^_.._..__..-“.._-..” .._........ -__.-.._.... .,_._”. ..-.._I..- svpt t~fllbt’l- l!~!~O BIOTECHNOLOGY Processing Delays Continue for Growing Backlog of Patent Applications ?a rh illlllllll Ill1 142349 ll RELEASED IW3TIUCTED--Not to be released outside the General Accounting Office unless specifically approved by the Oface of Congressional Relations. (i/2( 1111(:El)-w-z~ 1 -__-__-... --_I-... _..--_.__ -- . --.......- “-. .I...I”_..._..I-_.-... -.. .__--_.._ --_~-~ -- I----._ --^- __- I -___ l._. ll.,ll .._..-.. _“...““----~l -..“.“-.. ._.” ._. ..l.“.“.“l” ...l.l . .-. -- .---.--...1.--.-- United States ‘GAO General Accounting Office Washington, D.C. 20548 Resources, Community, and Economic Development Division B-234666 September 28,199O The Honorable Ron Wyden Chairman, Subcommittee on Regulation, Business Opportunities, and Energy Committee on Small Business House of Representatives Dear Mr. Chairman: As requested in your April 4, 1990, letter, and subsequently agreed with your office, we updated our report on the large backlog of unprocessed biotechnology patent applications at the U.S. Patent and Trademark Office (POD),an agency of the Department of C0mmerce.l That report dealt with several issues, including: the level of scrutiny required to pro- cess these applications compared to others; actions taken to streamline the process for these applications; and the ability of P?Dto attract and retain qualified examiners. In this update, we determined (1) the extent of the current backlog, (2) the current impact of m actions to accelerate decisions on biotech- nology patents, and (3) the impact of continuations on reported patent pendency time in 1989. We briefed your staff on the results of our work on July 13, 1990, and, as requested, have summarized the information in this report. The swift granting of a patent encourages both investment in biotech- Results in Brief nology research and the commercialization of related inventions. Unfor- tunately, despite p1~ actions designed to accelerate decisions on biotechnology patents, processing delays continue for a growing backlog of biotechnology patent applications. During calendar year 1989 and the first half of 1990, the inventory of unexamined biotechnology patent applications increased by about 33 percent, from about 6,200 to about 8,200. This increase reflects about a 15percent average annual increase in the number of filings during the past 6 years. Over 40 percent of the about 8,200 backlogged patent applications were over 12 months old. ‘Biotechnology: Backlog of Patent Applications (GAO/RCED-89-12OBR, Apr. 12,1989). Page 1 GAO,‘RCED-go-231 Biotechnology E234666 PTO’Sefforts to accelerate the award of biotechnology patents have been less effective than anticipated, The average waiting time for processing biotechnology patent applications was about 26 months in 1989 com- pared with the about 1Qmonth average for all other technologies. Because of the large growth in filings and the shortage of experienced senior biotechnology patent examiners, P’IDis no longer projecting that by 1992 it will reduce the pendency period for biotechnology patents from its current 26-month average to the targeted 18-month average goal for all patent applications. As of August 1990, PKI had not estab- lished a new date to replace the 1992 target date. The actual time required to process inventions contained in patent appli- cations is longer than the pendency reported by the P?Dbecause the PT~ measures pendency of applications, not inventions. A patent granted on an invention may be the result of a chain of replacement applications, or continuing applications. For example, during 1989, about one-third of the 26,616 inventory of unexamined (backlogged) and in process bio- technology patent applications resulted from chains of continuing appli- cations. Factoring in the original application date for the 7,079 patent applications issued or abandoned in 1989 would add 9.0 months to P?D’s reported average patent pendency of 26.3 months. Patent applications are assigned to the appropriate examining group-l Background of 16 such groups. Each group includes a number of suborganizations, art units, responsible for a specific area of technology. Examiners in the art units review patent applications to decide whether the inventions described are entitled to patent protection. The examination process includes a search through United States pat- ents, prior foreign patent documents that are.available in p1~, and avail- able nonpatent literature, to see if the invention is new, useful and nonobvious (significantly different from prior inventions). The exam- iner decides whether to grant a patent based on a review of the applica- tion and search results. An Office “action” notifies the applicant of the examiner’s decision. It states reasons for any adverse decision or any objection or requirement and provides information that may assist the applicant in judging whether to pursue the application. If the invention is not considered pat- entable subject matter, the claims will be rejected. Some or all of the claims may be rejected on the first action by the examiner; relatively few applications result in patents as originally filed. Page 2 GAO/RCED-!XJ-231 Biotechnology . E234366 If the application is rejected or objected to, the applicant must request reconsideration in writing, responding to every rejection in the Office action. The application is then reconsidered, and the applicant is again notified of the Office’s decision. If the applicant elects not to further pursue the issuance of a patent under the existing application, P?Dcon- siders the application as no longer pending and classifies it as aban- doned. In order to control the time frame of patent applications, P?D normally makes the second Office action final. The applicant is then lim- ited to: (1) appeal to the P?DBoard of Patent Appeals and Interferences and to the courts in the case of rejection of any claim; (2) presentation of a further amendment for consideration by the examiner (although the applicant does not have a right to have the amendment entered by the examiner); or (3) filing a continuing application. As an alternative to appeal, when applicants desire consideration of dif- ferent claims or of further evidence, continuation applications are often filed. Each continuing application also needs to include the claims and evidence for which consideration is desired. If the continuing applica- tion is filed before expiration of the appeal period and it refers specifi- cally to an earlier application, the applicant is entitled under 35 U.S.C. 120 to the date of the earliest filed application for subject matter common to both applications. An earlier filing date is important because occasionally two or more applications are filed by different inventors claiming substantially the same patentable invention. The earlier filing date determines patent rights, absent any other evidence. Furthermore, in the examining group, applications are examined in the order in which they have been filed. Thus, continuing applications are scheduled for examination based on the date of an earlier filed application on which they rely for common subject matter. The number of unexamined biotechnology patent applications continues Backlog Continues to to increase. Between January 81989, and July 3, 1990, the number of Grow biotechnology patent applications not yet acted upon increased from 6,163 to 8,213 (41.3 percent of which were over 12 months old). One contributing factor is that the filing of biotechnology applications has grown at a significantly higher average annual rate-14.9 percent- than have all patent applications -7.6 percent-during fiscal years 1984 through 1989. Page 3 GAO/RCED-90-231 Biotechnology As we reported in April 1989, PTOinstituted a 13-point plan in 1988 to Long Delays Continue accelerate the award of biotechnology patents. The plan includes hiring Despite New Efforts 100 new biotechnology patent examiners over 6 years, consolidating all biotechnology examining responsibilities into a new group (called - “Group ISO”), which currently contains eight art units, enhancing search tools by using personal computers to access PTDand commercial data bases, improving training for examiners by joining with the bio- technology industry to create the Biotechnology Institute, and liberal- izing the procedure for requesting accelerated examination. Through June 30,1990, the number of biotechnology patent examiners assigned to Group 180 increased by 23 percent (from 91 to 112) from October 1,1988. According to the P?D,more biotechnology patent exam- iners would have been hired, but it had an insufficient number of expe- rienced senior staff to train them. Only 16 of the current 112 biotechnology examiners (14 percent) have more than the 6 years’ expe- rience required to become a senior examiner. The large number of patent applications not yet acted upon, along with the relatively small number of experienced senior examiners, have con- tinued to cause long waiting periods for PTOfirst actions. During cal- endar year 1989 and the first half of 1990, first actions in the biotechnology area were made an average of 13.1 months after the filing date of the application, whereas first actions in all technologies aver- aged 7.1 months after the filing date of the application. To avoid the wait created by the backlog, PTOhas developed accelerated examination procedures, which allow applicants who can justify their need for expedited processing to have their applications reviewed before others, regardless of the filing date. However, very few biotechnology patent applicants have taken advantage of this special status. Our anal- ysis of Patent Application, Location, and Monitoring (PALM) computer- ized data showed that of 26,616 biotechnology patent applications pending during 1989, only 144 had petitions for accelerated examina- tion. (See table 1.9.) In April 1989, we reported that applicants are reluc- tant to use the accelerated procedures because of perceived legal risks. Page 4 GAO/RCFtD-DO-231 Biotechnology B-234563 Because of the size and age of the backlog created by the large growth in filings and the shortage of experienced senior biotechnology patent examiners, p1~ no longer believes it can meet its goal of reducing the average biotechnology patent processing time from its 26-month average to 18 months by 1992, bringing the pendency for these patents in line with the pn> average for all technologies. No new target date had been established as of August 1990. As we previously reported, PTOmeasures pendency of each application Extensive Use of in a chain of replacement applications, or continuing applications. PTO Continuations Masks officials believe that measuring pendency of applications rather than of Actual Pendency Time inventions is a better management control over patent processing effi- ciency because patent examiners cannot control the use of continua- tions. Only the patent applicant decides whether and when to file a continuing application, so long as it is filed during the pendency of the prior application. A continuing application is often filed in situations where an applicant desires consideration of different claims or of further evidence related to an application for an invention considered unpatentable and rejected by a PTO examiner. With a continuing application that meets the condi- tions of 35 USC. 120, the applicant is entitled to the benefits of the earlier filing date of the prior application. This earlier date may be important in determining patentability or who owns an invention, although pendency is measured from the latest filing. Using PALM data, we determined that about 32 percent of the 26,616 bio- technology patent applications pending during 1989 resulted from con- tinuations. (See tables I. 1 through 1.4.) We did not examine the extent of the use of continuations by applicants in other technologies, but EYIDoffi- cials told us that continuations for all technologies is 24 percent. We used the date of the original application rather than the date of the most recent continuation application for the 7,079 patents issued or abandoned in 1989 and calculated pendency of 36.3 months-Q.0 months more than the m-reported average patent pendency of 26.3 months. (See tables I.5 and 1.6.) Using this same approach, we calculated that the 18,634 applications pending at the end of 1989 had, on average, been in process for 26.7 months since their original application date. Page 5 GAO/BCED-9@231 Biotechnology I rE d E234Mtl These 18,534 applications included 7,529 unexamined (backlogged) applications (examiners had not yet made a first Office action). (See table 1.7.) A total of 1,627 of the patent applications pending at the end of 1989 had been in process for more than 5 years since the date of the original application. The pTDpendency goal for patent applications is 18 months. Thus, if the original application date was considered, the 18,634 patent applications pending at year-end had already been in process, on average, about 50 percent more than the pendency goal. However, according to PRI offi- cials, the pendency goal would be more than 18 months if P?Dmeasured pendency of inventions rather than of applications. Our analysis of the recorded processing steps for 926 biotechnology patent applications (with a first Office action) abandoned and refiled as continuation applications in calendar year 1989 showed that an average of 2.5 Office actions and 31.2 months elapsed during the life of the orig- inal application. About 25 percent were abandoned after the first Office action, and an additional 50 percent received a final rejection after the initial response from the applicant. A final rejection after the applicant’s first response is counted as the second Office action by PID. About three- quarters of the 595 final rejections were second Office actions. This rejection rate is consistent with pm’s policy of normally making the second Office action final. Only about a fifth of the 926 applications had more than 2 Office actions. (See table 1.8.) Our audit work was performed between April and July 1990 in accor- dance with generally accepted government auditing standards. Our review included an analysis of PALM data contained in m computer tapes for all biotechnology patent applications on hand during 1989. We also examined work load reports generated during 1989 and the first 6 months of 1990 by n’ro. Appendix I contains tables of data generated from our analysis of PALMcomputer tapes. We discussed this report’s contents with PTO officials, who concurred with the facts, and their comments have been included where appro- priate. As agreed with your office, however, we did not obtain official agency comments on this report. As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribu- tion of this report until 14 days from the date of this letter. At that time, we will provide copies of this report to the Department of Commerce and to others upon request. If you have any further questions on these Page 6 GAO/RCED-go-231 Biotechnology 0234536 niatters, please contact me at (202) 276-6526. Major contributors to this report are listed in appendix II, Sincerely yours, John M. Ols, Jr. Director, Housing and Community Development Issues Page 7 GAO/RCEJHO-231 Biotechnology c Contents Letter Appendix I GAO Analysis of PALM Computer Tapes Appendix II 14 Major Contributors to This Report Tables Table I. 1: Percent of Continuations Included in All 10 Biotechnology Patents Issued During 1989 Table 1.2: Percent of Continuations Included in All 10 Biotechnology Patent Applications Abandoned During 1989 Table 1.3: Percent of Biotechnology Patent Applications 10 Abandoned and Simultaneously Refiled as Continuations During 1989 Table 1.4: Percent of Continuations Included in All 11 Biotechnology Patent Applications Pending at the End of 1989 Table 1.5: Average Waiting Period From Date of Original 11 Application for All Biotechnology Patents Issued in 1989 Table 1.6: Average Waiting Period From Date of Original 11 Application for All Biotechnology Patent Applications Abandoned During 1989 Table 1.7: Average Waiting Period From Date of Original 12 Application for All Biotechnology Patent Applications Pending at the End of 1989 Table 1.8: Average Processing Time for Selected Steps for 12 All Original Applications With a First Office Action and Abandoned and Refiled as Continuation Applications in 1989 Table 1.9: Percent of Accelerated Examinations Included 13 in All Biotechnology Patent Applications Pending During 1989 Page 8 GAO/RCED-B&231 Biotechnology Abbreviations FAOM First Action on the Merits of the Case PALM Patent Application, Location, and Monitoring Pm Patent and Trademark Office Pwe 8 GAO/RCRD-80-231 Biotechnology \ ;;, /I” ‘F 1. Appendix I GAO Analysis of PAL;MComputer Tapes ’ Table 1.1: Percent of Continuations included In All Biotechnology Patents Total Total Issued During 1989 Art unit/description patents issued continuations Percent 18l/equipment 723 219 __ 30 182Ammunoloav-- 417 134 32 183/biochemicals 665 230 35 184/plants and animals 754 84 11 185Jgenetic engineering 307 124 40 186/biochemicals 268 106 40 187/equipment and immunology 1 0 0 188/microbioloav “. 0 0 0 Biotechnology total 3,135 897 29 Table 1.2: Percent of Continuations Included In All Biotechnology Patent Total Total Applications Abandoned During 1989 Art unit/description abandonments continuations Percent 18l/equipment 510 187 37 182/immunology 646 213 33 183/biochemicals 647 206 32 184/plants and animals 653 218 33 185/genetic engineering 684 228 33 186/biochemicals 580 195 34 187/equipment and immunology 119 36 30 188/microbiology JO6 44 42 Biotechnology total 3,945 1,327 34 Table 1.3:Percent of Biotechnology Patent Appllcatlons Abandoned and Total Refiled Simultaneously Refiled as Continuations Art unit/description abandonments continuations Percent During 1989 18l/eauioment 510 189 37 182/immunology 646 255 39 183/biochemicals 647 234 36 184Mants and animals I I 653 272 42 185jgenetic engineering 684 311 45 186/biochemicals 580 247 43 187/equipment and immunology 119 35 29 188/microbioloav 106 33 31 Biotechnology total 3,945 1,576 40 Page 10 GAO/RCED-90-231 Biotechnology . 51 Appendix I GAO Analysis of PALM Computer Tapes Table 1.4: Percent of Continuatlonr Included In All Biotechnology Patent Total Total Applications Pending at the End ot 1989 Art unit/description applications continuations Percent 181 /equipment 2,318 660 28 182/immunology 2,496 815 33 183/biochemicals 2,946 915 31 184/olants and animals 2.266 650 29 185laenetic engineering 2,334 907 39 186fbiochemicals 2,655 944 36 187/eauioment and immunoloav 1.702 547 32 188/microbioloav 1,8i6 652 36 Biotechnology total 18,535 6,090 33 Table 1.5:Average Waltlng Period From Date ot Orlglnsl Appllcatlon for All Total p$rrr;; Avera e Biotechnology Patents lsrued in 1989 Art unit/description mont 1 s 181/equipment 723 37.2 182/immunoloav 417 44.1 183/biochemicals 665 36.7 184/plants and animals 754 24.9 185/genetic engineering 307 47.4 186/biochemicals 268 37.7 187/equipment and immunology 1 33.4 188/microbiology 0 0.0 Biotechnoloav total 3.135 36.1' aPatent Office reported average was 27.4. Table 1.6:Average Waiting Period From Date of Origlnal Application for All Total Avera e Biotechnology Patent Applications Art unit/description abandonments mont a s Abandoned During 1989 18l/equipment 510 33.1 182/immunology 646 37.3 183/biochemicals 647 29.2 184/olants and animals 653 37.0 185Jgenetic engineering 684 40.0 186/biochemicals 579 30.8 _--- 187/eauicment and immunoloav 119 33.5 188/microbiology 106 35.8 Biotechnology total 3,944 34.7' aPatent Office reported average was 25.4. Page 11 GAO/RCED-30-231 Biotechnoloey Appendix I GAO Aualyeb of PALM Computer Tape8 Table 1.7:Average Waiting Perlod From Date of Orlglnal Application for All Total Avera e Biotechnology Patent Applications Art unit/description applications mont Ii s Pendlng at the End of 1989 181/equipment 2,318 23.4 182/immunology 2,496 27.7 183/biochemicals 2,946 23.2 184/plants and animals 2,268 25.7 185Jgenetic engineering 2,333 33.0 186Jbiochemicals 2,655 26.9 187/eauioment and immunoloav 1,702 25.8 1BE/microbiology 1,816 28.6 Biotechnology total 18,534 26.7' %cludes elapsed months for 1,576 applications abandoned and simultaneously refiled as continuations in 1989. Table 1.8:Average Processing Time for Selected Steps for All Orlginal Total time Total Average time Application8 Wlth a Flrat Office Action Processing step (months) number (months) and Abandoned and Refiled as Filing to docketing 4,579 923 5.0 Contlnuatlon Applications in 1989 Docketin to first action on the merits of the case (FA8 M) 10,489 907 11.6 FAOM to first response 3,606 680 5.3 Abandonment after first action 1,226 226 5.4 First response to final reiection 1,040 446 2.3 First response to second action 600 228 2.6 Second action to second response 883 165 5.4 Abandonment after second action 344 63 5.5 Second resconse to final reiection 290 108 2.7 Second response to third action 168 57 3.0 Third action to third response 216 43 5.0 Third action to abandonment 121 20 6.0 Third response to final rejection 165 39 4.2 Final rejection to abandonment 4,940 595 8.3 Filina to abandonment 28.856 925 31.2 Y Page 12 GAO/RCED-W-231 Biotechuology GAO Analyalu of PALM Computer Tapea Table I.% Percent of Accelerated Examinatlonn Included In All Total Total Biotechnology Patent Applications Art unit/description applications accelerations Percent Pending During 1989 18l/equipment 3,551 35 1 .o 182/immunoloav 3.559 13 0.4 183/biochemicals 0.4 184/plants and animals 3,675 24 0.7 185/genetic engineering 3,325 23 0.7 186/biochemicals 3.503 7 0.2 187/equi~~ment and immunoloav 1,822 16 0.9 188/microbiology 1,922 8 0.4 Blotechnoloav total 25.615 144 0.8 Page 18 GAO/RCED-fBO-281 Biotechnology Appendix II Major Contributors to This Fteport Paul J. O’Neill, Assistant Director Resources, James E. Gwinn, Evaluator-in-Charge Community, and Sara-Ann W. Moessbauer, Operations Research Analyst Economic Development Division, Washington, DC. (aeaalo) Page 14 GAO/WED2@231 Biotechnoloey l.ll”-..- -.--.- -..-- --.---- I1.S. (;cbuchral Awou~lt.ing offictt I’. 0. hx 6015 (;ait.hersburg, MI) 201377 First-(Yaw Mail I’ost,zrgt~ & Fws hid (if40 Permit. No. G 100 Ol’f”ic~i;rl Hwitwss . .._---.--- -.___._ ~ ~--__-_-.._- ___.
Biotechnology: Processing Delays Continue for Growing Backlog of Patent Applications
Published by the Government Accountability Office on 1990-09-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)