In response to the economic effects of the COVID-19 pandemic, many companies are reevaluating their expenditures. Some may look to their intellectual property portfolios as a place to cut costs. But any decisions to scale back on investments in patents should be driven by business considerations and not by panic. In order for a well-informed decision to be made, the available options must be considered.
Regarding patent applications that have not yet been filed or even drafted, the question may be whether the costs to prepare the patent application, file the application and eventually “prosecute”[1] the application are worth it. If a potential applicant is on the fence, it may be best to file a provisional patent application. The cost of filing a provisional application often is considerably less than the cost of filing a non-provisional application. While a provisional application is neither published nor examined by the U.S. Patent and Trademark Office (USPTO) for patentability, it serves as a placeholder to establish a priority date for the claimed invention.
Even during a pandemic such as the one we are currently facing, innovation will continue and may even accelerate in certain fields, such as cloud computing, e-commerce, streaming and medical technology. As large companies may be more immune to the economic impacts of the pandemic, putting a stake in the ground of the IP landscape and establishing an early priority date may be one of the most effective ways for small players to protect the fruits of their R&D.
The priority date of a patent application is significant because it determines what constitutes prior art against the application, such as earlier-filed patents, printed publications and other information predating the priority date, which may be considered by a USTPO Examiner in deciding whether an invention meets the novelty and non-obviousness requirements for patentability.[2] Therefore, establishing the earliest possible priority date is essential.
With a provisional application, an applicant has a year from the date of its filing to decide whether to continue to pursue a patent by converting the provisional application to a non-provisional patent application for the invention. This year may allow the applicant to get a better sense of the value of the invention or whether a patent is the best mechanism for deriving the most value from the invention, as opposed to a trade secret, copyright or use of the “first to market” advantage, as examples. Also within the year, the applicant may have found additional funding that can be put toward patenting expenses.
Before the one-year mark, if the applicant chooses to continue to pursue a patent, conversion of the provisional application to a non-provisional application usually involves filing another version of the provisional application, with similar or the same content, and paying several fees.[3] To the extent that the non-provisional application incorporates the subject matter of the provisional application, it will be afforded the priority date of the provisional application.
While most applicants submit a non-provisional application that is very similar in substance to the provisional application to which it claims priority, the applicant does have the opportunity to supplement the disclosure of the provisional application, such as with additional details, test results or examples. For this reason, a provisional application is also an excellent option for an invention that has been conceived[4] but for which tests are still being done or prototypes are being built. However, the applicant should add information to the disclosure of a non-provisional application judiciously, as any additions that are deemed to be “new subject matter” will not enjoy the benefit of the filing date of the provisional (even if the rest of the application is afforded the provisional application’s date). Instead, the new subject matter would be given the priority date of the date on which the non-provisional application was filed.
Even before a provisional application has been converted to a non-provisional application, another provisional application, known as a “rolling provisional,” may be filed to add information to the original provisional application. There is almost no limit on how many rolling provisional applications may be filed within the one-year of the filing of the original provisional. However, as with new subject matter added in a non-provisional conversion, any new subject matter added in a rolling provisional may be given a priority date of the date that the rolling provisional was filed rather than the filing date of the original provisional application.
Of course, if an applicant does not see any benefit to filing a provisional application, the applicant may directly file a non-provisional application. Bypassing the provisional process may save money in the long run, as the filing fee associated with the provisional (albeit small) and costs incurred by the conversion to non-provisional may be avoided. Once a non-provisional application is filed, there usually is a period of time averaging one to three years before the non-provisional application is examined by an Examiner of the USPTO. Depending on the Examiner’s findings and any change of circumstances during that period, the applicant can again choose whether or not to continue to pursue the patent.
Regarding patent applications that have been filed but have not been allowed, an applicant may wonder whether it is worth continuing to put more money into prosecuting the patent application (i.e., trying to get the application allowed). This can be a difficult decision to make, especially when it is often unclear how many rounds of rejections await an application before an allowance is attained. Here, it may be prudent to communicate with the attorney handling the matter and discuss the prospects for getting the application allowed. The attorney may have a better sense of the stage of examination based on the kind of rejection(s) the application is facing, the prior art and/or discussions with the Examiner. If the application is close to allowance, it may be worth funding the last few steps. If the application is far from allowance, the continued cost of prosecution could outweigh the desire to proceed.
In making any decisions about a pending application mid-prosecution, the applicant should revisit the motivations for filing the application in the first place. There can be many different strategic objectives for filing a patent application, and those objectives may inform the decision whether to keep an application on life support or to pull the plug. For example, if the objective of an application was merely to attempt to clear a technical space in which the applicant plans to innovate in the future, or the applicant merely wished to increase numbers in a portfolio, those objectives could later be outweighed by the ongoing costs. However, if the applicant was seeking to protect a product or process that the applicant intends to produce or perform, such as from potential infringers, obtaining the patent may be worth the expense. Similarly, if the objective is to license rights to the invention to other parties, the applicant will mostly likely need an issued patent to do so.
Given the workplace and financial hardships associated with the current COVID-19 pandemic, it may be particularly difficult for an applicant to make a decision concerning ongoing prosecution of a patent application or even to meet deadlines for response to office actions received from the USPTO. A common question is whether the USPTO will extend due dates for responses to office actions in order to give applicants more time to respond or to make decisions concerning ongoing prosecution of an application. Several patent offices in other countries, including the European Patent Office, have already extended certain deadlines. To date, the USPTO has made no such move. However, the final text of the Coronavirus Aid, Relief, and Economic Security (CARES) Act grants the USPTO Director the authority to decide whether to toll, waive, adjust or modify statutory deadlines.[5] So, the possibility is still on the table. The director will publish a public notice if any such decision is made.
Regarding patents that have been allowed but have not yet issued, the applicant may have a period of time between receiving the notice of allowance and the due date for payment of the issue fee to decide whether the applicant is willing to pay the issue fee and the subsequent maintenance fees to keep the issued patent in force. In addition, the applicant has an opportunity to file a related application to the allowed application, such as a continuation, continuation-in-part or divisional application. But any such related application will incur further costs. While payment of fees for such related applications can be deferred by several months, in uncertain economic times, these costs can be prohibitive.
Regarding patents that have issued, a patent owner may scrutinize the cost of maintaining the patent. In the U.S., maintenance fees are due at 3, 7 and 11 years after issuance of a patent in order to keep the patent in force. While no extensions of maintenance fee due dates have been announced, the USPTO Director could choose to modify them by exercising the authority granted to him under the CARES Act.
Failure to pay a maintenance fee will result in expiration of the patent, and a patent owner can no longer enforce an expired patent.
If a patent owner decides that the maintenance fees are not a justifiable expense, the patent owner may decide to let the patent expire. However, the patent owner may also want to consider selling the patent, if possible.
In conclusion, while the expenses associated with developing and maintaining a patent portfolio may seem like an easy target for cuts during times of economic stress, such as we are currently facing with the COVID-19 outbreak, a company’s patent portfolio may be key to its competitiveness and success. It can be easy to succumb to all the panic and fervor by taking a myopic view. But companies should carefully weigh the short-term savings against the long-term impacts on their business and competitiveness. Companies need to be careful to make decisions that will land them on their feet once the current pandemic roller coaster comes to a stop.
[1] Patent prosecution refers to the interactions between an applicant or their representative and the patent office in furtherance of obtaining a patent.
[2] For a legal definition of prior art, see 35 U.S.C. § 102. The novelty requirement is defined by 35 U.S.C. § 102, and the non-obviousness requirement is defined by 35 U.S.C. § 103.
[3] The fees for filing a non-provisional application may include a basic filing fee, a search fee and an examination fee.
[4] In U.S. patent law, invention requires conception and reduction to practice. The Federal Circuit has defined conception as “the formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.” Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986). An invention can be reduced to practice if there is a working prototype or, for an invention that is a process, if there is a successful performance of the process. Alternatively, an invention can be reduced to practice constructively by filing a patent application describing the invention. See Hyatt v. Boone, 146 F.3d 1348, 1352 (Fed. Cir. 1998).
[5] https://www.documentcloud.org/documents/6819239-FINAL-FINAL-CARES-ACT.html
