A study of Patent Thickets (1.31Mb) - UK Intellectual Property Office

A Study of Patent Thickets 27
Lei and Wright (2009) find that paradoxically examiners at the USPTO spend more time searching
for prior art on patents that are later rejected at the EPO than on patents that are granted by the
EPO. They argue that this shows that examiners at the USPTO are able to identify weak patents,
but that they may be unable to reject as many as would be socially optimal due to pro-applicant
rules. A problem of this “pro-applicant approach,” which presumes patentability of an invention,
is that the USPTO has difficulties in rejecting patent applications, which contributes to the patent
quality problem (Allison et al., 2011). Because of the quality problems surrounding patents
issued by the USPTO, the FTC has called for more funding to be provided to the patent office
for the purpose of improving patent quality and notice, cf. page 16 in Shapiro (2000), also
Federal Trade Commission, 2011.
Harhoff et al. (2012) show empirically that their measure of patent thickets has a significant
negative effect on the probability that a patent application is opposed at EPO. They argue that
in a patent thicket the incentive for firms to oppose each other’s patent applications falls as each
new patent overlaps with the patents of many other firms and a public goods effect arises when
one of these opposes the patent. Additionally, firms may avoid opposing a rival’s patent if they
can expect the rival to retaliate by opposing their own applications. In keeping with this Harhoff
et al. (Graevenitz et al., 2012; 2011; Harhoff et al., 2012) show that opposition is lowest for firms
at the center of patent thickets. This suggests that post-grant opposition cannot be relied upon
to reduce the effects of patent thickets on patent quality.
The steep increase in patent filings and their complexity have caused patent offices around the
world to build up large backlogs of pending patent applications. Backlogs introduce uncertainty
into patent systems by increasing the length of pendency and by exerting additional pressure
on patent offices to process more patent applications with the same amount of resources. The
increased uncertainty may affect firms’ filing behaviour directly, but backlogs can also affect
thickets indirectly through the impact they have on the resources available for the examination
of patent applications, i.e., the effect on thickets works through the negative impact on patent
quality.
The most recent data for USPTO indicate that there were 536,604 patent applications in 2011
and that there were 690,967 patents awaiting a first action by an examiner. This is down from a
peak of 771,529 patents in 2008 (United States Patent and Trademark Office, 2011). Hegde
(2012) shows that the number of pending patents at USPTO has been increasing since 1997
and had quadrupled by 2009. He reports that first-action pendency 20 nearly quadrupled between
1991 and 2010, from 7.6 months to 25.7 months. Meanwhile Quillen et al. (2009) indicate that
a comparison of the USPTO application backlog at the end of 2008 with the Net Disposal rate
in 2008 yields a 60 month examination backlog. 21
Harhoff and Wagner (2009) document that at the European Patent Office (EPO) the number of
pending patent cases per examiner increased from 24 in 1978 to 120 in 1998 and that the
average number of claims per patent increased from just under 10 to just over 15 in the same
period. The examination period in 1994 lasted on average between 4 years for withdrawn
20 First-action pendency measures the time between filing of a patent application and the examiner’s formal
communication of a preliminary decision regarding patentability.
21 It should be note that according to USPTO data pendency rates reached a maximum there in 2008 and have
slightly declined since.