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Number of Patent Applications Remains High/Patent Laws Change, Business and Industry Trends Analysis

In fiscal year 2022, the U.S. Patent & Trademark Office (PTO) received 646,855 patent applications, up from only 109,359 in 1970.  To some extent, patents tend to reflect the health of R&D budgets.  The greater the funding, the more patents are filed.  At the same time, however, the rapid growth in the number of patent applications reflects today’s increased focus on protection of intellectual property by corporations and universities along with the extremely high traffic from biotech firms attempting to patent gene expressions and other biological discoveries.
A patent application leads either to a patent grant or to a denial.  The PTO granted 361,435 total patents during calendar year 2022 (which includes utility patents in addition to design, plant and reissue patents).  In contrast, there were only 67,964 patents granted in 1970.  A patent typically takes 18 to 24 months after application to receive a grant.  The term of patent protection is currently defined as beginning on the date the patent is granted and ending 20 years from the earliest filing date of the application.

Patent Categories in the United States:
Utility Patent: may be granted to anyone who invents or discovers any new, useful and non-obvious process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof.
Design Patent: may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture.
Plant Patent: may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.
Internet Research Tip:
For the latest official statistics from the U.S. Patent & Trademark Office, visit the web site of TAF, the patent office’s Technology Assessment and Forecast branch.

     Globally, there are roughly 120 different national patent systems, and recent proposals to create a unified global patent system are creating buzz.  “Harmonization” is the word used to describe the effort, and it will be difficult to bring about.  According to the World Intellectual Property Organization (www.wipo.int), 90% of the approximately 7 million applications filed annually worldwide are filed in more than one country, which exponentially multiplies application fees, legal fees and hours spent (fees for multinational applications can surpass $75,000, and legal fees often reach $200,000 or more).  WIPO reported that 3.27 million patent applications were filed worldwide in 2020 (the latest data available), up 1.6% over 2019.
An aborted 1989 attempt to establish an international system was bogged down when the U.S. could not agree with most other participating countries on a simple first-to-file regulation when awarding patents to filers with similar claims.  In the U.S., the practice traditionally had been to award a patent to the filer who is proven to be the first to conceive an idea and develop it.  Although fair, the system can prove costly as applicants spend time and money in the court systems to establish who was first with an idea.
An international patent system of a sort does exist in the form of the Patent Cooperation Treaty (PCT), overseen by WIPO and signed in 1970.  A PCT application establishes a filing date in all contracting nations (of which there are about 150).  Filers must then proceed to file the necessary documents with the patent offices of separate contracting nations of the PCT, after an initial centralized processing and evaluation period (which usually is about 18 months).  Filers thereby postpone examination and related expenses in national offices during that period.  Top filing countries include the U.S., Japan, China and Germany.
Since patent applications have grown exponentially in recent years, examiners have less and less time to spend studying each application and researching past inventions.  Some detractors claim that patents awarded in recent years may not have been for original ideas.
Critics of the old U.S. patent system also cite unscrupulous patent-licensing companies called “trolls” that seek licensing fees by sending demand letters to presumed patent infringers, in many cases without basis of proof.  Trolls also seek injunctions against large numbers of defendants, hoping to become enough of a nuisance that the supposed infringers will pay license fees just to make the problem go away.  The U.S. Supreme Court made rulings (in 2006 and 2007) that limit injunctions, enable alleged infringers to file their own suits and/or make it easier for frivolous patents to be declared invalid.  All three rulings were expected to curtail troll activity.
Another critical difference between the U.S. patent system and those elsewhere around the globe was the one-year waiting period, during which American filers may publish or speak at public forums about their ideas without jeopardizing their patent rights.  Abroad, filers are required to keep their ideas top secret until a patent is awarded.
Yet another point of argument centers on patent subject matter.  Traditionally, in the U.S., just about anything or any idea can be patented.  Business practices, for example, are commonly patented, such as Amazon.com’s “one-click” technology, as well as genetic discoveries and treatments.  The latter is a particularly sticky point for developing nations such as those in Latin America and Africa.
In September 2011, the America Invents Act was signed into law by President Obama to further reform U.S. patent law.  The act calls for a “first to file” system that awards patents based on the date the application is filed as opposed to the date the invention was made.  It also creates new procedures, such as the ability to challenge a patent’s validity directly with the Patent and Trademark Office (PTO) rather than going to court, to fight bad patents more efficiently.  In addition, the act expands the ability of third parties to show prior art, meaning evidence of previous activity relating to the patent in question, to the PTO, thereby avoiding lengthy (and costly) court time.  Detractors of the new law are concerned that a “first to file” system favors large, sophisticated filers who have knowledge of patent law over small entities or individuals.  Another concern is that no additional funding was awarded to the PTO to handle the backlog of cases before it.
Further legislation was passed by the U.S. House of Representatives in 2013 due to a massive upswing in patent litigation since the passage of the America Invents Act.  The Innovation Act is designed to neutralize patent trolls.  It requires specificity in patent lawsuits, makes patent ownership more transparent, holds losing plaintiffs responsible for court costs and delays lengthy discovery phases (in which sometimes millions of internal documents such as emails and memos must be produced) to allow the courts to address the meaning of patent claims.  The Innovation Act also protects end users such as small businesses by allowing technology vendors to fight lawsuits against trolls instead of their customers.
Among competing tech companies, patents are something like badges of honor.  Patents protect ideas and technologies as well as exclude competitors from making strides in particular areas of research.


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