error Rate2*

5.32% 4.88% 6.46% 3.56% 2.25% 4.43% 4.94% 6.43% 1.6% 4.55% 4.0%

*Compliance and error rates as measured by OPQA. *Compliance and error rates as measured by OPQA. 1Compliance is the percent of office actions reviewed and found to be free of any in-process examination deficiency (an error that has significant adverse impact on patent prosecution).

2Patent allowance error rate is the percent of allowed applications reviewed having at least one claim which is considered unpatentable on a basis for which a court would hold a patent invalid. “Allowance” occurs before a patent is issued, so these errors are caught before any patent is actually granted.

88

Technology Centers Rework* StatisticsTechnology Centers Rework* Statistics

* Rework first actions are those actions that are in a Continuing (CONs and CIPs), RCE, CPA or 129(a) applications (excludes Divisionals).

FY 2002 FY 2003 FY 2004 FY 2005TC

Summary% FAOM Rework

% FAOM Rework

% FAOM Rework

% FAOM Rework

1600 36.4% 39.7% 40.3% 42.4%1700 25.2% 26.9% 27.1% 28.0%2100 23.9% 24.0% 24.6% 28.2%2600 24.8% 24.1% 24.3% 25.4%2800 19.1% 22.0% 24.9% 24.1%3600 17.7% 21.2% 23.1% 28.5%3700 22.2% 25.1% 24.0% 28.1%

UPR 23.2% 25.3% 26.1% 28.3%

99

Continuation Filing RatesContinuation Filing Rates

0

20,000

40,000

60,000

80,000

100,000

FY80

FY82

FY84

FY86

FY88

FY90

FY92

FY94

FY96

FY98

FY20

00

FY20

02

FY20

04

Continuations (CON, CPA/RCE) CIPsAs of 10/24/2005As of 10/24/2005

1010

Continuation Filing PercentageContinuation Filing Percentage

0%

5%

10%

15%

20%

25%

30%

FY80FY82

FY84FY86

FY88FY90

FY92FY94

FY96FY98

FY00FY02

FY04

% Continuations (CON, CPA/RCE) of Total Filings

As of 10/24/2005As of 10/24/2005

1111

APPEAL PENDENCYAPPEAL PENDENCYFY01 – FY05FY01 – FY05

11.8

7.76

3.5 3.8

14.5

9.9

4.8

0

2

4

6

8

10

12

14

16

FY01 FY02 FY03 FY04 FY05

Inventory Reduction Measure Time to Renew from Docketing

InventoryInventoryTime to DecisionTime to Decision

1212

Appeal Conference InitiativesAppeal Conference Initiatives

Pre-Brief Appeal Conference Pilot ProgramPre-Brief Appeal Conference Pilot Program 1296 1296 Off. Gaz. Pat. OfficeOff. Gaz. Pat. Office 67 (July 12, 2005) 67 (July 12, 2005) The USPTO is extending the program until The USPTO is extending the program until

further notice. further notice.

Appeal Conferee Specialists Pilot ProgramAppeal Conferee Specialists Pilot Program

1313

Average Number of Claims at Filing Average Number of Claims at Filing

24

16

8

0

FY 1990 FY 1999 FY 2005

1414

Rule Makings on Representative Rule Makings on Representative Claims and Continuing ApplicationsClaims and Continuing Applications

Objectives:Objectives: Better focused examination – help us get it Better focused examination – help us get it

right the first timeright the first time Create greater finality in examination:Create greater finality in examination:

To help the Office turn to new inventions To help the Office turn to new inventions and create public certainty on patent and create public certainty on patent protectionprotection

Pendency Reduction Action Plan

10.0

20.0

30.0

40.0

50.0

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Fiscal Year

Pe

nd

en

cy

Historic Without Strategic Plan 1,000 Hires & Low Attrits Plus Claims & Continuation Rules Plus Patentability Report