Which way will the traffic flow on patent prosecution highways?

August 17th, 2010

A key question is which patent offices will be winners and which not from PPH agreements.

Examination will not be even distributed across countries who are parties to PPH agreements if there is a perception among patentees that there is an advantage in prosecuting in one country over another. Here, perception may matter far more than reality, at least in the early going as patentees and their advisors make decisions on the fly. Examples of perceptions that could dramatically affect filing patterns include:

a) If patents will be examined more quickly in one country (country A) than the reciprocating country (Country B).

b) If claims are more likely to be allowed in one country (this has significant potential unexpected consequences – more below).

c) If it will be easier to prosecute the same claims in other countries (Country C) as a result of examination being in Country A rather than Country B. The existing of PPH agreements between Country A and other countries, that Country B does not have reciprocity with, will be a significant factor here. For instance, if the USPTO has a PPH agreement with a country (such as the EPO) and Canada does not, then examination in the US will be preferred to examination in Canada for applicants who also wish to claim patent rights through the EPO.

d) If it will be easier to enforce claims examined in one country than another. This issue goes to the heart of reciprocity. Will it, for instance, be possible to enforce in a US court a patent that was issued without examination by the USPTO following examination in a country like Canada. It is almost certain that the non-standard examination history and the element of deferral to a foreign authority inherent in the PPH process will provide fodder for defendants in an infringement suit to claim that the patent is invalid. Patent applicants will need to consider this contingent risk when determine which country to choose for examination.

These factors may produce contradictory forces. Patentees will have to weigh all of these factors, and more when determining where the primary examination should take place.

Factor (b) is troubling: patentees may seek a jurisdiction where examination is permissive, not necessarily where it is of highest quality. This is directly contrary to the stated goal of using PPH agreements to improve patent quality. A partial off-setting consideration is that weak or poorly examined patents are not likely to withstand testing in litigation and thus patentees will have some motivation to seek the highest quality patents. However, this is not a complete answer to the problem as so few issued patents are actually litigated, and issued patents, though weak to the point of invalidity, may still have a substantial chilling effect on third parties (whether targeted for infringement by the patentee or not).

These factors and more suggest that the flow of traffic on patent prosecution highways is unlikely to be symmetric. Some patent offices will carry a disproportionate share of the examination load and incur costs accordingly. National patent offices that are perceived by patentees as being unsuitable choices to lead examination will experience the greatest financial benefit from PPH agreements. For domestic offices, it is perverse but true: will pay to be slow, unfriendly to applicants, and a sink but not a source of examined patents.

Considering all of the above, we anticipate for instance, that the US-Canada PPH will be a financial boon for CIPO, but will produce no measurable benefit for the USPTO. The same number patents will be fied and examined in the US, but more patents will be filed and prosecuted without examination in Canada. Currently the ratio between patents filed in the US and Canada is approximately 10:1. We expect this gap to narrow, as it becomes simpler and cheaper to secure an issued Canadian patent with claims equivalent to the allowed US patent. However, this prediction of asymmetric benefit leads immediately to a fundamental the question: if there is no net benefit for the USPTO, why will it enter into or maintain these agreements?

I currently have no answer to this, yet answering it is crucial for understanding the long term prognosis for PPH agreements.

Why highways? The incentive for PTOs to make agreements.

August 16th, 2010

The stated objectives of patent offices for entering in to PPH agreements are a) to expedite examination of patent applications and b) to improve the quality of the patents are allowed.

These are laudable objectives, and PPHs may assist the first (speed of examination), but without more it is not a given how they will improve overall patent quality. Most importantly, however, these laudable goals are likely not the real motivating force driving the flood of PPH agreements which is money. Only by understanding this motivation can one understand the inevitability of PPH agreements, and in particular, understand why it is so likely that the initial ‘trial’ and ‘demonstration’ agreements will become permanent features of the patent landscape. Perhaps more importantly, this motivation will shape the specific terms of the PPH agreements and thus their impact on patentees, third parties, and their respective patent advisors.

National patent offices collect fees from patent applicants. To my knowledge, no PPH reduces or amends the fees charged by countries to patent applicants. But, PPH agreements have the potential to dramatically reduce the amount of work done by many patent offices in examination. Accordingly, the net result of each PPH in the short run is the same fees collected but far less examination effort. Considering how difficult and expensive it is for many patent offices to attract, train and retrain qualified patent examiners, patent prosecution high agreements have the potential to dramatically improve the profitability of many domestic patent offices. They have the potential to be a financial boon for patent offices.

Moreover, as the cost of domestic patent prosecution falls as a result of PPH agreements, I anticipate that applicants will (on average) file in more countries. This will produce yet more revenue for domestic patent offices.

Patent prosecution highways – the road ahead

August 15th, 2010

Patent prosecution highway agreements (“PPH”) appear to be all the rage, and the reasons that patent offices like them are obvious (discussed more fully in a separate post). However, PPH agreements represent an enormous change to patent prosecution that will have profound consequences for patentees, licensees and infringers, patent agents/attorneys, and national patent offices. Some of these consequences will be very positive, and some will not. But considering how significant the changes and challenges ahead are likely to be, it is remarkable how little discussion PPHs have generated.

In a series of posts, I will try to explore the challenges, opportunities, and uncertainties arising from patent offices setting off on these highways, often without much consultation.

First, some terminology. ‘Patent prosecution highway agreements’ are bi-lateral and multi-lateral agreements between nations (or their respective patent offices), which permit patent examiners in one country to recognize (and perhaps adopt or defer to) the work performed by their peers in another country. Most PPH agreements purport to be reciprocal (although the extent to countries and courts will respect that reciprocity is one of the most open issues arising from PPH agreements.)

Hello world!

April 18th, 2010

This is our new blog on patent matters. It will cover matters that we think should be of interest to Canadians about patents, and for others interested in Canadian patents. As a result, we will likely put particular emphasis be on developments in patent law in the United States and elsewhere and how they are relevant to Canadians and patents in Canada. As this is a blog, it is intended to be current and opinionated. It is not intended to be legal advice, nor an exhaustive repository of information.

At the same time we are launching our Wiki, which we hope will grow to be a very informative repository for factual information on intellectual property law and practice.

We welcome your comments.

Neil