More from Hal Wegner on the USPTO's allowance rate, reprinted with permission:

Several folks have shared their reactions to the PTO’s announcement of a 54 % allowance rate for this past fiscal year which is an indication of a vast improvement over the earlier higher rates that some had estimated at over 90 % and many others had estimated at over 70 %. This is still far above the 29 % allowance rate in Japan that has remained constant over the past three years, but considerably lower than at the EPO.

What does all this mean?
There are two immediate observations, short of the detailed statistics on actual cases that has either yet to be released or at least has not been readily accessible. Pending such statistics, it is impossible to make any clear sense of the results announced by the PTO.

There are two preliminary observations, one positive and one that raises a yellow caution flag:
(1) There is a noticeable toughening of examination at the PTO: One of the most experienced and knowledgable practitioners with possibly the best understanding of the workings of the PTO shared his anecdotal experience, while a respected former high government official personally knowledgable about the Board of Patent Appeals and Interferences shared some important information.

The experience practioner shared the following observation: “Th[e lower allowance rate] is not surprising since the PTO now requires an allowance conference for each proposed allowance - thus the examiner can no longer allow any application without getting agreement from two supervisors. I assume the supervisors get pressure from above to keep the allowance rates down and reverse the examiners a significant amount of times. I just had this happen with an important application - the examiner called with a trivial examiner's amendment to put the application in condition for allowance and then called back a week later to indicate that he was making a new rejection ‘that was suggested to him’.”

The former high government official noted that the 54 % allowance rate “dovetails with the report of [Chief Judge] Fleming … that patent examiners wrote an additional 2300 examiner’s answers [last year] than in either of [the two previous years]. This will cut into the Board’s ability to quickly reach and decide cases, reportedly now at an average of 4.7 months after the case is docketed at the Board. Also, the [Chief Judge] made note that the affirmance rate at the Board was north of 50 % for the first time in a long time. It will be interesting to see as the Board works off the latest increase in appeals whether the affirmance rate will drop. It may be that examiners are responding to the latest quality initiatives by only allowing ‘sure’ cases while rejecting everything that they see as being close. Déjà vu once again.”

(2) Real Improvement or Two Steps Forward, Three Steps Back: Whether there is a long term improvement in the system will largely depend upon whether patent applicants consider the toughening standards to be a temporary matter or not, which is best measured by the rate of continuation and RCE filings. To the extent that there is a major increase in such refilings, there may be little or no improvement at all. Continuation and RCE statistics have yet to be obtained to measure what’s happened so far, and only time will tell whether the current stricter policy will be maintained.

Statistics to back up the 54 % conclusion have not been obtained: Everything stated here is based upon assumptions without the numbers. There is reason to question some of the statistics, including a roughly 31 month average pendency for applications. To the extent that this is a net pendency from the priority filing date, this does not square with some recent calculations that have been made over admittedly limited samples.

Churning -- The Number One Enemy to Quality and Pendency: To the extent that the PTO 54 % number is a real number without significant continuation/RCE filings, this is very significant. To the extent that there is any indication that the tougher examination that is real is viewed as a short range measure, then there will be massive churning that will only flood the system with additional work without real disposal of cases. While a curtailment of continuations (which should be done through a statutory fix) may seem like an answer, it is in reality simply fools gold as other stop-gap measures will be taken to prolong the pendency of patent applications until a kindler, gentler regime is instituted toward applicants: The higher rate of appeals is one manifestation of the tougher policy. To the extent that the Board gets flooded with appeals, the several years backlog of appeals that was the norm in the 1980's will surely return so that this alternative to continuation/RCE filings will return as a normative measure.

A new Leadership at the PTO -- Will it "Stay the Course"? There is every expectation that in 2007 or 2008 at the latest there will be a vacancy in the position of Deputy Under Secretary. Applicants with marginal but important applications will surely maintain pendency to wait out the change, further contributing to churning.