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Deploy Patent Prosecution Analytics to Accelerate the Product Development Cycle: A Comparative Case Study

Patent prosecution analytics can provide valuable insight into the performance of an organization’s IP operations just as other forms of analytics help in reducing cost, in making better decisions and in creating new products and services. Technology companies who are actively filing patents can achieve cost savings and faster times to grant through prosecution analytics. I will illustrate what I mean by looking at two leading technology companies with different prosecution performance – Cisco and Juniper Network.

The patent prosecution analytics can illustrate areas for improvement, how a company compares with direct and indirect competitors, patent prosecution trends, and areas the company is performing well.

There are multiple ways to measure how well an organization’s patent prosecution processes perform. MaxVal and its clients have had good success with these methods:

  • Prosecution Success Score – The number of issued cases divided by the number of abandoned cases in a given year.
  • Application Abandonment before an Office Action
  • Rate of Issued Cases with 2 or more RCEs
  • Average Pendency

To illustrate these methods and the insight they can provide, MaxVal took a look at Cisco Systems and Juniper Networks, two competitors within the Computer Communications Equipment Industry. MaxVal used publicly available data for its analysis.

Patent Prosecution Score

A Prosecution Success Score is simply the number of issued cases divided by the number of abandoned cases in a given year. The higher the score, the better it is for the company. Higher prosecution success scores can be attributed to more efficient prosecution methods, a better invention disclosure screening process, and possibly fighting harder to get patent issuance.

Prosecution Success Score
Year Cisco Juniper
2013 12.3 15.6
2014 5.9 16.1
2015 5.9 47.8

While we see Cisco and Juniper had comparable Success Scores in 2013, Juniper has continued to improve their Success Score while Cisco’s Success Score has dramatically declined. Cisco is still getting patents issued at a high rate but many more applications are being abandoned. It would be useful for Cisco to further investigate and see what the reasons for these patent application abandonment are.

Rate of Abandonment Prior to an Office Action

Another telling metric would be the rate of abandoned cases prior to receiving an Office Action. If a case is abandoned prior to receiving even a single Office Action, then it is likely that the case should not have been filed in the first place or the company did not fight hard enough for the case. An option to reduce the number of abandonment prior to an OA would be to invest in pre-filing searches to become aware of the prior art.

Rate of Abandonment Prior to an Office Action
Year Cisco Juniper
2013 1.6% 9.1%
2014 4.2% 50%
2015 5.8% 40%

Cisco seems to have a very low rate of abandonment prior to an OA while Juniper’s rate in 2014 and 2015 seems rather high. However, Juniper only abandoned 14 and 5 cases, respectively, in 2014 and 2015 so the sample size is too small to make a proper assessment of their rate.

Rate of Issuance with 2+ RCEs

The next metric to look at is the number of issued cases prior to filing a Request for Continued Examination (RCE). A high rate in this metric is a strong indicator of inefficient prosecution methods (broader claims among other things). Since the application was ultimately issued, it can be inferred that it was inefficient prosecution by the practitioner that led to a number of RCEs prior to issuance.

Rate of Issuance with 2+ RCEs
Year Cisco Juniper
2013 3.3% 12.2%
2014 6.0% 6.6%
2015 4.0% 5.4%

Both Cisco and Juniper seem to have pretty good rates in this metric suggesting that their patent practitioners use efficient prosecution methods. While Juniper’s rate in 2013 was on the higher end of the spectrum, there has been a noticeable decrease in their rate.

The final metric to look at today is the average pendency between a first OA and issuance. While looking at the pendency from filing to issuance is a normal metric to look at, it doesn’t give the best insight to prosecution methods. Much of the time from filing to first OA is a result of the patent office delays in working on the application. So, a better indicator of an applicant’s prosecution methods is to look at the time from the first OA to issuance. A higher pendency can be attributed to receiving more OAs, taking longer to respond to OAs, and filing RCEs.

Average Pendency from OA to Issuance

Average Pendency from OA to Issuance
Cisco Juniper
Overall 13 months 18 months

As evidenced by the table above, Cisco seems to be getting their applications issued, on average, 5 months quicker than Juniper. Juniper should look closer at factors that can be attributed to this increase in pendency.

Overall Cisco and Juniper seem to employ reasonably efficient patent prosecution practitioners and methods. They both have high issuance rates and low abandonment rates. Cisco’s low abandonment prior to OA rate indicates a good invention disclosure screening process. And the low rate of issuance with 2+ RCEs indicates efficient patent prosecution methods.

These metrics, and others, illuminate a company’s patent prosecution process strengths and weaknesses. It allows companies to see how their competition is faring and what areas they need to improve.

By Bharath Venkat, MaxVal

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Patent Renewal Rates under Different Renewal Period Schemes

by Bharath Venkat

In order to keep a US patent in force, the US Patent & Trademark Office requires that patent owners make maintenance fees at years 3.5, 7.5 and 11.5 after grant. This is in addition to filing, search, examination and post-filing fees.

Other patent issuing authorities use different rules. For the European Patent Office (EPO), maintenance payments must be made annually and cannot be pre-paid. For Japan (JPO) and the Korean Intellectual Property Office (KIPO), fees are due annually and can be prepaid.

If the patent owner decides not to pay the maintenance fee, then the patent owner loses the patent rights and the patent reverts to the public domain. If a patent is abandoned, the term of the patent is shortened and patent protection ends well before the maximum life of the patent. At MaxVal, we have compared abandonment rates for US, European, Japanese and Korean patents. Our goal is to see if abandonment rates differ between single year or multi-year renewal countries.

patent renewal ratesAnalysis of Lapse Rates

A good indicator of this could lie in the rates that patents lapse due to nonpayment of renewal fees. As seen in the graph below, different patent annuity systems yield different lapse rates.

Looking at the US – in 2014, 50.7% of active patents were renewed for the Third Stage (11.5 years). Since payment of the Third Stage gives those patents protection from years 12-20, it can be said that 50% of patents filed in the US are active for the full 20 years of the patent term.

This lapse rate is much different than in patent offices that require annual patent fees that cannot be paid in an advance lump sum like the EPO. In 2010, only 50% of active patents were renewed for the 8th year of the patent term. Only 42% of the patents are renewed beyond the 12th year of the patent term. Furthermore, only 33% of patents were renewed beyond the 15th year. Only about 17% of patents are active for the entire 20-year patent term. These statistics indicate that patent owners were very wary of paying higher annuity fees and were able to judge if the patent was economically viable on a yearly basis. This arguably led to a higher percentage of patents lapsing and entering the patent domain much earlier than in the US.

Additionally, patent offices that accept advanced lump sums of annual fees, like JPO and KIPO, have different renewal rates as well. At the JPO, the number of renewed patents only dropped to 50% after 17 years of the patent term. Also, 33% of patents were renewed throughout the 20-year patent term. At the KIPO, the number of renewed patents only dropped to 50% after 13 years of the patent term. However, the patent renewals drop to 33% after the 16th year of the patent term. These statistics indicate that, if allowed to, patent owners are more likely to pay their maintenance fees in advance, which would prevent the lapse of patents that are economically not viable.

Conclusion

For patent owners, annual renewal schemes seem to offer greater flexibility for making renewal decisions. When fees are payable annually, patent owner have more control over what to keep than they do in the US system.

From the perspective of a patent office, it would appear that forcing patent owners to make multi-year commitments increases renewal income. So, a multi-year scheme is beneficial for the patent office.

Owners of US patents should take care at the Third Stage. The data suggests that some patents that are routinely renewed at 11.5 years should be considered for abandonment. Those patents would be soon abandoned under an annual renewal scheme – but that option is not available in the US.

*Sources:

  1. 2014 USPTO Performance and Accountability Report
  2. Four Office Statistics Report 2010

MaxVal offers the Annuity Payer service to help companies plan and execute fee payments.