Accelerated prosecution for licensing programmes

The possibility of doing more with less is usually worth considering in just about any field of endeavour. Organisations are motivated to operate more efficiently when budgets are tight. More than operational efficiencies, the ability to generate higher return on investment is an ongoing aim for most businesses. When it comes to monetising patents, accelerated prosecution can be a key enabler in realising higher licensing revenues from a smaller portfolio of patents.

This article examines how accelerated prosecution can be used to align the timing of patent grants to a known business need, such as an upcoming licensing renewal. The rationale is that the same applications will eventually issue as patents regardless of whether accelerated prosecution is used, so why not time the grants for maximum benefit to the business? This article presents a plan for choosing a group of patent families for accelerated prosecution, with a selectable trade-off between the costs and benefits to licensing programme development. Options for accelerating the prosecution of the chosen group of patents in many of the leading patent offices are discussed, with suggestions for several strategies for accelerated prosecution, depending on the desired country coverage and the time at which accelerated prosecution will take effect during the prosecution of each patent family. Finally, the expected costs and benefits of using accelerated prosecution on an example group of patents are compared with the status quo.

Motivation

Accelerated prosecution is available in many leading patent offices, such as the group known as the IP5 (the US Patent and Trademark Office (USPTO), the European Patent Office (EPO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO) and China’s State Intellectual Property Office (SIPO)). Typically, accelerated prosecution is used where there is an imminent need to have a patent granted (eg, use of the claimed invention by others has been detected or is believed to be forthcoming). Another use could be to build a portfolio of standard-essential patents quickly, although that would be limited by the speed at which the standard development progresses. Yet another use could be for applications that have been awaiting examination for several years, where a reason for having them issue soon arises.

Another use for accelerated prosecution is to align the otherwise sporadic timing of grant dates for a group of patents. This could be done for an upcoming patent licence renewal or similar negotiation. Other reasons for following this approach could be to increase a business’s valuation before it is sold or to create loan collateral. While using accelerated prosecution on a large scale for such purposes is feasible, the question of whether this is cost effective needs considering.

Figure 1 depicts the concept of an accelerated prosecution programme over a sample five-year period between the execution date (2012) and termination date (2017) of a patent licence. To keep things simple, the licence is considered to be fully eligible for renewal in 2017. The figure shows an upper flow, which uses normal prosecution, and a lower flow, which uses accelerated prosecution for selected applications. In the upper flow, patent applications (A) are filed over the five-year period at irregular intervals and issue as patents (P) about 36 months later. Patents and applications which are in the technology area of the licence are shown with shading in both flows. In the bottom flow, applications in the technology area of the licence are selected for an accelerated prosecution programme. These applications issue to patents 12 months after their respective filing dates.

Figure 1. Concept of acceleration prosecution programme

In the upper flow, patent applications (A) are filed during the term of the licence at irregular intervals and follow normal prosecution. Applications issue as patents (P) after a median pendency of 36 months. Patents that issue during the term of the licence are timely, in that they can be claim charted and used during licence renewal negotiations. However, those issuing after the negotiation takes place are too late to be of use during the negotiation. An acceleration prosecution programme uses accelerated prosecution on a set of applications that are relevant to the technology of the licence. The selected applications issue as patents after a median pendency of 12 months, thereby making the patents available for the licence renewal negotiation. The result of the acceleration prosecution programme is that approximately double the number of patents are available for the negotiation than would otherwise be the case.

The pendency to final action of 36 months under normal prosecution and 12 months under accelerated prosecution is thought to be representative of what could reasonably be expected given current statistics from the IP5 offices. A pendency of 36 months under normal prosecution corresponds well with the USPTO’s statistic for traditional total pendency including requests for continued examination for fiscal year 2015. Pendency to final action in the other IP5 offices ranges from a median of about 20 to 38 months according to 2014 statistics, as calculated from a request for, or entering into, examination depending on the office. A pendency of 12 months under accelerated prosecution seems a reasonable – and possibly a conservative – estimate for the various accelerated prosecution options available in the IP5 offices. These options are examined in detail later. While available statistics also show that pendency varies by several months according to the technology in question, for simplicity this variation has not been taken into account in this example.

Assuming that the same number of granted patents will result regardless of whether accelerated prosecution is used, the question of cost effectiveness comes down to the additional cost of accelerated prosecution versus the monetary gains it will provide. The example considered in this article is representative of an actual case, which was about an order of magnitude larger than the example. According to the example, the approach presented could bring twice the number of new patents to bear than would otherwise be the case. This result would provide a negotiation advantage equal to that of a patent portfolio double in size, all other things being equal. Obviously, the selection of patent applications for accelerated prosecution must be made judiciously, given that accelerated prosecution will incur additional costs. Further, it is possible that patent office resources for processing accelerated prosecution could become overwhelmed if this service is not used sparingly.

Selecting licences with technology overlap

Although an accelerated prosecution programme can be applied to just one licence renewal or other business need, applying the programme in a way that satisfies several upcoming needs at the same time would multiply the advantages. For example, an accelerated prosecution programme could be applied to several licence renewals at the same time. In order to do this, it is necessary to select a group of licences with technologies in common with one another.

Table 1 depicts an example set of patent licences with six licences, labelled A to F in the first column. A count of patent families with claim charts which were used in the licensing negotiations is shown in the second column. The third column lists the International Patent Classification (IPC) sub-classes of the claim-charted patents relevant to each licence. The table is designed to help select a group of licences with a broad overlap in technology, which can be considered further for the accelerated prosecution programme. The IPC classification codes are taken to the level of sub-class granularity in this example. However, a finer or coarser level of granularity could be used, depending on the number of claim-charted patents, the number of licences and the diversity of the technology covered by the licences. Table 1 illustrates that the technology covered by Licence F is mostly optical technology, which is quite different from that of the other licences. Therefore, the technology of Licence F does not overlap well with that of the other licences and should be omitted from this programme.

Selecting licences with time period overlap

Choosing licences with overlapping terms is another way to maximise the advantages of the accelerated prosecution programme, the idea being to use accelerated prosecution for a set of licences that will be renewing at close to the same time (ie, that occur within a year or so of one another).

Table 2 provides additional detail on the previous set of licences, excluding Licence F, which was removed from the list. Licences A to E are again listed in the first column, with the execution dates of the licences listed in the second column. For this example, the licences are all five-year terms. A count of patent families with priority dates which occur after the execution date and within the technology area of each licence is provided in the third column. These are the patents and applications which are outside the respective licence’s capture period – the stock from which additional claim-charted patents can be drawn and brought to the licence renewal negotiation. The counts are taken as of December 31 2015 in this example, although any date that is at least a year or so after the most recent execution date would suffice. The approximate yearly accumulation of first patent filings in the technology area of each licence is calculated from the respective count and duration in years from the execution date of that licence.

The execution dates reveal that Licences A to C were executed in 2012, Licence D at the end of 2011 and Licence E midway through 2014. Since each of the licences has a five-year term, the renewals for Licences A to D will take place within a year of each other. However, the renewal for Licence E will take place almost two years after all the others or about 40% of the five-year term of the others. Therefore, we will omit licence E when determining the technology areas to be used for the accelerated prosecution programme.

Selecting a group of applications for accelerated prosecution

Now that we have selected a group of licences which have good overlap in both time and technology, we can select the patent applications for accelerated prosecution. The selected applications will have a priority date which post-dates the latest of the execution dates of the selected group of licences. That date in this example is after the execution date of Licence C, which is March 31 2012. Applications filed before this date and which fall outside the capture period of the earliest executed licence should issue to patent before the first renewal date and therefore need not be accelerated. The International Patent Classification (IPC) classification codes listed in Table 1 are also used to select applications.

Figure 2 illustrates the concept of overlapping groups of applications. It depicts four possible groups of applications which can be selected based on how the applications overlap the technology areas. The technology area of each licence is represented by the IPC classification codes listed in Table 1. These codes are taken from the claim-charted patents which were used in the negotiation of each respective licence. The rationale for this representation is that we are trying to create a set of patents that will be productive in generating claim charts for the licence renewals, so sticking to technology with which we have had good charting success in the past should mean that there is a good chance of future charting success. Possibly, the portfolio has technology leadership in this area over those of the licensees. In any case, a selected group of applications could be customised if knowledge about leadership in specific technology areas or innovations is available.

Figure 2. Concept of overlap groups

In order to achieve a high degree of cost effectiveness, the applications selected for the accelerated prosecution programme should cover a large number of the technology areas with a few number of applications. The technology areas of Licences A to D are depicted by the circles labelled A to D. Groups of selected applications are shown by shading in the Venn diagrams – the darker the shading, the more technology areas each application in the group overlaps. The group of “Three or more” consists of applications which overlap only three technology areas and applications which overlap all four technology areas.

The figure shows four Venn diagrams, one for each group of applications. The technology area represented by each licence is shown simply as a circle. The circles, each of equal size, are labelled A to D to correspond to their respective licence. The groups of applications are shown in various shades of red; the darker the shading, the more technology areas the applications overlap. In the top-left diagram the group labelled “Overlap = four” overlaps all four of the technology areas. This means that each application in the group has at least one IPC classification code from each of the technology areas. The top-right diagram depicts a group of applications in which each application overlaps three or more of the technology areas and contains the applications of the previously described group with an overlap of four.

The point of organising the candidate applications for the accelerated prosecution programme into overlap groups is to make a trade-off between the number of applications which will be accelerated as opposed to the coverage of the technology areas which those applications will provide when issued as patents. We would like to minimise the costs incurred by our accelerated prosecution programme, while maximising the benefit to our upcoming licensing negotiations.

As an implementation point, the IPC classification codes might not be available for each application in the technology area and time period of interest. However, any technology classification could be used, such as a proprietary classification. Alternatively, an IPC classification for use by an accelerated prosecution programme could be assigned in-house to applications which are missing them.

Table 3 shows a listing of the overlap groups from an implementation perspective, with the patent families of the applications listed by row. There is a column for each technology area of the Licences A to D. If the first filed application in a family has at least one IPC sub-class code which is in common with those of the technology area of a given licence, a check is placed in the column corresponding to that licence. The far-right column, labelled “Overlap”, contains the count of the checked columns across a row. The patent families of an overlap group are identified as those with the entry in the overlap column greater than or equal to the number of the overlap group. For example, the overlap group named “Three or more” contains all the patent families with entries in the overlap column being equal to three or four. In this example, the total number of patent families is 550. The total number of check marks in any of the columns (labelled A to D) will equal the corresponding entry for the count of families for that licence in Table 2.

Table 4 shows the count of families in each overlap group. A decision must be made as to which overlap group should supply applications for the accelerated prosecution programme. The overlap group of “One or more” would probably be too expensive to pursue. Choosing that group would mean that all applications which meet the priority date criteria and have at least one IPC sub-class code in common with any of the technology areas would be selected. The overlap group of “Four” would probably have too few applications to yield significant benefit to the upcoming licence renewal negotiations, meaning that the choice would be between the overlap groups of “Three or more” and “Two or more”. Since the latter has twice the number of patent families than the former, this decision will have a significant impact on the programme’s costs and benefits.

In order to decide which overlap group to proceed with, we can look at the coverage of patent families listed in Table 3.

Table 5 is a comparison of coverage that each overlap group provides on the patent families of the technology areas (A to D). The coverage is shown as a percentage of the total number of patent families in each of the technology areas. The total number of patent families is obtained from the count of families in Table 2. The percentages are calculated using the candidate patent families associated with each technology area listed in Table 3. The average coverage for the “Three or more” group is 48%, whereas the average coverage for the “Two or more” group is 79%. Clearly, doubling the number of families in the accelerated prosecution programme does not double the coverage over the technology areas in this example. A graph of the size of overlap groups versus their average coverage would reveal a knee in the curve, which would provide useful information for choosing an overlap group. However, in order to keep things simple, the “Two or more” group is chosen in this case.

In practice, the selection of applications for an accelerated prosecution programme would not simply be carried out in a statistical manner. The selection of these applications is an attempt to create a stock of patents which are likely to produce a large number of claim charts that can be used in upcoming licensing programmes. With that in mind, we might remove applications from the selected group which are less likely to be chartable, perhaps because the inventions are too implementation specific, difficult to detect or both. Further, other applications from a larger group (eg, the “One or more” group in our example) might be added to the selected group if they are likely to result in broad claims, be easily detectable or both. Ultimately, the selection of applications for the accelerated prosecution programme is case specific. However, it can be guided by the foregoing principles and selection techniques.

Options and strategies for accelerated prosecution

Up to this point, the focus for achieving cost effectiveness has been on the careful selection of a group of applications for accelerated prosecution. However, another opportunity to increase cost effectiveness is through the accelerated prosecution strategies chosen to implement the programme. Different strategies will be best suited to different scenarios, these being defined by the country of first filing, the countries of the counterpart applications in the family and the timing of when the family is selected for the accelerated prosecution programme. The main aim in formulating the following strategies was to minimise the time to issuance of a first filing and its counterpart applications.

For ease in describing the following scenarios, the term ‘multiple country family’ is used to denote a patent family with counterpart applications filed, or to be filed, in all of the IP5 offices. The term ‘single country family’ is used to denote a patent family in which all applications are filed, or will be filed, in just one IP5 office.

Scenario 1

The first scenario involves a multiple country family selected before first filing. Under this, the proposed filing strategy is to first file with the JPO or EPO. Counterpart applications are then filed in the other IP5 offices. A request for accelerated examination is made to the JPO or EPO, as the case may be. A request under the IP5 Patent Prosecution Highway is made to the other IP5 offices after allowance by the JPO or EPO. A total additional cost of $1,600 for the family, excluding legal fees, is used in calculations regarding this scenario.

Scenario 2

In this scenario a multiple country family is selected after first filing and a Patent Cooperation Treaty (PCT) application is used thereafter.

This scenario can thus be broken down into two sub-scenarios, depending on the availability of a written opinion, an international preliminary report on patentability (IPRP) and an international preliminary examination report (IPER).

If the written opinion or IPRP/IPER is available and favourable, then a request for entry into national phase is made in the IP5 offices, if this has not yet been done. A request under the IP5 Patent Prosecution Highway or the PCT Patent Prosecution Highway is then made in the IP5 offices. A total additional cost of $1,600 for the family, excluding legal fees, is used for calculations regarding this sub-scenario.

If the written opinion is not yet available, then a request for early entry into national phase is made in the IP5 offices. In the JPO, accelerated examination is requested instead of the Patent Prosecution Highway. A request for accelerated examination is made with the EPO. A request for fast-track examination is made with the KIPO. After allowance by the JPO, KIPO or EPO, a request for IP5 Patent Prosecution Highway is then made with the USPTO and SIPO. A total additional cost of $2,400 for the family, excluding legal fees, is used for calculations regarding this sub-scenario.

Scenario 3

In this scenario a single country family is chosen for the accelerated prosecution programme. Under this, the proposed strategies depend on the country of filing. For USPTO applications, prioritised examination is selected because there is no requirement to comment on prior art as compared to the accelerated examination track. For EPO and JPO applications, the accelerated examination tracks of these offices are chosen. For SIPO applications, the invention preferential examination track is preferred, although certain conditions apply with regard to the subject technology. For KIPO applications, the fast-track examination track is selected. The following additional costs per family, excluding legal fees, are used for calculations regarding this scenario:

• USPTO – $4,280;
• EPO – $0;
• JPO – $1,200;
• SIPO – $250; and
• KIPO – $960.

Accelerated prosecution programme versus status quo

Now that a set of applications has been selected, strategies defined and costs estimated, the cost effectiveness of using accelerated prosecution to develop a licensing programme can be studied in more detail. To do that, an estimate is made on the number of patent families expected to have at least one patent granted during the term of the licences. This estimate is made for the case of using accelerated prosecution and not using accelerated prosecution. Additionally, an estimate is made on the number of families for which claim charts are expected in the licences’ technology areas.

In order to make the comparison, some assumptions need to be made about the composition of the patent families. The total number of families in our example data set is 550, while the number selected for the accelerated prosecution programme is 270. The percentage of multiple country families, with counterparts filed in each of the IP5 offices, is 40%, or about 110 families. The percentage of single country families is 60%, or about 160 families. There is at least one US application in each of the patent families. The total pendency without accelerated prosecution is 36 months – with accelerated prosecution it is 12 months. The percentage of families that can be claim charted is 1.5%.

Table 6 provides the data needed to perform the comparison. The information with respect to the technology area of each licence (A to D) is provided by row. The estimated number of first filings for the years of the licences (2012 to 2016) is taken from Table 2. The number of families with a patent granted during the five-year period is determined according to the total pendency estimates. For example, without accelerated prosecution, only the families with a first filing in 2012 or 2013 will have a patent granted during the five-year period. That is because the median pendency for normal prosecution is 36 months. For the purpose of comparing the results of normal and accelerated prosecution tracks, the median pendency of each track is used as an absolute pendency for all applications for that track. A more accurate comparison could be made by using the variance in the pendency of each prosecution track. The percentage coverage of each technology area for the selected overlap group, as given in Table 5, is used when estimating the number of families with a patent granted during the five-year period for the accelerated prosecution programme. None of the first filings in 2016 was selected for the accelerated prosecution programme because there would be less than 12 months to the renewal date for most of them. However, in practice, some of these applications in the last year of the five-year term would be selected for an accelerated prosecution programme and some might grant before the renewal date.

According to Table 6, the number of patent families with a patent granting during the period is approximately double using the accelerated prosecution programme as compared to normal prosecution. The number of expected families with new claim charts in the technology areas is also double. The additional cost per licence of using the accelerated prosecution programme, excluding legal fees, is $215,000. This is calculated as:

$4,280 per single country family (for Scenario 3 USPTO applications) x 160 families + $1,600 per multiple country family (for Scenario 1 applications) x 110 families, ÷ four licences. This additional cost would be about $43,000 per year for each of the four licences, if renewed.

This would have to be weighted against the benefit of the additional claim charts in the renewal negotiations. The accelerated prosecution programme would expect to yield one more claim-charted family over that of the status quo for Licence A, and two more new claim-charted families over the status quo for Licences B, C and D.

The cost effectiveness of the accelerated prosecution programme could also be compared to alternatives such as buying claim-charted patents that are relevant to the renewal licences or filing additional applications using normal prosecution. As for the first alternative, the cost of buying seven claim-charted patents at an average price of $200,000 per patent would be $1.4 million. Of course, that alternative is an option only if such patents are available for purchase. The additional cost of our accelerated prosecution programme example was about $860,000, excluding legal fees, which compares favourably to the alternative of spending $1.4 million on patents.

As for the second alternative, assuming that enough inventions are produced, the number of first filings could be doubled in the first two years of the five-year period. This would mean filing approximately an additional 225 first filings (half of the 550 first filings over the period 2012 to 2015 from Table 3). Assuming a cost of $20,000 per first filing, the additional cost of this approach would be $4.5 million. Filing fewer applications in the third to fifth years of the five-year period could offset this additional cost. However, doing so could mean foregoing protection on some valuable inventions.

Turning to the PCT filing scenarios (both versions of the second scenario), these cover situations where the decision to embark on an accelerated prosecution programme is taken after many of the first filings have been made. Since using the PCT route is a common approach to building multiple country families, it is important to consider the cost of an accelerated prosecution programme using the PCT. Under the first variation of Scenario 2 – where the decision to include a family in an accelerated prosecution programme is taken after the written opinion or IPRP/IPER is available – the cost is the same as that in Scenario 1. So in the worst case, even if all multiple country families were under this scenario, the total cost of the example accelerated prosecution programme would be the same as previously calculated – about $860,000. However, under the second variation of Scenario 2 – where the decision to include a family in an accelerated prosecution programme is taken before the written opinion is available – the cost is about 50% higher than that of Scenario 1. In the worst case, if all multiple country families were under this scenario, the total cost of the example accelerated prosecution programme would be 50% higher than that previously calculated, about $1.3 million. This cost is quite close to the previously estimated cost of buying seven claim-charted patents, about $1.4 million. Therefore, a portfolio with pending applications wholly under this scenario might be best served by using an accelerated prosecution programme in combination with a patent purchasing programme.

In cases where the decision to start an accelerated prosecution programme is taken after the first filings have been made, but the PCT route has not been used, the strategy and costs would be similar to those of the first scenario.

One final point of comparison between the accelerated prosecution programme and the status quo is to look at the number of new claim-charted families produced in each case, in view of the number of claim-charted families expiring during the term of the licences. From Table 1, we see that the number of claim-charted families used during the previous licensing negotiations ranged from eight to 15 families. Assuming that 25% of these families expire during the five-year term, due to a 20-year patent term, the number of claim-charted families expiring during the licence term is between two and four families per technology area. Under the accelerated prosecution programme, the number of newly charted families per technology area is estimated to be between two and five, as shown in Table 6. This number is at least enough to replace the charted families expected to expire in each of the technology areas during the licence terms. However, following the status quo approach results in an estimated one to three newly charted families per technology area, as shown in Table 6. This is not enough to replace the charted families expected to expire in each technology area, except those corresponding to Licence C.

From this example, it appears that an accelerated prosecution programme could indeed be a cost-effective technique in licensing programme development. The cost effectiveness will depend on the technology and value of the licensing programme being developed. Also, the accelerated prosecution options available in the IP5 offices and their associated costs are subject to change, and some of these options are currently offered on a trial basis. An actual accelerated prosecution programme should also consider the additional burden which responding in a timely manner to office actions can create for in-house staff and outside.