Post-GSK: Where Do We Go from Here? - Deferred Examination

    By Donald Zuhn --

The following is part of a continuing series on how to address the very real problems facing the U.S. Patent and Trademark Office.

A day after the day of rejoicing for inventors, patent practitioners, examiners, and seemingly all of civilization, fair-minded people will concede that the U.S. Patent and Trademark Office faces a daunting task.  After years of neglect - from Congress raiding the users' fees, an inadequate number of examiners, technology-driven increases in the number of applications filed, and a "count" system that has not rewarded a style of examination that encourages prosecution to a definitive end point - the Office is facing a massive backlog of applications without sufficient resources to process them in a timely manner.

If the patent bar is gladdened by District Court Judge Cacheris' decision enjoining implementation of the new rules - representing an attempt, albeit a misguided one, on the part of the Office to address the pendency and backlog problems - it behooves us to propose alternatives.  Patent Docs will be posting a series of such proposals, and we invite our readers to provide their own ideas.  As they used to say in the days of the counterculture, "if you are not part of the solution, you are part of the problem."  Patent Office management clearly thinks the patent bar is part of the problem; it would be satisfying to prove them wrong.

Deferred examination

Patent Docs readers have proposed a number of suggestions for helping the U.S. Patent and Trademark Office deal with its pendency and application backlog problems (we'll have more on readers' suggestions in another article).  One proposal that has been frequently suggested is that the Patent Office allow applicants to defer examination.

Such a deferred examination system exists in Japan, where an applicant can put off examination for up to three years after filing (see "Procedures for Obtaining a Patent Right" at the JPO website).  If an applicant has not requested examination within three years of filing, however, the application will be regarded as irretrievably withdrawn.  By requiring applicants to request examination, and thereby defer examination by withholding such a request, the Japan Patent Office does not waste valuable examination resources on an application the applicant may later deem to be of little value.  In addition, an applicant can request examination immediately after filing in order to expedite prosecution of applications the applicant deems to be more valuable.

Two Patent Docs readers noted that the U.S. Patent Office already has a deferred examination system in the form of the suspension of action provisions of 37 C.F.R. § 1.103.  Under Rule 103(a), an applicant may request a suspension of action of up to six months "for good and sufficient cause," provided that a reply by applicant to a pending Office action is not outstanding.  Under Rule 103(b), an applicant can secure a three-month suspension, but only for a continued prosecution applications (CPA).  Under Rule 103(c), an applicant can request a three-month suspension upon filing a request for continued examination (RCE).  The provision of Rule 103 that the two astute readers were specifically pointing to, however, is 103(d), which permits an applicant to defer examination for up to three years provided that the applicant has not filed a nonpublicaton request (or has rescinded the nonpublication request), the application is in condition for publication, and the Patent Office has not issued an Office action under 35 U.S.C. § 132 or a notice of allowance.  For the deferred examination request under Rule 103(d), the Patent Office even provides a form:  PTO/SB/37.

It seems, therefore, that the U.S. Patent Office already has a deferred examination system that appears to be the equal of Japan's deferred examination system.  So why are these provisions of the rules (especially Rule 103(d)) so little known and so little used?  Perhaps it has something to do with the Patent Term Adjustment ramifications of requesting a suspension of action or deferred examination under Rule 103(a)-(d).  According to M.P.E.P. § 709, such a request "will cause a reduction in patent term adjustment accumulated (if any) under 37 CFR 1.703."  More likely, however, it's because the system has one significant difference from Japan's deferred examination system.

In Japan, the default is no examination and an applicant can request examination at any time after filing.  Thus, in Japan, an applicant can request examination immediately, wait three years to request examination, or wait anytime in between to request examination.  In the U.S., however, the default is examination, an applicant must request deferral, and at the time of this request, must specify a deferral period of up to three years.  According to M.P.E.P. § 709:

Once the deferral of examination has been granted, the application will not be taken up for action by the examiner until the suspension period expires.  For example, if an applicant files a request for deferral of examination under 37 CFR 1.103(d) for the maximum period permitted under the rule in an application that claims priority of a foreign application filed 1/3/00, the action by the Office on the application will be suspended and the application will automatically be placed in a regular new case status on the examiner's docket on 1/4/03 (36 months from the effective filing date of the application, i.e., 1/3/00).

Thus, it would seem from this portion of the M.P.E.P. that in the U.S., an applicant will be stuck with the deferral period originally requested.  In other words, if an applicant chooses a deferral period of three years and circumstances change, tough luck; the applicant could be out three years of patent term adjustment.  However, as usual with the USPTO, everything is not always as it seems.  According to M.P.E.P. § 709(D), an applicant can "submit[] a request for termination of the suspension of action prior to the end of the suspension period," and such a termination "will be effective when an appropriate official of the Office takes action thereon."  Of course, it's unclear how long the Patent Office might take to terminate the suspension of action, and for certain biotech or pharma patents, the loss of even a few months of adjusted patent term could cost a patentee millions.

Clearly, U.S. applicants would be better off with a Japanese-style deferred examination system in which no examination is the default, examination must be requested, and an examination request can be lodged at anytime between filing and three years after filing.  Because the current U.S. deferred examination system appears to see so little use (Patent Docs readers who have requested deferred examination in the U.S. are encouraged to submit comments regarding their experience), the USPTO might also benefit from the implementation of a Japanese-style deferred examination system by allowing the USPTO to expend examination resources on applications that applicants deem to be the most valuable.

For additional articles in the "Post-GSK" series, please see:

• "Co-owned, Co-pending Applications," November 11, 2007
• "Increased Fees for Continuations," November 8, 2007
• "Regional Patent Offices," November 7, 2007
• "Tailoring Protection and Examination," November 6, 2007
• "Annuities," November 1, 2007

Comments

[In favor of deferred examination]

With deferred examination, the search and examination fee should not have to be paid until the request for examination is filed. However, it is not clear from 37 CFR 1.16 if these fees may be deferred. Rule 1.103(d) provides that the publication fee and a $130 petition processing fee (per 1.17(i)) must be paid at the time the suspension of examination is requested, which would seem to imply that the search and examination fees may be deferred, but as I've never tried this, I don't how the USPTO would react if the request was made upon filing, without payment of the search and examination. Any ideas on what would happen? And do you know how the fee schedule in Japan works?