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Patent Delays

posted Jun 6, 2011, 2:19 PM by Kyle Herkenhoff   [ updated Jul 16, 2011, 2:36 PM ]
This summer I will be at the USPTO looking at the 3 track proposal which will allow people to patent faster for a higher fee. To get people up to speed on what is happening at the patent office, this post will look the timing of the patent system (the USPTO visualization center provides a good snapshot of the time delays in the patenting process

On average it takes about 2 years for someone at the patent office to take first action on a patent. First action is a written response by an examiner explaining why the claims have been accepted or rejected. While the inventor is waiting for the patent to be approved, the inventor is only allowed to put a "patent pending" stamp on the invention. However, this does not stop other people from identically copying the idea since the inventor can only sue copiers once the patent is actually approved. It takes, on average 40 months for a patent to finally leave the office, either completely abandoned or actually allowed. Only after 2 years of waiting (if lucky), will the patent be approved or rejected. At this point, the inventor sues the people who copied the idea (this creates a lot of jobs for consultants and lawyers). The two parties go to court and the judge determines if the patent is valid and whether or not the copier is guilty of copying. The average cost of determining whether a patent is valid (i.e. it can actually be used to exclude others) is $15,000 according to the American Intellectual Property Law Association. The average cost of going to court and determining if infringement occurred and if the patent is valid is $28,000 dollars.

Now, imagine that the longer the patent is in the system, the more potential instances of infringement (an assumption that needs to be studied in more detail).  Does it matter how soon a patent can be enforced? Of course, with short product cycles earlier enforcement rights are important.

Key Question: What is the elasticity of RD intensity with respect to patent pendency? In non-economist terms, a 1 day reduction in pendency increases RD by what dollar amount? (I estimate a .3% increase in patentable RD intensity if pendency decreases by .3%, see my article entitled "R&D:Research and Delays")