Patent backlog – A qualitative analysis

Milind Sathe

Patent backlog (PB) is a common phenomenon observed across the globe. It is observed in developed countries too. It is more pronounced in Developing Countries (DCs) and Least Developed Countries (LDCs) than in developed world, in terms of its future impact. In DCs and LDCs it is primarily due rise in applications by foreign nationals / entities. DCs and LDCs witnessed PB after they became signatory to TRIPs.

What is PB?

PB is stock of accumulated patent applications filed and undecided, unexamined. PB is present in Intellectual Property (IP) offices of all nations, including developed nations. It consists of applications in diverse states.

Why is there a PB?

Post TRIPs, IP offices have experienced a dramatic increase in the number of applications. The reason for PB is, applicants do not seek the examination of their applications for various reasons and do not take the application to its logical end.

IP offices will always have some applications pending examination. However when the available resources, structures and legal frameworkis inadequate to keep them within manageable levels, resulting into appreciable delay, the situation is alarming.

Applicants and IP offices have to review themselves if the PB is to be reduced. A study of number of applications received and cleared in unit time may provide a dependable measure to assess adequacy of installed resources. But it will not say anything about tendencies of applicants. Developed countries with robust economies experienced a PB because even these countries could not provide adequate funds for their IP offices. One can imagine the situation in DCs and LDCs which have fragile economies.

Advancement in technologies and expansion of the scientific field has elevated the level of text, content of patent applications and has made it more complicated. Standards of obviousness are continuously undergoing refinement. There is a trend to draft broader claims which are subsequently narrowed.

There is lack of alignment of public domain, arrangement of freely accessible global knowledge into arranged usable databases that are available to IP offices and public too. It requires upgradation of hardware and possibly development of new user friendly software packages. A fleet of new trained examiners who are able to clear the PB while following law of the land is required. These are capital intensive and complex jobs which cannot be installed overnight.

Rapidly growing industries and economies of Asia, increased rate of innovation, multiplicity of commercialisable scientific fields and diverse technologies (individual and combination), rise in number of R&D firms in diverse and increased fields and rise of new business models, rise of TRIPs, TRIPs+ Free Trade Agreements (FTAs) / Regional Trade Agreements (RTAs), globalisation and rise in adopting a strategy to protect invention in multiple countries, rise in possibility of licensing out and of raising funds from IP based on undecided patent applications have contributed to an unprecedented rise in the number of patent applications received by IP offices in all nations.

Applicants have learned from the developed world that keeping applications in an undecided state has a deterrent effect on competition, as well as increases opportunities of licensing. As a result keeping applications pending has a clear potential to raise business revenue . Applicants do not opt for fast track processing and take full benefit of periods for request for examination which is four years in India, but is as high as seven years in some countries. It means applications will be accumulated for these years.

Although the percentage rise in number of examiners over the years may exceed the percentage rise in number of applications received and examined, PB continues to increase. It indicates the tendency of applicants to keep the application in a pending state and probably complexity of applications.

The applicant has to prosecute his application in at least relevant IP office to take advantage of Patent Prosecution Highway (PPH) or to enable him to provide the relevant information to another IP office where it is required. If applicants opt to take full advantage of request for examination period, PB will continue to rise.

Is PB good?

To applicants, keeping applications pending has

1. licensing potential,
2. It demotivates competitors
3. Increases hopes to raise funds
4. Potential to create pseudo-submarine patents and related benefits.

To Economy: Negative effects of monopoly would be felt for shorter period.

Is PB bad? For applicant

1. Though keeping applications pending creates licensing potential, demotivates competitors and raises hopes to raise funds, it may not actually ensure funding and can delay his plans.
2. In some countries there is a requirement of payment of maintenance fees albeit the application is undecided.

For the corporate world and industry

Business has to be conducted under threat of pseudo-submarine patents. Secondly, if a monopoly is cashed after grant, effective period of monopoly is shorter. And lastly, ahere will always be apprehension of infringement and litigations creating internal resistance to adopt newer technologies.

To subject population of the nation

People may not get improved, more user friendly goods and may deny opportunities to more comfortable life.

To nation

The impact on quality of granted patents may lead to rise in litigations and its cost shall be paid through tax payer funds. The administration and judiciary which otherwise would have attended to other cases will have to spend their resources in deciding these added burdens. It will increase the social, opportunity and administrative costs creating scarcity of resources for deserving priorities.

Truly speaking, a strong sovereign shall not be affected by pending status of applications if it wants to use any of the applications or grants as that is allowed by law of the land in many countries and by TRIPs.

What is the effect of PB?

PB results into legal uncertainty. Its counterproductive impact on innovation, economy and on rate of industrialisation will vary from nation to nation. It may impact generation of employment opportunities, distribution and redistribution of wealth within the nation. Absence of patent may mean no investment, no start of new activities and hence no business. No business means no opportunities to produce new articles, no new jobs, loss of opportunity to use newer technologies, loss of opportunity to use available resources in more economic manner. It is a drain on scare resources.

It is said that the undecided fate of applications may provide disincentive to inventors or applicants, diminishes incentive to innovation. But it fails to explain why there is continuous rise in PB over the years. PB pressures and inadequate staff may also result in grants which otherwise do not deserve patents. It will lead to rise in oppositions / litigations which is again a drain on tax payer’s money.

PB creates tendency to apply for trivial and possibly non-patentable inventions to capitalise on the deterrent effect of pending application status.

How to overcome PB?

The most effective solution that will eliminate rising PB is rigorous and punctual implementation of provisions related to non-worked patents. Each nation should by default declare patents open for compulsory licensing if it is found that the patent has not been worked for three years after the grant. This will create a deterrent impact and will demotivate applicants who want to keep their applications in an undecided state for long. Recruitment of many adequately trained examiners and diversion of national resources from existing priority areas to this area may resolve PB.

Patent systems should be reviewed to ensure the main objective of commercialisation of inventions. A thorough scrutiny of grants will reveal the extent to which the granted patents are worked. This will reveal if providing incentive to innovation, development and inducing enabling disclosure of an invention are benefits in reality or only philosophical theories with no practical relevance. It is working of the patent that ensures orderly development and not the non-worked patents.

More and more IP offices should collaborate in PPH kind of arrangement. In a knowledge economy, IP offices should be structured to be self supporting. DCs and LDCs should seriously review fee structure as in DCs and LDCs, funds are diverted from more important sectors such as agriculture, health, infrastructure and education to IP offices. DCs and LDCs may have to raise IP office fee structure. Internal reforms, increased transparency may be able to combat rising PB.

If some examination requests are remaining unattended due to shortage of examiners, may be there is a solution. May be establishing relationship of number of applications examined per unit time per examiner may provide suitable indication to either increase or decrease the number of examiners. This is applicable assuming all examination requests are to be cleared. This will necessitate flexible employment policies.

Will PB be there forever?

PB will always be there. There is nothing wrong about it till it reaches threatening magnitude resulting into inordinate delay of grant, for no fault of applicant. The trends of change in industry/ in technology and applicants behavior cannot be visualised in advance to perfection.

Is an international patent a solution?

There is nothing like an international patent. Each application has to undergo examination in each country where it is applied. Different nations inherently differ from each other. Secondly sovereign priorities, regional values and identities of nations cannot be compromised. National jurisdiction should never be compromised. Inventors and industrial entities may opt for different form of IP protection, may be trade secrets.

(The views expressed here are those of the author and do not necessarily reflect the views of his employers, past or current.)