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Incentivizing Patent Examination

Have you ever wondered why your pending U.S. patent application(s) see quarterly increases in activity? Or why certain activities during patent examination take longer than others?  

A big reason for this is examiner performance evaluation and compensation.   The USPTO operates on a four quarter fiscal year which runs from October 1 through September 30, and examiner performance is evaluated at the end of each quarter. While the United States Patent & Trademark Office (USPTO) has expected time limits for action during patent examination, patent examiner’s production goals are met by receiving “counts” accrued through completion of various tasks associated with the examination process. The count system is a performance or production system methodology for determining the amount of time a patent examiner is expected to complete a patent examination and provides a level of credit for each stage of examination.

Examiners are expected to maintain an average minimum production level at the end of each quarter. Additionally, at the end of the fiscal year examiners must have a minimum level of production in order to avoid disciplinary action by the USPTO. Moreover, examiners are eligible to receive performance based bonuses at the end of the fiscal year, including financial compensation for those examiners who produce upwards of 110% of their expected production, and increasing bonuses up through 135% of expected production. Therefore, as the end of a quarter or the end of a fiscal year draws near, examiner output spikes as examiners ensure they meet their required production for the specified period.

Not only does the count system affect the timing of actions, but it affects the type of action. Certain actions are weighted more heavily than others. Under the current count system which was implemented in February 2010, examiners are given more credit for tasks performed early on in prosecution. For example, an examiner is given 1.25 counts to issue a first action on the merits of a case in an original application, but only 0.25 counts for a final action, and fewer counts for an action on a Request for Continued Examination (RCE) than an original application. As an applicant continues to file RCE’s, the examiner’s opportunities for counts are smaller. Allowance and abandonment are weighted equally at 0.5 counts on an original application. The examiner will also receive 2.0 counts for achieving “a balance disposal”, which is when an examiner examines an application from the first action through disposal (i.e., abandonment, allowance, examiner’s answer, or RCE), but these counts reduce in value as RCE’s are filed. Thus, the current system incentivizes examiners to “dispose” of cases quickly. This is further bolstered by the USPTO providing examiners time-credit for initiating substantive interviews with applicant and/or applicant’s representative.

The current system also results in continuation or divisional applications being taken up more quickly for examination because the examiner, who is already familiar with the case, can maximize the higher counts. For example, the examiner can obtain 0.5 counts for an allowance on the parent application, 2.00 counts for the balance disposal on an original parent application, and 1.25 counts on a first action in the new continuation application—all within a very short period of time.

Another important point to note is that RCEs are placed on the examiner’s “Special New” application docket. On this docket, examiners must act on the application having the oldest effective filing date at least every other pay period. In other words, in addition to the reduced count, the examiner does not need to pick up an RCE each quarter.   As a result, RCEs tend to experience large gaps in prosecution between RCE and first action. At the same time, patent examiners will face diminishing returns by continuing to force unnecessary RCE filings. That being said, examiners are encouraged to take-up applications that they believe are in condition for allowance and give action to these applications without making them await their turn.

According to the USPTO, “The key objectives of the recently implemented count system are to provide more overall time for examination and to place emphasis on complete and thorough initial examination, encourage quicker resolution of issues, and to reduce unnecessary rework.” http://www.uspto.gov/patent/initiatives/patent-examiner-count-system Whether or not the count system is effective in accomplishing these goals remains to be seen, but the count system at the very least illuminates a method to the madness of patent examination.

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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