Patents: Information about the Publication Provisions of the American Inventors Protection Act
Published: 2004-05-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Patent and Trademark Office (USPTO) receives over 300,000 patent applications each year. Before the American Inventors Protection Act of 1999, USPTO was required by law to keep the information on patent applications confidential until a patent was granted. The act modified this requirement and mandated that USPTO publish most patent applications 18 months after filing. One exception to this requirement is available to patent applicants filing only in the United States. These applicants can request that their application not be published. The act required GAO to provide information on how patent applications have been affected by the 18-month publication provisions. GAO was required to determine (1) the number of patent applications filed only in the United States, and (2) whether certain differences exist between published and unpublished patent applications. Specifically, GAO examined differences relating to whether the applicant was a large or small entity, the percentage of patents issued by USPTO and applications abandoned by the applicants, and the length of time between filing an application and when USPTO issued a patent or the application was abandoned.
section_title: What GAO Found
paragraphs: Of the approximately 805,000 patent applications USPTO received between November 29, 2000, and November 28, 2003, about 88,000 were filed by applicants certifying they would apply for a patent only in the United States. Subsequently, 8,000 of these applicants rescinded this certification. For about 275,000 applications, the applicants indicated they had already applied for a patent abroad. For the remaining 450,000 applications, USPTO's database does not provide the information needed to determine whether the applicants intend to file in the United States alone or also abroad. GAO found four differences between the published and unpublished patent applications that USPTO received between November 29, 2000, and November 28, 2003. USPTO has published or plans to publish applications from about 85 percent of the applicants qualifying as large entities compared with only about 74 percent of those qualifying as small entities. USPTO issued patents to about 22 percent of the applications it had published and considered about 8 percent abandoned, although resolution for most of the approximately 456,000 published patent applications is still pending. For applications it did not publish, USPTO issued patents to about 25 percent and considered about 19 percent abandoned, although resolution for most of these approximately 117,000 applications is also still pending. The median length of time for the agency's review of an issued patent was about 20 months for those applications that had been published and about 15 months for those not published. The median length of time between filing and abandonment of an application was about 18 months for published applications and about 8 months for those not published.

section_title: Letter
paragraphs: The U.S. Patent and Trademark Office (USPTO) administers the nation’s  patent laws to protect inventions and encourage innovation by examining  applications and granting patents to qualified inventors for a period of time.  A patent provides inventors with certain property rights to the invention.  Between fiscal years 1998 and 2003, USPTO received an average of about  317,000 patent applications annually. Following the enactment of the  American Inventors Protection Act of 1999, USPTO significantly changed  its processes for publishing patent applications, bringing U.S. patent policy  into greater harmony with the policies of most other nations. Effective  November 29, 2000, USPTO generally must publish patent applications 18  months after the application is first filed anywhere. Previously, USPTO  published patent applications when patents had been issued-–for fiscal  year 2003, a patent was typically issued about 28 months after the filing of  the application. With this new publication requirement, other inventors, in  the United States and abroad, may be able to improve upon the invention in  the original application and submit their own patent application more  quickly. While the new publication requirement may accelerate the pace of  innovation, it also raised concerns among some smaller entities— individual inventors, nonprofit organizations, and enterprises with 500 or  fewer employees—that larger competitors might be able to take advantage  of the published information and use their greater resources to reap  benefits in the marketplace before USPTO has granted a patent to the  original inventor.
The 1999 act contains two provisions to address the concerns of these  smaller entities. First, it allows all inventors to avoid publication by  certifying, when they file their application, that they are, in essence, filing  for a patent only in the United States. Generally, applications that do not  include such certification are automatically published 18 months after they  are first filed. Second, inventors whose applications are published, and  who have been issued patents, may be able to collect compensation  retroactively to the date of publication from those who use the invention  without approval. Since inventors are responsible for enforcing their patent  rights, without the aid of USPTO, the potential litigation costs could deter  some inventors from seeking to recover reasonable compensation.
While inventors may certify that they are seeking a patent only in the  United States, they may rescind their certification at any time. Inventors  may rescind their requests for several reasons, such as deciding to seek a  patent abroad or to become eligible to collect compensation from others  who are using their invention without approval. An applicant who makes a  certification and later files in another country directly or under an  international agreement must notify USPTO of such filing within 45 days.  According to USPTO officials, the agency records in its database both  those that specifically rescind their certification and those that provide  notice as having rescinded their certification. In both cases, USPTO  publishes information on the application as it would for any other  application. USPTO does not require patent applicants who do not certify  to indicate whether they intend to file in only the United States or whether  they also intend to file abroad.
The American Inventors Protection Act required GAO to provide  information on patent applications affected by the 18-month publication  provisions. In response, we analyzed USPTO’s database for applications  submitted to the agency during a 3-year period—November 29, 2000,  through November 28, 2003-–to determine (1) the number of applications  seeking patents only in the United States, the number that requested at the  time of filing not to be published, and the number that later rescinded that  request; and (2) whether certain differences exist between published and  unpublished patent applications. Specifically, GAO examined differences  relating to whether the applicant was a large or small entity, the percentage  of patents issued by USPTO and applications that were abandoned, and the  length of time between the applicants’ filing of an application and either  USPTO’s issuing of a patent or the application being abandoned.
To address these questions, we examined USPTO records of the patent  applications filed or published between November 29, 2000, and November  28, 2003. We interviewed program officials to determine how these records  are maintained and to interpret the data the records contain. We assessed  the completeness and accuracy of the data we used in our review by (1)  performing electronic tests of relevant fields and (2) reviewing related  program and system documentation, as well as audit and system reviews  and reports. We determined that the data were sufficiently reliable for the  purpose of our review. For about 44 percent of patent applications,  USPTO’s data allowed us to determine whether the applicants sought  patent protection only in the United States or in both the United States and  other countries. For the remaining 56 percent of applications, we relied on  USPTO officials’ best estimates of how many applicants would also seek  patent protection outside of the United States. To obtain a better  understanding of patent law, we discussed patent issues with USPTO  economists and attorneys. We conducted our work from June 2003 through  April 2004 in accordance with generally accepted government auditing  standards.
subsections: section_title: Background
paragraphs: USPTO administers the nation’s patent and trademark laws to protect  inventions, encourage innovation, and advance science and technology  through the preservation and dissemination of patent information. The  principal effect of patent law in a market economy is that it provides the  economic incentive for inventors to devote resources to technological  innovation. Granting the inventor exclusive rights to control the use of the  patented invention produces this effect.
Patent rights do not rise automatically, however. Inventors who seek patent  protection must first prepare applications that fully disclose and clearly  claim their inventions. Before issuing a patent, USPTO examines the  application to verify that the patent is new, useful, and nonobvious. See  figure 1 for a description of the application examination and publication  process. If the agency issues a patent, the inventor has, in most instances,  exclusive rights to the invention until 20 years from the date the application  was first filed. Patents typically fall into one of three categories: (1)  utility—for useful inventions, such as processes, machines, articles of  manufacture, or composition of matter; (2) design—for changes in  configuration, shape, or surface ornamentation that do not involve changes  in function; or (3) plant—for asexually reproducible plants. The  publication provisions of the American Inventors Protection Act apply only  to applications for plant and utility patents, which constitute most of the  applications filed.
Until 1999, USPTO was required to keep in confidence submitted patent  applications, and applicants had no enforceable patent rights before the  issue date of the patent. The American Inventors Protection Act of 1999  removed this confidentiality, so that, with certain exceptions, such as  applications subject to a secrecy order for reasons of national security,  patent applications filed on or after November 29, 2000, will be published  18 months after they are first filed. In exchange for the loss of  confidentiality and the public dissemination of this proprietary  information, the applicant may be able to obtain compensation  retroactively to the date of publication from those who use an invention  without approval.
USPTO may publish some applications earlier than 18 months. Some  inventors, for example, request that their applications be published early.  Applications that are first filed abroad will also normally be published in  fewer than 18 months after being filed in the U.S. This is because USPTO  designates an application’s publication date as 18 months from when it was  first filed, regardless of whether that occurred in the United States or  abroad. Applicants who file first in another country and wish to obtain a  patent in the U.S. must file with USPTO within a year. If such an applicant  took 12 months to file with USPTO, the agency would then publish the  application within 6 months. If, for example, such an application was  abandoned 9 months after it was published, then USPTO’s database would  show that the application was abandoned in 15 months-–the number of  months that had passed since the application had been filed in the U.S.-– rather than the 27 months that had passed since the application had been  first filed anywhere.
Proponents of the act believe that the changes brought U.S. patent policy  into greater harmony with the policies of nearly all other nations and will  increase the rate at which dissemination of new technology occurs, thus  speeding the diffusion of knowledge and avoiding the duplication of  research expenditures by competing firms. Some inventors, however,  objected to the early disclosure requirement of the act. For example, a  group of 26 Nobel laureates claimed that this practice would be most  harmful to small inventors and would discourage the flow of new  inventions. They pointed out that the patents most affected by early  disclosure would likely be breakthrough inventions, often made by  independent inventors, that take time to progress from application to an  issued patent. Independent inventors and smaller entities have also  expressed concern that the new law aids larger entities that have greater  resources, at the expense of smaller entities. They contend that smaller  entities are less able to obtain legal redress if larger firms use their  inventions without approval, and are less able to keep pace if a larger firm  attempts to invent around the patent—that is, to improve the patented  device enough to apply for a separate patent.
The 1999 act allows all inventors not intending to seek patent protection  abroad to request that USPTO publish the application only when it issues  the patent. Such inventors also have the option of rescinding the original  request before USPTO issues a patent and asking the agency to publish the  application as it would other applications.
section_title: USPTO’s Database Does Not Include Information on the Status of Many Applications
paragraphs: USPTO’s database does not provide information for many applications  regarding whether the applicant intends to file only in the United States or  in both the United States and abroad. Our analysis of USPTO’s database  indicates that of the approximately 805,000 applications USPTO received,  applicants certified they would apply for a patent only in the United States  in about 80,000 applications. Although about 88,000 applications originally  included this certification in their applications, about 8,000 applicants later  rescinded this certification. Consequently, these 80,000 applications are  exempt from the publication provisions of the American Inventors  Protection Act because they are filing for patent protection only in the  United States. In about 275,000 applications, the applicants indicated they  had applied for a patent in another country. As a result, these applications  are subject to the publication provisions of the American Inventors  Protection Act, and USPTO will publish these applications within 18  months of when they were originally filed.
USPTO’s database does not provide the information needed to determine  definitively whether the applicants for the remaining 450,000 applications  intended to apply for a patent only in the United States or in both the  United States and abroad. However, USPTO officials estimated that for  about one-third of such applications, the applicants generally seek patent  protection in both the United States and abroad. Applying this proportion  to the 450,000 applications for which no information is available, about  300,000 were likely to seek patents only in the United States and about 150,000 were likely to seek patents in both the United States and abroad.  By combining these estimates with the data for the applications that we  could definitively identify from the database, we calculated that about  380,000 applications (about 47 percent) likely were filed only in the United  States, and about 425,000 (about 53 percent) likely were filed in both the  United States and other countries. See figure 2.
section_title: Some Differences Exist between Published and Unpublished Applications
paragraphs: We found four differences between the published and unpublished  applications filed with USPTO between November 29, 2000, and November  28, 2003. First, USPTO published, or plans to publish, applications filed by  inventors qualifying as large entities at a somewhat higher rate (85 percent)  than those filed by inventors qualifying as small entities (74 percent). Of the  approximately 580,000 applications filed by large entities, USPTO  published about 60 percent and listed another 25 percent as eligible for  publication—that is, the applications will be published 18 months after  they were first filed. About 12 percent of the applications filed by inventors  qualifying as large entities are ineligible for publication—typically because  the applicants certified that they will file only in the United States. USPTO’s  database does not provide the information needed to determine the  publication status for the remaining 3 percent.
For the approximately 225,000 applications filed by inventors qualifying as  small entities, USPTO published about 46 percent and lists another 28  percent as eligible for publication. About 22 percent of the applications  filed by inventors qualifying as small entities are ineligible for publication.  USPTO’s database does not provide the information needed to determine  the publication status for the remaining 4 percent. See figures 3 and 4.
Second, although the rate at which USPTO issued patents to published and  unpublished applications differed only slightly, the rate at which applicants  abandoned published applications and unpublished applications differed  significantly. Of the approximately 456,000 applications USPTO published,  about 70 percent are still pending, about 22 percent were issued patents,  and 8 percent were considered abandoned. Similarly, of the approximately  117,000 applications USPTO did not publish, about 56 percent are still  pending, about 25 percent were issued patents, and 19 percent were  considered abandoned. For a summary of these differences, see table 1.
Third, USPTO took longer to issue patents that had been published (a  median time of about 20 months) than those that had not been published  (about 15 months). According to agency officials, the difference occurs  primarily because examiners sometimes complete their review and decide  to issue a patent in fewer than 18 months. In these cases, USPTO does not  publish the application because the issued patent will itself be published  and become public information. As a result, the median length of time for  unpublished patents is less.
Fourth, for applications considered abandoned, the median length of time  between filing and abandonment was longer for published applications  (about 18 months) than for those not published (about 8 months).  According to USPTO officials, this difference occurs primarily because  nearly all patent applications abandoned within about 18 months of filing  are not published.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of this report, USPTO provided technical  comments that we have incorporated, as appropriate.
We are sending copies of this report to the appropriate House and Senate  committees; interested Members of Congress; the Secretary of Commerce;  the Director, USPTO; the Director, Office of Management and Budget; and  other interested parties. We are also providing copies to others upon  request. In addition, the report is available at no charge on GAO’s Web site  at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-3841. Key contributors to this report are listed in appendix II.
section_title: Scope and Methodology
paragraphs: To provide information on the patent applications affected by the American  Inventors Protection Act of 1999, we analyzed data obtained from the U.S.  Patent and Trademark Office’s (USPTO) Patent Application Location and  Monitoring system (PALM).  We used these data to determine the number  of applications USPTO received, the number of applications certifying that  they would be filed only in the United States, and the number that  rescinded this certification.  PALM also contained data we used to  determine whether applicants had filed an application for the same  invention in another country before filing with USPTO.  In addition, we  used PALM data to analyze whether differences existed between published  and unpublished applications in terms of the relative size of the applying  entity, the length of time USPTO reviewed the application before it was  issued or abandoned, and the rate at which applications were issued or  abandoned.
In about 44 percent of the cases, the USPTO data provided information  about whether applicants sought patent protection only in the United  States or in both the United States and elsewhere.  For the remaining 56  percent of the cases, USPTO’s database does not provide the information  needed to determine whether the applicants have filed or intend to file in  the United States alone or also in another country.  We discussed other  possible sources of information about these cases with USPTO program  officials, attorneys, and economists.  These USPTO officials noted that  while they had conducted one study that provided some data as to whether  applicants filed in the United States alone or also in another country, the  limitations of the study’s methodology and results precluded any  statistically valid use of the information.  Three other studies we examined  had similar methodological limitations that precluded their use.
The USPTO officials with whom we discussed these issues estimated that,  based on their professional experience, for about one-third of the  applications filed in the United States, applicants may subsequently file in  another country after filing with USPTO.  Although we used this estimate to  determine the potential number of applications that may have been filed in  the United States only and in both the United States and abroad, use of this  estimate should be considered in light of the limitation that it could not be  corroborated by other methodologically sound independent sources.
We assessed the reliability of USPTO’s PALM data that we used in our  analysis by (1) performing electronic testing of relevant data elements, (2)  reviewing existing information about the data and the system that  produced them, (3) interviewing agency and contractor officials  knowledgeable about the data, and (4) reviewing audit and system reports  on accuracy of data entry performed by contractors.  We determined that  the data were sufficiently reliable for the purposes of this report.
To determine if studies analyzing the impact of the American Inventors  Protection Act had been conducted by any other entity, we interviewed  officials from the Intellectual Property Owners Association, the American  Intellectual Property Law Association, and the National Intellectual  Property Researchers Association.  To explore the practicality of  conducting a survey of patent attorneys to determine how many patent  applications were filed only in the United States or in both the United  States and abroad, we contacted patent attorneys around the United States  representing private legal firms, corporations, academia, and government.   After discussions with these officials, we concluded that a survey was not  feasible because of concerns about attorney/client confidentiality.
We conducted our work from June 2003 through April 2004 in accordance  with generally accepted government auditing standards.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Oliver Easterwood, Judy Pagano,   Elsie Picyk, Paul Rhodes, Stuart Ryba, Carol Herrnstadt Shulman, and  Mindi Weisenbloom made key contributions to this report.
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